PJ/Case Laws/2010-11/32
CASE LAWS
Prepared By:
CA Pradeep Jain
Sukhvinder Kaur, LLB [FYIC]
Parag Ghate and Megha Jain
Excise Section
Case: Ramala Sahkari Chini Mills Ltd, UP v/s Commissioner of Central Excise,
Citation: 2010-TIOL-102-SC-CX
Issue: - In order to fall within the ambit of the term ‘input’ defined under Rule 2 (g) of CCR, 2002, whether the goods should also be covered within the 6 categories of goods enumerated in Rule 2 (g) as held in Maruti Suzuki Limited v/s Commissioner of Central Excise, Delhi-III?
Brief Facts: - Appellants availed cenvat credit on welding electrodes used in the maintenance of plant and machines, by treating them as inputs under CCR, 2002. Department objected to the taking of credit on the ground that the welding electrodes were not inputs.
The Tribunal relied upon the Larger Bench decision in the case of JP Rewa case [2003 (57) RLT 739] which was followed in J. P. Cement Works v/s CCE, Jaipur [2007-TIOL-70-CESTAT-DEL]. Accordingly, it was held that the Lower Authorities rightly held that welding electrodes were no eligible for credit either as capital goods or as inputs.
Aggrieved by the same, the appellant are before the
Appellant’s Contentions: - Appellants relied upon the judgment of the
Reasoning of Judgment: - The
It was held that the inclusive part of the definition one finds that it covers:
(a) lubricating oils, greases, cutting oils and coolants;
(b) accessories;
(c) paints;
(d) packing materials;
(e) input used as fuel;
(f) input used for generation of steam or electricity.
It was held in Maruti Suzuki case that the expression viz. "used in or in relation to the manufacture of the final product" in the specific/substantive part of the definition is so wide that it would cover innumerable items as "input" and to avoid such contingency the legislature has incorporated the inclusive part after the substantive part qualified by the place of use. For example, one of the categories mentioned in the inclusive part is "used as packing material". Packing material by itself would not suffice till it is proved that the item is used in the course of manufacture of final product. Mere fact that the item is a packing material whose value is included in the assessable value of final product will not entitle the manufacturer to take credit. Oils and lubricants mentioned in the definition are required for smooth running of machines, hence they are included as they are used in relation to manufacture of the final product. The intention of the legislature is that inputs falling in the inclusive part must have nexus with the manufacture of the final product.
It was held therein that in each case it has to be established that inputs mentioned in the inclusive part are "used in or in relation to the manufacture of final product". It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression "used in or in relation to the manufacture" has many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product.
The Apex Court held that the effect of the judgment was that in order to fall within the ambit of the term "inputs" within the meaning of Rule 2(g) of the 2002 Rules, the goods must be (i) used in or in relation to the manufacture of the final product, whether directly and indirectly, and whether the said goods are contained in the final product or not, (ii) covered within the six categories of goods enumerated in Rule 2(g) and (iii) used within the factory of production.
Accordingly, the
Apex Court referred to the observations made in The State of Bombay & Ors. Vs. The Hospital Mazdoor Sabha & Ors [AIR 1960 SC 610] wherein with regard to definition of industry it was held that the words used in an inclusive definition denote extension and cannot be treated as restricted in any sense. Where we are dealing with an inclusive definition it would be inappropriate to put a restrictive interpretation upon terms of wider denotation.
Reliance was also placed on Regional Director, Employees' State Insurance Corporation Vs. High Land Coffee Works of P.F.X. Saldanha and Sons & Anr [(1991) 3 SCC 617] wherein it was held that The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word `include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include.
Accordingly, the
In the end, it was held that having regard to the language of Rule 2(g) of the 2002 Rules, and the analysis of the afore-noted decisions, it appears that by employing the phrase "and includes", legislature did not intend to impart a restricted meaning to the definition of "inputs" and therefore, the interpretation of the said term in Maruti Suzuki Limited, may require reconsideration by a larger bench.
Decision: - Matter to be referred to Larger Bench of the
Comments: - This is very important decision. The definition of “inputs” which was almost settled by Maruti Suzuki case has been unsettled and it is to be decided by Larger Bench of Apex Court. The same is situation with the welding electrodes. Everyone thought that the issue is settled after Chhattisgarh High Court decision but the same is unsettled by Highest Court of India. Let us wait for the decision of Larger Bench of the
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Case: Gautam Steel Traders v/s Commissioner of C. Ex,
Citation: 2010 (259) E.L.T. 479 (Tri. –
Issue: - Penalty is imposable on dealer when the Cenvat is passed on by him although he is third stage dealer.
