Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2746

applicability of exemption notification on DTA clearance by an EOU.

Case-SARALA PERFORMANCE FIBRES LTD.VersusCOMMISSIONER OF C. EX. & S.T., VAPI
 
Citation-2015 (316) E.L.T. 498 (Tri. - Ahmd.)
 
Brief Facts-Brief facts are that appellant is a 100% EOU and is clearing, inter alia, goods in DTA (Domestic Tariff Area) availing the benefit of Notification No. 7/2003-C.E., dated 1-3-2003 and Notification No. 30/2003-CC, dated 9-7-2004 and received the input where CVD paid is ‘NIL’. Revenue denied the benefit of these Notifications on the ground that appellant do not fulfil the condition of the Notifications, hence the present appeals.
 
Appelants Contention-Shri Prakash Shah (Adv.) appearing on behalf of the appellant argued that appellant is a 100% EOU engaged, inter alia, in the manufacture of Nylon Filament Yarn of 210 Denier and 210/2 ply Denier. That the dispute in the present appeals is denial of exemption under Notification No. 7/2003-C.E., dated 1-3-2003 up to 8-7-2004 and thereafter Notification No. 30/2004-C.E., dated 9-7-2004 in respect of 210 denier Nylon Yarn cleared by the appellant in DTA. Learned Advocate argued that the exemption under the above Notification is proposed to be denied on the grounds that no duty is paid on inputs (Nylon chips) acquired by the appellant. The second issue is payment of education cess on duty paid by the appellant while making clearance in DTA. It was his case that the condition of these Notifications is that no credit on inputs or capital goods is taken by the assessee availing these exemption. It was argued that no credit was taken with respect to inputs by the appellant. Learned Advocate made the Bench go through the language of the condition specified in Notification No. 76/2003-C.E. and 30/2004-C.E. He also relies upon the Larger Bench decision in the case of Kumar Arch Tech Pvt. Ltd. v. CCE,Jaipur-II [2013-TIOL-614-CESTAT-DEL-LB = 2013 (290)E.L.T.372 (Tri.-LB)] to drive home the point that third time cess is not payable. With respect to admissibility of Notification No. 30/2004-C.E. Ld. Advocate relied upon Order-in-Appeal No. A/815 to 820/2007/C-1/EB, dated 15-10-2007 where the benefit of Notification No. 30/2004-C.E. has been extended for DTA clearance. He also relied upon H.P. High Court Order in the case of Satya Metal v. UOI [2013 (290)E.L.T.514 (H.P.)] to argue that only effective rate of Central Excise Duty will be applicable.
 
Respondents Contention-Shri K. Shivkumar (AR) appearing on behalf of the Revenue argued that not taking of Cenvat credit presupposes that duty on the inputs is paid. It was his case that in these proceedings appellant has not paid any duty on the inputs used in the manufacture of the finished goods for which exemption is sought. Learned AR argued that as per the provision of Section 5A of the Central Excise Act, 1944 no exemption issued under Section 5A shall be applicable to the goods produced or manufactured by a 100% EOU.
 
Reasoning Of Judgement-Heard both sides and perused the case records. So far as applicability of effective rate of duty on DTA clearances of a 100% EOU is concerned it is observed that the issue is no more res integra. Himachal Pradesh High Court in the case of Satya Metals v. Union of India (supra) after following the judgment of Supreme Court in the case of Hyderabad Industries Ltd. v. UOI [1999 (108)E.L.T.321 (S.C.)], held that effective rate of a Central Excise exemption Notification will be applicable. Similarly with respect to the issue of payment of third time cess CESTAT Larger Bench in the case of Kumar Arch Tech Pvt Ltd. v. CCE, Jaipur-II (supra) has held that third time cess on DTA clearances from 100% EOU cannot be charged.
Regarding admissibility of exemption under Notification No. 30/2004-C.E., dated 9-7-2004 appellant argued that there is no such condition in the exemption Notification that duty should be paid on the inputs. It is the case of appellant that the only condition prescribed is regarding not taking Cenvat credit with respect to the inputs. For better appreciation the text of Notification No. 30/2004-C.E., dated 2-7-2004 is reproduced below :
“In exercise of the powers conferred by sub-section (1) of the Section 5A of the Central Excise Act 1944 read with sub-section (3) of Section 3 of the Additional duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and in suppression of the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No 7/2003-Central Excise dated the 1st March 2003, published in the Gazette of India vide number G.S.R. 137(E) dated 1st March, 2003, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in Column (3) of the Table below and falling within the Chapter heading No or sub-heading number of the first schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act) specified in the corresponding entry in column (2) of the said Table, from whole of the duty of excise leviable thereon under the said Central Excise Act.
Provided that nothing contained in this notification shall apply to the good in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the Cenvat Credit Rules, 2002 :

Sr. No. Chapter or heading No. or sub-heading No. Description of Goods
7 5402.10 Nylon filament yarn or polypropylene multifilament yarn of 210 deniers with tolerance io 6 per cent.
  5402.41
  5402.49
  5402.51
  5402.59
  5402.61
  5402.69
 

Similar wording has been used regarding not taking of Cenvat credit on inputs under Notification No. 7/2003-C.E., dated 1-3-2003.From the above language used in the exemption notifications it is observed that there is no prescribed condition that duty should be paid on the inputs. The only condition is that an assessee claiming these exemptions should not take any Cenvat credit. Also there is no such condition that unless the inputs are clearly recognisable as non-duty paid in these notifications. This interpretation also finds support from the decision given by CESTAT, Mumbai, in the case of Garware Marine Industries Ltd. and Others v. CCE, Aurangabad under order Nos. A/815 to 820/2007/C-I(EB), dated 15-10-2007. Para 4 of this order is relevant and is reproduced below :
“We find force in the submission of the appellants that the benefit of exemption in terms of Notification No. 30/2004 with effect from 9-7-2004 cannot be denied to them for the reason that the product in question viz., Nylon twine has been manufactured by out of monofilament/multifilament yarn on which undisputedly no credit of duty has been taken.The language of the Notification does not lend itself to the interpretation of Revenue viz., that the inputs should be duty paid. The only condition in the proviso is that no credit of duty on the inputs used in the manufacture of the goods for which the benefit of the Notification is being claimed, should be taken. Since admittedly, no credit was taken on the inputs used for the manufacture of Nylon twine there is no valid reason for disallowing the benefit of exemption in terms of Notification No. 30/2004. We, therefore, hold that the benefit of exemption in term of Notification No 30/2004 is admissible to the disputed product manufactured by both the appellants for the period subsequent to 9-7-2004.”
In view of the above observations and settled legal proposition appeals filed by the appellants are allowed with consequential relief, if any.
 
Decision-Appeal allowed

Comment-The analogy in the case is that for availing the benefit of notification no.7/2003-CE and notification no.30/2003-Cus there is no prescribed condition that duty should be paid on inputs.  The only condition is that the assessee should not take any cenvat credit in respect of the inputs used in the manufacture of goods for which benefit under the notification has been claimed. This was based on the landmark decision in the case of Garware Marine Industries Ltd. and Others v. CCE, Aurangabadand inHyderabad Industries Ltd. v. UOI it was held that the effective rate of a duty will be applicablefor the payment of education cess on duty paid by the assessee while making clearance in DTA and the third time cess cannot be charged on DTA clearances from 100% EOU as was also held in Kumar Arch Tech Pvt Ltd. v. CCE, Jaipur-II.
 
Prepared By-Neelam Jain
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com