2014 (8) TMI 315 - AT - Customs

Customs Tribunal: SAD Exemption for Re-imported Goods under Notification No.94/96-Cus

The Tribunal interpreted Notification No.94/96-Cus to include exemption from both Basic Customs Duty and CVD for re-imported goods, granting SAD exemption ... SAD - Re-import of goods cleared outside India - Whether goods which have been re-imported and cleared availing the benefit of Notification No.94/96-Cus have to be held as having suffered additional customs duty leviable under Section 3 of Central Tariff Act and therefore are leviable to SAD leviable under Section 3A of Customs Tariff Act or not - Held that:- It is evident from the body of the Notification No.94/96-Cus that though exemption is issued under Notification No.25 of the Customs Act, 1962 but it exempts Basic Customs Duty under first schedule to the Customs Tariff Act, Additional Duty (CVD) leviable under Section 3 of the Customs Tariff Act and Special Duty of Customs under Section 68(1) of the Finance Act, 1996. It will not be correct, as held by first appellate authority that duty exempted under Notification No.94/96-Cus represents only Basic Customs Duty but will represent both the Basic Customs Duty and Additional Duty of Customs (CVD). What is required to be paid, as per Sr.No.2A of the Table to Notification No.94/96-Cus will also represent CVD though the measure would be equivalent to the Central Excise duty leviable on the re-imported goods at the time of import. The additional duty of Customs (CVD) is thus not wholly exempted under Notification No.94/96-Cus. Revenue neutrality - Held that:- Even if SAD is paid by the appellant, the same will be available as refund to the appellant if the imported goods are sold as such on payment of sales tax. In the event of the re-imported goods are brought to the appellant’s premises, then also CENVAT Credit is admissible. The demand of duty upon the appellant is thus not sustainable on revenue neutrality - Decided in favour of assessee. Issues involved:- Interpretation of Notification No.94/96-Cus regarding exemption on re-imported goods- Whether Special Additional Duty (SAD) is payable on goods cleared under Notification No.94/96-Cus- Applicability of revenue neutrality in not demanding SADIssue 1: Interpretation of Notification No.94/96-Cus regarding exemption on re-imported goods:The appeal involved the interpretation of Notification No.94/96-Cus regarding the exemption on re-imported goods. The appellant exported insulators to China, which were rejected and re-imported for repairs. The appellant claimed exemption under Notification No.94/96-Cus but faced a dispute on whether the exemption covers only Basic Customs Duty or includes Additional Duty of Customs (CVD) as well. The appellant argued that the duty paid in excess represents CVD and, therefore, SAD exemption should apply. The Tribunal analyzed the text of the notification and relevant case laws to determine that the duty exempted under the notification includes both Basic Customs Duty and CVD. The Tribunal referred to a judgment from CESTAT Mumbai to support its interpretation, emphasizing that the notification exempts re-imported goods from Customs duty, not Central Excise duty. Consequently, the Tribunal held that SAD exemption applies to the appellant under the circumstances.Issue 2: Whether Special Additional Duty (SAD) is payable on goods cleared under Notification No.94/96-Cus:The central issue revolved around whether SAD is required to be paid on the re-import of goods cleared under Notification No.94/96-Cus. The Revenue contended that the duties exempted under the notification represent only Basic Customs Duty, implying that SAD would still be leviable. However, the appellant argued for SAD exemption based on the specific provisions of the notification and the measure of duty paid. The Tribunal carefully examined the provisions of the notification, highlighting that the duty exempted encompasses both Basic Customs Duty and CVD. By considering the legal framework and case precedents, the Tribunal concluded that the appellant is entitled to SAD exemption as the duty paid in excess under the notification includes CVD. Therefore, the Tribunal ruled in favor of the appellant on this issue.Issue 3: Applicability of revenue neutrality in not demanding SAD:Regarding the applicability of revenue neutrality in not demanding SAD, the Tribunal observed that even if SAD was paid by the appellant, it would be refundable upon certain conditions. The Tribunal noted that if the re-imported goods were sold or brought to the appellant's premises, provisions like CENVAT Credit would apply, ensuring that the duty demand on the appellant was not sustainable. Based on the principle of revenue neutrality, the Tribunal determined that the appeal filed by the appellant should be allowed. Consequently, the Tribunal granted relief to the appellant on the grounds of revenue neutrality and directed in favor of the appellant in the operative part of the order pronounced in court.This detailed analysis of the judgment from the Appellate Tribunal CESTAT Ahmedabad highlights the complex legal issues surrounding the interpretation of Notification No.94/96-Cus and the applicability of Special Additional Duty (SAD) on re-imported goods cleared under the said notification.