Brief Facts: - Appellant was registered as a dealer in terms of Rule 2(ii) of Cenvat Credit Rules for the purpose of passing of Cenvat credit on duly paid materials procured by them. The goods manufactured by M/s Swastika Pipes Ltd were sold to M/s Rameswara Das Sevi Dayal (P) Ltd but the goods were consigned to the appellants. The appellants holding themselves as first stage dealers sold it to another registered dealer who in turn sold the goods to the actual user–manufacture of the final products.
Revenue denied the credit to the manufacturer of the final products on the ground that the goods had passed through registered dealers namely M/s Rameswar Das Devi Dayal (P) Ltd., M/s Gautam Steels Traders and M/s Metal Trading Company and that the same has happened because of mis-declaration of the status of the appellants as first stage dealer while they are only a second stage dealer. The Original Authority imposed penalty for availment of irregular credit.
Appellant’s Contentions: - Appellants submitted that as they had received the goods as consignment agent, they were under the bonafide belief that the sale by them will be considered as sale by the first stage dealer. Further, in the case of similar issues involving the appellant in appeal, the penalty was waived on the manufacturer. Therefore, Appellant prays that the penalties imposed on the appellants may be set aside.
Respondent’s Contentions: - Respondent relied on the decision of the Tribunal in the case of Commissioner of Central Excise, Delhi–IV v/s Sai Ram Industries [2010 (255) E.L.T. 256].
Reasoning of Judgment: - The Tribunal held that appellants had received the inputs manufactured by M/s Swastika Pipes Ltd which were sold to one M/s Rameswar Das Devi Dayal (P) Ltd though the goods have been directly received by them from M/s Swastika Pipes Ltd. They had purchased the goods only from M/s Rameswar Das Devi dayal (P) Ltd who was also a registered dealer. That being the case, the appellants posing as first stage dealer selling the goods to another dealer before the goods were sent to the manufacture-user was not justified. When there is specific restriction that the goods can be routed through maximum two dealers while passing on the credits, the appellants as registered dealers ought to have followed the same. The explanation offered by them is not convincing. Therefore, the penalties were justified. However, on facts of the case, penalties were reduced.
Decision: - Appeal disposed of by reducing penalty.
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Case: Lakshmi Packaging (P) Ltd v/s Commr. of C. Ex. & Cus.,
Citation: 1998 (098) ELT 91 (Tribunal)
Issue: - Penalty under Section 11AC can not be imposed during the period before its introduction in statue book.
Brief Facts: - Appellant collected engraving charges over and above the contracted price during the period from 1991 to 1995. These charges were not included in the assessable value. Revenue raised demand of duty on the said charges. The Lower Authority confirmed the demand and imposed equal penalty under Section 11AC of Central Excise Act, 1944 and penalty of Rs. 5,000/- levied on the Director.
Against this order, appellant is before the Tribunal. Stay application is filed with prayer for dispensation of pre-deposit of duty and penalties imposed.
Appellant’s Contentions: - Appellants have accepted their liability to pay duty on engraving charges which have been held to be includible and were incurred in connection with manufacture of the excisable goods.
However, appellant are contending that equal penalty was not required to be imposed on them since the demand relates to the period 1991 to 1995 prior to the introduction of Section 11AC of Central Excise Act, 1944. Thus, the statutory penalty of 100% equal to the duty evaded could not have been levied.
It was also submitted that there was no intention to evade payment of duty and have pleaded for waiver of the penalty.
Reasoning of Judgment: - The Tribunal has taken up the main appeal dispensing with the pre-deposit of duty and penalties as the case on merits is not contested.
On facts, the Tribunal held that the demand of duty has been rightly made.
With regard to levy of penalty, it was held that since the period involved is 1991 to 1995, the statutory penalty of 100% of duty evaded in terms of Section 11AC as above could not have been invoked as it came into force on 20-9-1996. Reliance was placed on the judgment of the Supreme Court in Brij Mohan v. CIT [120 ITR 1].
It was held that ends of justice will be served if the penalty levied on the company is reduced to Rs. 15,000/-. With regard to penalty imposed on the Director, the Tribunal held that there is nothing on record to show that he had wantonly in disregard of the law indulged in violations. In this view of the matter, benefit of doubt is given to him and the order of levy of penalty on him is set aside. The appeal of the company is partially allowed in the above terms.
