2013 (12) TMI 1400 - AT - Customs

DEPB Scheme Goods Not Exempt from Duty; Education Cess Liability Upheld

The Tribunal held that goods cleared under the DEPB Scheme were not exempt from duty payment, as indicated by the payment of duty using the DEPB Scrip. ... Education cess pre-deposit - pre-deposit waiver - DEPB scheme not an exemptionEducation cess pre-deposit - DEPB scheme not an exemption - pre-deposit waiver - Whether pre-deposit of education cess could be waived where duty on goods was discharged by debit entry in a DEPB scrip on the basis that such goods were exempt from basic customs duty. - HELD THAT: - The Tribunal examined the contention that goods for which basic customs duty and CVD were claimed to be exempt (by virtue of clearance under the DEPB scheme) would not attract education cess and therefore the pre-deposit of education cess should be waived. The Revenue relied on a decision of the Hon'ble Madras High Court in Tanfac Industries Ltd. which held that goods cleared under the DEPB scheme cannot be treated as exempted goods. Applying that principle, the Tribunal observed that in the present case duty liability was discharged by making a debit entry in the DEPB scrip and therefore the goods cannot be treated as duty-exempt for the purpose of education cess. On this prima facie view, the Tribunal found no merit in the applicant's plea for waiver of the pre-deposit of education cess and directed payment of the specified pre-deposit within a time frame. [Paras 4]Application for waiver of pre-deposit of education cess refused; applicant directed to make the pre-deposit of Rs. 3,53,321/- within four weeks and report compliance.Final Conclusion: The plea for waiver of pre-deposit of education cess was rejected on the ground that clearance under the DEPB scheme does not amount to exemption from duty; the applicant was directed to pay the specified pre-deposit and report compliance. Issues:Waiver of pre-deposit of duty in respect of Education Cess on goods cleared under DEPB Scheme.Analysis:The applicant sought a waiver of pre-deposit of duty amounting to Rs. 3,53,321, contending that since the Basic Customs Duty and CVD on the goods were exempted, they should not be liable to pay Education Cess. However, the Revenue argued that the goods were not exempted from the payment of basic customs duty and that duty was payable, including Education Cess. The Revenue relied on a decision of the Hon'ble Madras High Court in a similar case to support their stance.The Tribunal observed that the Hon'ble Madras High Court, in the case referred to by the Revenue, held that goods cleared under the DEPB Scheme cannot be considered as exempted goods. In the present case, duty was paid by debiting the DEPB Scrip, indicating that the duty was indeed payable. Consequently, the Tribunal found no merit in the applicant's argument that the goods were exempted from duty payment. Therefore, the Tribunal concluded that there was no basis to waive the pre-deposit of Education Cess in relation to the duty paid on the goods. As a result, the applicant was directed to make the pre-deposit of Rs. 3,53,321 within four weeks and report compliance by a specified date.This judgment underscores the importance of analyzing the specific circumstances of duty payment and the applicability of exemptions in cases involving the waiver of pre-deposit of duty. The decision highlights the Tribunal's reliance on precedent and legal principles to determine the liability of the applicant in relation to Education Cess on goods cleared under the DEPB Scheme.