2014 (8) TMI 290 - HC - Customs

Court rules against imposition of 1% Extra Duty Deposit on imports

EI. Dupont India Pvt. Ltd. Versus The Union of India (Through The Secretary) Ministry of Finance

The court ruled in favor of the Petitioner, stating that the imposition of 1% Extra Duty Deposit (EDD) on their imports was unjustified. The Respondents ... Demand of 1% loading of Extra Duty Deposit (EDD) on bills of entry - Held that:- There is a SVB order passed by the Deputy Commissioner of Customs, New Delhi dated 23rd June 2014. In view of the said order, at least prima facie, Respondent Nos.4 and 5 were not justified in loading 1% EDD on the imports made by the Petitioner. In any event and even if we were to hold that the SVB order dated 23rd June 2014 was not a fresh order and there was no renewal of the earlier SVB order dated 21st February 2011, even then, by virtue of the Circular dated 23rd February 2001, and particularly clause 9 thereof, in the facts of the present case, Respondent Nos.4 and 5 were not justified in loading 1% EDD on the imports made by the Petitioner. The said clause categorically states that where the provisional assessment is being resorted to, the investigation and finalization of the assessment must be completed within four months from the date of reply and if no decision is taken within the said period, the extra duty deposit will be discontinued. Even if we assume that the order passed by the Deputy Commissioner, SVB, New Delhi dated 23rd June 2014 does not amount to a fresh SVB order and neither does it renew an earlier SVB order dated 21st February 2011, by virtue of the said circular, no EDD could have been loaded on the imports made by the Petitioner. However, in view of the fact that the Appeal before the CESTAT, Delhi is pending, we do not think it would be a fit case to entitle the Petitioner to clear their imports without in any way securing 1% EDD that is being loaded on their imports. - Petitioner will have to furnish a Bond in favour of the Respondents at the time of clearance to secure the difference between the duty demanded and the Quantum of Extra Duty Deposit. - Decided in favour of assessee. Issues Involved:1. Legality of 1% Extra Duty Deposit (EDD) imposed on the imports by the Petitioner.2. Validity of actions by Respondent Nos. 4 and 5 in withholding out of charge orders unless 1% EDD is paid.3. Compliance with the Special Valuation Branch (SVB) orders and Circular No. 11/2001-Cus dated 23rd February 2001.4. Impact of pending appeal before CESTAT on the imposition of 1% EDD.Detailed Analysis:1. Legality of 1% Extra Duty Deposit (EDD) Imposed on the Imports by the Petitioner:The Petitioner challenged the imposition of 1% EDD on their imports, arguing that it was arbitrary and contrary to the SVB order dated 23rd June 2014 and Circular No. 11/2001-Cus. The Petitioner contended that once an SVB order is passed, or if no decision is taken within four months from the date of filing a reply to the questionnaire, 1% EDD cannot be recovered. This position was supported by the judgment in M/s. Skoda Auto India Pvt Ltd v/s Union of India, 2010 (255) ELT 63 (Bom).2. Validity of Actions by Respondent Nos. 4 and 5 in Withholding Out of Charge Orders Unless 1% EDD is Paid:Respondent Nos. 4 and 5 withheld out of charge orders for the Petitioner's imports unless 1% EDD was paid. The Petitioner argued that this action was illegal as it disregarded the SVB order dated 23rd June 2014, which did not justify such a deposit. The court found that Respondent Nos. 4 and 5 were not justified in imposing 1% EDD, especially given the existing SVB order and the provisions of Circular No. 11/2001-Cus.3. Compliance with the Special Valuation Branch (SVB) Orders and Circular No. 11/2001-Cus Dated 23rd February 2001:The Petitioner highlighted that the SVB orders clearly stated that any order would be in force for three years unless the facts changed. The orders also allowed for appeals under Section 128 of the Customs Act. The relevant SVB order dated 23rd June 2014 was brought to the notice of Respondent Nos. 4 and 5, but they continued to impose 1% EDD. The court noted that even if the SVB order dated 23rd June 2014 was not a fresh order, the Circular dated 23rd February 2001 mandated that if no decision was taken within four months, the EDD should be discontinued.4. Impact of Pending Appeal Before CESTAT on the Imposition of 1% EDD:The Respondents justified the imposition of 1% EDD based on the pending appeal before CESTAT, Delhi, against the order of the Commissioner (Appeals) dated 31st October 2011. The court acknowledged the pending appeal but emphasized that the lack of a stay order from CESTAT meant that the Respondents' actions were not justified. However, the court decided that while the appeal was pending, the Petitioner should furnish a bond to secure the difference between the duty demanded and the EDD.Court's Order:1. The Respondents shall not demand 1% EDD on the Petitioner's imports.2. The Petitioner must furnish a bond to secure the difference between the duty demanded and the EDD.3. The Respondents must clear the goods upon compliance with the bond requirement.4. The order is without prejudice to the rights and contentions of the parties in the pending appeal before CESTAT.5. The CESTAT may expedite the hearing of the pending appeal upon request from either party.Conclusion:The court found the imposition of 1% EDD on the Petitioner's imports to be unjustified based on the SVB order and the relevant circular. The Petitioner was required to furnish a bond to secure the difference while the appeal before CESTAT was pending. The writ petition was disposed of accordingly.