Decision: - Appeal of appellant-company partially allowed. Appeal of Director allowed.
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Case: Upadhyay Valves Manufacturere Pvt. Ltd. & Anr v/s CCE, Kolkata-II
Citation: 2010 (102) RLTONLINE 30 (CESTAT-KOL.)
Issue: - The other unit of same manufacturer can act as job worker under Notification 214/86.
Brief Facts: - Appellants are having four units referred to as unit I, unit II, unit III & unit IV. Units I, II & III fall under the jurisdiction of same range/division coming under Kolkata-III Commissionerate. Unit IV comes under a different Commissionerates namely Haldia Commissionerate. Unit II falling under Kolkata-II Commissionerate is having facility for casting. Unit I, III and IV were receiving duty paid inputs like pig iron, iron scrap and took credit under Rules 57AB and later under CENVAT Credit Rules, 2001 and CENVAT Credit Rules, 2004. Unit II were using the said inputs received from other units manufactured CI Valves, CI pipes and pipe fittings. Unit II cleared the said final products without payment of duty to the unit which has supplied the inputs.
Show Cause Notice was issued to the appellant alleging that the Unit II of the Appellant company have wrongly availed the benefit of Notification No. 214/86-CE dated 25.03.1986. It was alleged that unit II and the supplying units being part of the same legal entity, the unit II cannot be treated as a job worker in as much as they were not getting job charges for the alleged job work undertaken by them. The Commissioner passed the impugned order and held that the Appellants were not eligible for benefit of Notification No. 214/86 dated 25.03.1986 and that the final products cleared from unit II should pay duty and that the duty should be paid on value ascertained in terms of Rule 8 of the Central Excise Valuation Rules, 2000. Accordingly, demand along with interest was confirmed and penalty of equal amount under Section 11AC was imposed. Penalty of Rs. 5,00,000/- was also imposed on the Managing Director of the Appellant company.
Appellant’s Contentions: - Appellant submits that they had intimated the jurisdictional Central Excise authorities about the removal of the inputs for the purpose of undertaking job work through their sister unit namely unit II. Rule 57AC (5) (a) of the Central Excise Rules 1944 clearly envisaged removal of inputs on which credit has been taken for the purpose of processing or any other purpose to a job-worker and bringing back the same to the units from which CENVATABLE materials were removed. The fact that job-worker was not a legal entity independent from the supplying units is of no consequence. Appellant submits that the benefit available when the same inputs were removed to a third party cannot be denied when the same is removed to another unit of the same manufacturer, being the same legal entity. Appellant also submits that the provisions of Rule 4 (5) (a) of CENVAT Credit Rules, 2004 also similarly permit such clearances and receiving back the goods without payment of duty from the job working unit.
Appellant also submits that there is no dispute that the inputs sent by unit I, III and IV have been processed by unit II and final products have been received back in the respective units and the said final products have discharged duty liability as per law. Moreover, the director is no more and his Death Certificate is produced.
Respondent’s Contentions: - Respondent submits that the sister unit cannot be considered as a job-worker as no payment of job charges are involved.
Reasoning of Judgment: - Tribunal found that the CENVAT Credit Rules permit “manufacturer” to take credit of duty paid on inputs/capital goods. The four units are different units of the same company and, therefore, they are same manufacturer as a legal entity. However, for the purpose of excise law each of the unit is required to register separately and discharge their duty liability when the goods are removed from the respective units. In fact captive consumption of goods manufactured in any unit used in the very same unit is also liable to duty unless specifically exempted. In other wards, each of the unit is treated, for all practical purposes, as if an independent company for the purpose of levy, exemption, extending of CENVAT Credit etc. in accordance with law.
The Tribunal held that in the present case, a perusal of the order of the Commissioner revealed that it is not in dispute that unit I, III and IV of the Appellant company have received duty paid inputs and taken credit. They have undisputedly removed the same inputs after taking permission of the jurisdictional central excise authorities for the purpose of processing as envisaged under Rule 57AC (5) (a) of the Central Excise Rules, 1944 and later under Rule 4 (5) (a) of the CENVAT Credit Rules, 2004. The reasoning of the Commissioner is that unit II not being a different legal entity from the units I, III and IV cannot be treated as a job-worker and therefore conditions of Notification No. 214/86 have been violated.
