2011 (3) TMI 833 - AT - Customs

EOU not liable for NCCD, SHE Cess, and Education Cess on imported oil.

COMMISSIONER OF CUSTOMS, JAMNAGAR Versus RELIANCE INDUSTRIES LTD.

The Tribunal held that a 100% Export-Oriented Unit (EOU) was not liable to pay National Calamity Contingent Duty (NCCD), Secondary & Higher Education ... Import - 100% EOU - whether the respondents are liable to pay the National Calamity Contingent Duty, SHE and Education Cess on the various consignments of imported crude petroleum oil - 100% EOU clear warehoused goods for home consumption - After payment of duty at the time of filing bill of entry for warehouse “Under Protest” - Held that:- following the law declared by the Larger Bench decision in the case of of CCE, Jaipur v. Paras Fab International - (2010 -TMI - 77759 - CESTAT, NEW DELHI), the fact of payment of duty at the time of filing bill of entry for warehouse “Under Protest” will also not change the legal position that 100% EOU is required to pay duty only at the time of clearances of warehoused goods for home consumption. - By following the law declared by the Larger Bench decision in the case of Paras Fab International that 100% EOU is not required to discharge any duty liability in respect of the imported goods warehoused in their premises and used for the purpose of manufacturing in-bond, we hold that respondents were not required to pay any NCCD, Education Cess and SHE Cess. Issues Involved:1. Liability of National Calamity Contingent Duty (NCCD), Secondary & Higher Education Cess (SHE Cess), and Education Cess on imported crude petroleum oil by a 100% Export-Oriented Unit (EOU).2. Jurisdiction to raise demand for short levy or non-levy of duties.Detailed Analysis:1. Liability of NCCD, SHE Cess, and Education Cess:The core question in the appeal was whether the respondents, being a 100% EOU, were liable to pay NCCD, SHE Cess, and Education Cess on imported crude petroleum oil. The respondents argued that since they were exempt from basic customs duty under Notification No. 52/2003-Cus., they should also be exempt from NCCD and other cesses. They cited the Tribunal's decision in Toyota Kirloskar Motor Pvt. Limited v. CCE, Bangalore to support their contention that exemption from basic customs duty should extend to NCCD. Additionally, they argued that the goods were warehoused and not cleared for home consumption, thus no duty was payable.The Commissioner (Appeals) held that NCCD leviable under Section 134 of the Finance Act, 2003, was not specified in the first schedule to the Customs Tariff Act, 1975, nor levied under Section 3 of the Customs Tariff Act, 1975. Therefore, the exemption granted from customs duty did not apply to NCCD and other cesses. However, the Commissioner (Appeals) also noted that the respondents had not cleared the goods for home consumption, which meant no duty was payable under Section 68 of the Customs Act, 1962.2. Jurisdiction to Raise Demand:The Commissioner (Appeals) accepted the respondents' argument that the Assistant Commissioner of Jamnagar, who confirmed the demand, lacked jurisdiction. The proper officer to raise the demand was the Assistant Commissioner of Central Excise, Rajkot, who had administrative control over the 100% EOU. This was based on the Board Circular No. 31/2003-Cus., which stated that administrative control over all EOUs should be with the jurisdictional Commissioner of Central Excise. The Tribunal's Larger Bench decision in Ferro Alloys Corporation Limited v. CCE (Appeals) Bhubaneshwar supported this view, emphasizing that jurisdiction for raising demands lies with the proper officer having jurisdiction over the 100% EOU, not the Customs House where the goods were initially assessed.Tribunal's Findings:The Tribunal upheld the Commissioner (Appeals)'s decision, agreeing that the jurisdiction to raise any demand for short levy or non-levy lies with the Central Excise authorities having jurisdiction over the 100% EOU. The Tribunal also noted that the payment of NCCD and other cesses under protest at the Sikka Port did not change the legal position that the 100% EOU is required to pay duty only at the time of clearance for home consumption.The Tribunal further referenced the Larger Bench decision in Paras Fab International, which stated that the entire premises of a 100% EOU should be treated as a warehouse, and goods used for manufacturing in-bond cannot be treated as removed for home consumption. Thus, no duty was payable on such goods.Conclusion:The Tribunal concluded that the respondents were not required to pay NCCD, SHE Cess, and Education Cess on the imported crude petroleum oil. The appeals filed by the Revenue were rejected, and the cross objections filed by the respondents were disposed of accordingly.(Pronounced in the Court on 17-3-2011)