Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/Case Laws/2012-13/1057

Duty payment when textile machinery parts cleared without duty against invalidation of EPCG licenses

Case: RIMTEX INDUSTRIES Versus COMMISSIONER OF CENTRAL EXCISE, BHAVNAGAR
 
Citation: 2010 (254) E.L.T. 116 (Tri. - Ahmd.)
 
Issue:- Manufacture and clearance of textile machinery parts without payment of duty against invalidation of EPCG licenses - no specific provision exempting payment of duties, duty liable to be paid with interest - Only benefit available is refund of terminal excise duty.
 
Clearances within knowledge and approval of department and in view of wrong interpretation of law by both sides, penalties not leviable.
 
Brief Facts:- Appellant is engaged in the manufacture and clearance of Textile Machinery Parts used in the spinning mills. During the period from 5-8-2004 to 3-6-2005, the appellant cleared parts manufactured by them to EPCG Licence holders without payment of Central Excise duty on invalidation of EPCG licences.
 
The department took-up investigations and in the impugned order, duty demand for Rs. 66,63,270/- with interest has been confirmed and penalty of Rs. 15 Lakhs has been imposed on the first appellant namely M/s. Rimtex Industries and penalty of Rs. two Lakhs has been imposed on second appellant.
 
Appellant’s Contention:- Appellant submitted that the clearances were made under proper documents and with the knowledge of the department. In support of this contention, he drew our attention to various ARE-3 forms submitted by them and also to a letter of Assistant Commissioner, Surendra Nagar addressed to Assistant Commissioner, Jammu dated 13-12-2004, wherein he had requested for rewarehousing certificate.
 
Further, he also submitted that the procedure followed by them and clearances without payment of duty was perfectly as per the law.
 
Appellant relied upon the Policy Circular No. 5 dated 13-5-2005 and on Para 8.3.2 of Handbook of Procedure and also relied on several decisions of the Tribunal in support of various submissions
 
Appellant also submits that deemed export is legal fiction created by law and therefore all the benefits which are extended to regular exports should be extended to deemed exports also. In this connection he cited the decision of the Gujarat High Court in the case of Commissioner of Income Tax v. Jaykrishna Harivallabhdas reported in ITR Vol-231 Page No. 108.
 
Respondent’s Contention:- Revenue reiterates the observations made in the Order-in-Original and submits that duty demand has been correctly made.
 
Reasoning of Judgment:- The Tribunal found that before the learned Commissioner also the same submissions were made on behalf of the appellants and he has discussed these issues elaborately in his order.
 
The Tribunal held that the clarifications issued by Ministry of Commerce and CBEC cannot be applied to Domestic Manufacturers since they were issued in respect of clearances by an 100% EOU. It is well settled principle that 100% EOU clearances made to DTA are to be treated as import for the purpose of calculation of measure of customs duty since as per Section 3 of Central Excise Act, 1944, in respect of 100% EOUs, the duty will be equal to Customs duty payable. In fact, the clarification makes it quite clear that 100% EOU are liable to discharge excise duty and measure has to be derived from relevant customs notifications. Therefore, the clarification issued in respect of 100% EOU cannot be applied to DTA. In any case, clarification does not even say 100% EOU can clear goods without payment of Central Excise duty. We do not find decision of Tribunal in the case of Bhoruka Textiles Limited - 2007 (216) E.L.T. 640 (Tri.-Bang.), applicable to the facts of the present case. In that case, the issue before the Tribunal was whether the goods received under EPCG licence after invalidation from the manufacturer can be added to value of machinery imported for the purpose of examination of fulfilment of conditions in the EPCG licence. From the order it cannot be concluded in that case that machinery had been supplied by the domestic manufacturer without payment of duty. Similarly, the decision of this Tribunal in the case of Sahajanand Technologies Private Limited - 2007 (210) E.L.T. 108 (Tri.-Ahmd.) is also not applicable to the present case.
 
In fact, in Para 4, it has been observed that clearance from 100% EOU are subject to duty equal to that payable when like goods are imported. In fact in this Para, Tribunal has discussed the applicability of concessional rate of duty under Notification No. 55/03-Cus., dated 1-4-2003.
From the clarification issued by the Ministry of Commerce and the order of the Tribunal what emerges is that for the purpose of levy of duty to supplies made to EPCG licence holders by 100% EOU, customs duty leviable has to be worked out on the basis of Notification No. 55/03-Cus and the same has to be recovered as Central Excise duty payable. What emerges from this clarification is that, unless there is exemption Notification applicable to clearances, duty has to be paid.
 
In this case, appellant could not show any notification issued [under] Central Excise Act providing exemption in respect of clearances made to buyers who have EPCG licence and who have got the same invalidated in favour of domestic suppliers. As rightly observed by the Commissioner, in the absence of exemption Notification the remedy available to the appellants is specified in Para 8.3 itself, which provides that where supplies are not (sic) made against International Competitive Biddings, refund of terminal excise duty will be given. In the absence of any specific provision or exemption Notification and supplies made against invalidation of EPCG Licence, the tribunal cannot find fault with the demand for duty made by the lower authorities.
 
While the Tribunal fully agreed with appellant that legal fiction has to be carried to its logical end and has to be applied, they have to observe that in the case of benefit of exemption from duty, unless there is statutory provision, such benefits cannot be extended.
 
In this case and in the case of deemed exports, clearly the refund of terminal excise duty benefit is available. If the Legislature intends to provide exemption, an exemption Notification would have been issued. In the absence of specific exemption, this benefit cannot be extended. As regards penalty on the appellants, the Tribunal take note of the fact that clearances were made with the knowledge and approval of the department and this is because of their wrong interpretation of provisions of law by both the sides. Therefore, imposition of penalty on the appellants is totally unfair and not called for. Interest demand is upheld and penalty demand set aside.
 
Decision:- Appeal partly allowed.

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