The Tribunal held that if the benefit is available for removal of inputs to a third party (different legal entity), there is no legal sanctity for denying the concession to another unit of the same legal entity. The payment of job charges cannot be the criteria for levy or exemption from excise duty. In cases of captive consumption, obviously, no payment is involved and still levy is attracted. On the same analogy the benefit available to a job worker (a different legal entity) cannot be denied when another unit of the manufacturer undertakes similar functions.
Therefore, the Tribunal held that reasoning adopted by the Commissioner holding that the unit II of the Appellant company has not fulfilled the conditions of Notification No. 214/86 could not be agreed with.
Impugned order of the Commissioner set aside.
Decision: - Appeals allowed.
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Case: Jackson Engineering Ltd & Anr v/s CCE,
Citation: 2010 (102) RLTONLINE 95 (CESTAT-AHMD.)
Issue- The credit on inputs, sent directly to customer and fitted to machine at that place, is also allowed.
Brief Facts: - Appellants are engaged in manufacture of electric generating sets classifiable under Heading 85.02. Demand was confirmed against the appellant denying the benefit of Modvat Credit on various inputs viz. control panel, base frame etc., during the period 1996-1998, on the ground that the said inputs were not received by them in their factory premises, but were sent directly at site of the customers and fitted there with the DG sets.
Appellant’s Contention: - Appellant submits that the said inputs are part of the DG sets and the value of the same is already included in the value of the DG sets. The same were declared as inputs in the declaration filed with the Department and the fact of availment of Modvat Credit was duly reflected in RT-12 returns. The Modvatable invoices were also being defaced by their jurisdictional Central Excise Superintendent. It was contended that merely because the inputs were not first brought to the factory to avoid double transportation but were sent directly to the customer’s site, is no ground to deny them the benefit of Modvat Credit. It was further submitted that there is no dispute about the receipt of such inputs by the customers as is evidenced from the certificate issued by them. These certificates read with the purchase order of the customers, confirm the use of the disputed input in the manufacture of final product and as such, there is no justifiable reason to deny the credit. Appellant also assailed the invocation of longer period by the Revenue for raising the demand.
Respondent’s Contention: - Respondent submitted that inasmuch as the goods were never brought to the factory premises, the condition precedent for availing the credit denial of credit by the lower authorities is in accordance with the law.
Reasoning of Judgment: - The Tribunal found that the Commissioner (Appeals) has denied the credit on the sole ground that the inputs were not brought to the factory first and then cleared along with DG sets. The Lower Authorities have noticed the decision of the Larger Bench in M/s Maruti Udyog Ltd v/s Collector of C.E., Delhi [2000 (38) RLT 733 (CEGAT-LB)] wherein it was laid down that the Modvat Credit cannot be denied on the inputs where it is not disputed that such inputs had, in fact, been used in the manufacture of the finished product cleared on payment of duty. Tribunal, while holding so, had relied upon the decision in the case of M/s Mangalore Chemicals & Fertilizers [1991 (55) ELT 437 (SC)].
It was held that there is no dispute about the fact that the control panel, base frame etc. if brought by the appellant to the factory and then cleared with the DG sets, are eligible modvatable input. The Revenue’s objection that the goods were sent directly to the customer’s site without first bringing it to the appellant’s factory, was nothing but a procedural infraction if at all.
The Tribunal noted that the facts in Larger Bench decision in the case of M/s Maruti Udyog Ltd. judgment where akin to the facts in the present case and the said judgments took note of the Board’s circular, laying down the procedure for movement of the inputs which can be sent directly without sending it to the manufacturer’s premises, to save time and expenses. In view of the above, Tribunal held that denial of Modvat Credit to the appellant was not justified. Impugned order set aside on merits.
Decision: - Appeal allowed.
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Service Tax Section
Case: M/s Shubh Timb Steels Limited v/s Union of
Citation: 2010-TIOL-765-HC-P&H-ST
Issue: - Whether levy of service tax on providing of service to any person by any other person by renting of immovable property for business was covered by Entry 49 List II exclusively and not covered by Entry 92C or 97 of List I and thus, was outside the purview of the Central legislature. Further question is as to validity of levy being made retrospectively operative from 1.6.2007.
Brief Facts: - Appellant is a public limited company and owner of commercial immoveable property at Parwanoo, District Solan in the State of
Appellants Contention: - Appellant submits that renting of property was different from sale of goods or transfer of property or conveyance. The transaction is not covered by tax on sale of goods. Providing of service with respect to property was covered by service tax. Other similar transactions of service in relation to property were service of Mandap Keepers (Section 65(105) (m), Pandal Shamiana (Section 65 (105) (zzw), Convention Service (Section 65 (105) (zc), Right to use properties for business purposes under business support service (Section 65 (105) (zzzq). The levy was not covered under Entry 18 not being tax on land or building but only on service element. The tax was connected with land or building but was not on land or building. The levy was also not covered under Entry being not land revenue or by Entry 49 which contemplated direct tax. Service tax was on consideration received for allowing use of the premises. Under Article 246(1), Parliament had exclusive power to make laws in respect of matters covered under List I including residue entry. As regards retrospectively, it has been stated that the amendment was clarificatory. The levy was already provided even under un-amended provisions. The object of the amendment was to overcome the judgment of Delhi High Court against which appeal was pending before the Hon’ble Supreme Court. Judgment of Delhi High Court having not become final, the service providers were required to collect tax even if the same could not be collected on account of the said judgment.
Also submits that in pith and substance, renting of a building was a transaction in respect of land and buildings covered by Entries 18, 45 and 49 of List II in respect of which exclusive jurisdiction to legislate under Article 246(3) was vested in the State Legislature. Leasing was transfer of rights and not a service and was, thus, not covered under Entry 92C of List I. It amounted to conveyance attracting stamp duty. The Delhi High Court upheld the plea of service providers vide judgment dated 18.4.2009 in Home Solution Retail India Limited v. Union of
Respondent Contention: - On the other hand, Respondent submits that scope of Entry 49 List II was limited to direct tax on the property and not on any activity in relation to property. In any case, Entry 49 List II had to be read subject to Entries 92C and 97 of List I. Reliance has been placed, inter-alia, on judgments of Apex Court in Union of India v. Shri Harbhajan Singh Dhillon [1971 (2) SCC 790], Tamil Nadu Kalyana Mandapam Assn. v. Union of India [2004 (5) SCC 632] and All India Federation of Tax Practitioners and others v. Union of India and others [(2007) 7 SCC 527]. It was also submitted that judgment of Delhi High Court did not involve the issue of validity of the levy and only involved question of validity of notification and circular to recover service tax from the lessors of property on the proceeds of renting out of property. After the said judgment, by way of amendment, instead of service in relation to renting of immovable property, the legislature has substituted expression of providing service “of renting of immoveable property.” After the amendment, renting of immoveable property itself was a service covered by the definition of taxable service. Levy of tax on property did not exclude levy of tax on service in relation to property. A tax on one aspect of subject matter did not exclude tax on another aspect of the same subject matter. In view of this settled legal position, there was no conflict in tax covered by Entry 49 List II and tax covered by Entry 92C of List I.
Reasoning of Judgment: - The said tax is destination based consumption tax being not a charge on business but on consumer and is leviable on service provided, thus, value added tax. The services may be property based or performance based. As per scheme under the Constitution discussed, subject of tax falling in power of a particular legislature in one aspect may fall within legislative power of another in other aspect. Same transaction may involve two or more events in different aspects. There is distinction between general subjects of legislation and taxation. If there is any overlapping, doctrine of pith and substance is to be applied and the Court has to look at the substance of the matter. List I has priority over List II though predominance of List I does not prevent State Legislature from dealing matters under List II. Entry 49 List II has been subject matter of various judgments and interpretation given about scope thereof is that it covers tax directly on lands and buildings. Annual value or capital value on land and buildings can be made the basis for determining such tax. Income from property can be taxed under Entry 82 List I. Wealth tax can be levied on capital value of land and building and such tax will fall under Entry 86 read with Entry 97 of List I and not Entry 49 of List II. Tax on capital value of land and building was different from tax on land and building.
Reference was also made to judgments in C. Rajagopalachari v/s Corporation of Madras [AIR 1964 SC 1172] upholding income tax on pension under Entry 82 List I without affecting the scope of Entry 62 List II and in Western India Theatres Limited v. Cantonment Board [AIR 1959 SC 582] upholding entertainment tax on exhibition of film as falling outside. Entry 62 of List II and instead falling under the residue entry of List I. Reference was also made to Guajrat Ambuja Cements Limited v. Union of India [(2005) 4 SCC 214] upholding service tax on transportation services under the residue entry of List I which was outside Entry 56 of List II relating to tax on goods and passengers.
In view of above discussion, it was hold that service tax on service of renting of property is exclusively covered by Entry 49 List II. As already observed, Entry 49 of List II relates to tax on land and building and not any activity relating thereto. Income tax on income from property, wealth tax on capital value of assets including land and building and gift tax on gift of land and building have been upheld. It cannot be held that renting of property did not involve any service as service could only be in relation to property and not by renting of property. Renting of property for commercial purposes is certainly a service and has value for the service receiver. Moreover, the aspect of service element in renting transaction is certainly an independent aspect covered under Entry 92C read with Entry 97 of List I. In any case, subject matter of impugned levy being outside the scope of entry 49 of List II, power of Union Legislature is undoubted.
Judgment: - After listening to the both sides, High Court has come to an aspect of retrospectives. It is well settled that competent legislature can always clarify or validate a law retrospectively. It cannot be held to be harsh or arbitrary. Object of validating law is to rectify the defect in phraseology or lacuna and to effectuate and to carry out the object for which earlier law was enacted.
In any of the above view, Court does not found any ground to set aside giving of retrospective effect to the amendment on which levy was initially provided.
Accordingly, High Court does not found any merit in the writ petition and the same is dismissed.
Comments: - This is far reaching decision. This dispute was prevailing all over
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Case: Sobha Developers Ltd v/s CCE,
Citation: 2010 (20) S.T.R. 357 (Tri. – Bang.)
Issue: - Condonation of delay in filing of appeal on reasonable ground is allowed when the appellant is in regular appeal before the tribunal on the same issue.
Brief Facts: - Applications are filed by the applicant for condonation of delay of 35 days in filling the appeals.
Appellant’s Contentions: - Appellant contended that the delay occurred due to the resignation of the Finance Executive of the appellant’s company with effect from 26.12.2009. It is submitted that the said official who left the company did not bring to the notice of the management, the receipt of the impugned order and the new incumbent who after taking the charge, traced out the documents and filed the appeals. Hence there was a delay of 35 days in filling the appeal.
It is submitted that in identical issue, the company has been litigating before the Tribunal and this Tribunal has already granted unconditional waiver of pre-deposit in similar matters filed by the applicant. It is submitted that all the appeals have been listed for final disposal on 24.06.2010.
Reasoning of Judgment: - The Tribunal held that the applicant has been contesting the self same issue regularly before the Tribunal and this Bench has granted unconditional waiver of pre-deposit of the amount involved in those cases. It was found that the applicant has made out a justifiable cause for condonation of the delay in filling the appeal before the Tribunal. The delay of 35 days in filling the appeals in condoned.
Decision: - COD application allowed.
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Case: Adani Pharmachem (P) Ltd v/s CCE,
Citation: 2010 (20) S. T. R. 386 (Tri. – Ahmd.)
Issue: - Cenvat credit of service tax paid to CHA is allowed.
Brief Facts: - Appellants took Cenvat credit on C & F services paid on the CHA. The appellants are challenging the order of the Comm (A) disallowing the credit on the said service.
Appellant’s Contentions: - Appellants relied upon the decision in the case of CCE,
Respondent’s Contention: - Revenue relied upon the decision in Gujarat Ambuja Cement Ltd. V. CCE,
Reasoning of Judgment: - Following the decision of the Tribunal rendered in case, the appeal filed by the appellant is allowed with consequential relief.
Decision: - Appeal allowed.
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Customs Section
Case: Commr. of Cus. Drawback Recovery Cell v/s
Citation: 2010 (259) E.L.T. 372 (Bom.)
Issue: - The drawback under Section 74 of Custom Act is applicable when the imported goods are exported whereas Section 75 is applicable on use in manufacture of final product.
Brief Facts: - Respondent assessee imported goods and subsequently re-exported them under Section 74 of the Customs Act, 1962. They claimed the benefit of Drawback. The Assistant Commissioner directed the respondents to refund the duty drawback in exercise of powers u/s 75 of the Customs Act, 1962.
In revision, the Joint Secretary to the Government of India set aside the impugned order on the ground that the respondent had imported goods and subsequently re-exported them under Section 74 of the Customs Act, 1962 and thus provisions of Section 75 or the Rules made thereunder were not applicable to the respondent’s case. Section 75 and Rules framed thereunder were independent and govern a separate scheme of drawback which is different in intendment, scope and applicability to the provisions of Section 74.
This petition is filed by Revenue under Article 226 of the Constitution of India against the order passed by the Joint Secretary.
Appellant’s Contentions: - Revenue contend that the Revisional Authority namely Joint Secretary was not justified in setting aside the order holding that the provision of Section 75 of the Customs Act could not have been invoked to deny drawback under Section 74 for want of receipt of Sale proceeds in view of the absence of any such enabling stipulation u/s 74 itself or rule framed there under.
Respondent’s Contentions: - Respondent submitted that the contention of Revenue is contrary to the scheme of the Customs Act. Respondent also submitted that there is a distinction between Section 74 & 75 of the Customs Act. Section 74 of the Customs Act comes into operation when articles are imported, and thereafter re-exported, such article being easily identifiable whereas Section 75 comes into operation when imported materials are used in the manufacture of goods which are exported. Reliance was placed upon the judgment of the Delhi High Court in ABC India Ltd. V. UOI [1992 (61) E.L.T. 205 (Del.)].
Reasoning of Judgment: - The High Court concurred with the contentions made by the Respondent-assessee and also agreed with the judgment given in ABC India Ltd case.
Decision: - Petition dismissed.
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Case: Noel Agritech Ltd v/s Commissioner of Customs,
Citation: 2001 (128) ELT 0227 (Tri. - Chennai)
Issue: - The jurisdiction over 100% EOU is of territorial officers and not of custom officer where the goods are imported. Secondly, for allowing an appeal, the principle of natural justice should be followed.
Brief Facts: - Appellants are 100% EOU and were engaged in the export of cut fresh flowers to various destinations abroad. They sought permission to make clearances to Domestic Tariff Area (DTA) from the concerned Jurisdictional Development Commissioner, which was granted.
It was alleged that the appellant had made such clearances without following the prescribed procedure.
Appellants contended that they approached the Customs Authorities at Mangalore port where the capital goods viz. machinery was imported for installation in their 100% EOU premises at Mangalore which is away from the Mangalore port town area. Since the Customs House did not indicate to them as to what procedure and documentation was required, clearances were effected and in any case cut fresh flowers were not chargeable to any duty in the Central Excise Law and therefore there was no question of a levy of customs duty under Section 3A for the cut fresh flowers removed into the DTA.
The Original Authority confirmed the demand. In appeal, the Commissioner (Appeals) dismissed the stay applications & appeals. Later on in two cases without hearing and in the third case hearing was granted and appeal was dismissed for non-compliance of the pre-deposit amount. Hence, appellants are before the Tribunal. Stay applications are also filed.
Appellant’s Contentions: - Appellants relied on the judgment of Larger Bench in the case of Ferrous Alloys Corporation Ltd [1995 (077) ELT 31] and submitted that the jurisdiction over an Export Oriented Unit was the jurisdiction of the territorial officers where the unit was situated and not the Customs House from where the capital goods were imported and final goods were exported.
Respondent’s Contention: - Revenue submitted that there is a Special Officer appointed as Asst. Commissioner of Customs in charge of EOU in that area who is the competent officer having jurisdiction in this case and therefore the orders have been decided and determined by the jurisdictional officer. The Commissioner (Appeals) has the designation of Commissioner of Central Excise & Customs (Appeals),
Reasoning of Judgment: - The Tribunal held that there is no duty on removals to DTA under the Central Excise & Salt Act, 1944 which is applicable only to such goods which are permitted to be sold in the DTA. Reliance was placed on the case of Siv Industries Ltd [2000 (017) ELT 0281 (S.C.)] wherein it was held that Central Excise levy is only on goods permitted to be sold; for contravention of the procedural irregularities.
It was held that in the present case duty, penalties & Cess have been invoked under the provisions of Customs Act under Section 28 for duty, Section 112 for penalty. Since flowers have been grown in
Further, it was held that since principles of natural justice have been grossly violated in the decision of the Commissioner (Appeals), inasmuch as they have not determined the amounts of pre-deposit and the matter on merits in two cases and in the third case they have summarily rejected the material and the grounds on pre-deposit of duty, it is fit case for de novo consideration by the lower authorities.
Impugned order set aside. Matter remanded for re-determination of duty, if any, as per law.
Decision: - Appeal disposed off.
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SOY P ITTY on 21 Apr, 2016 wrote:
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