2000 (5) TMI 72 - AT - Central Excise

Imported zinc ash and additional customs duty exemption under Notification 19/88-denied due to inapplicable Rule 56A/57A input-credit condition.

The dominant issue was whether imported zinc ash qualified for exemption from additional customs duty under Notification No. 19/88, which required that no ... Domestic production of Zinc Ash - exemption under notification 19/88 during the period of import - Additional Customs duty - HELD THAT:- In the present case, the appellants are contending that they satisfied the condition stipulated in the Proviso to Notification No. 19/88 by stating that they had not availed themselves of Modvat credit on the inputs used in the manufacture of the imported consignment of Zinc Ash. This is not the correct understanding of the requirement of this notification. The exemption notification stipulates that 'no credit of duty paid on the inputs used in the manufacture of said goods have been taken under Rule 56A or Rule 57A of Central Excise Rules 1944'. In order to satisfy this condition it has to be shown that the Zinc Ash in question had been manufactured from inputs on which no credit of duty has been taken. The goods were manufactured abroad. It is common knowledge that the Central Excise Act of India and Central Excise Rules of India do not apply to manufacture abroad. Therefore, the appellant's claim that the imported consignments fulfil the requirement of the Notification has no substance or basis in facts. In other words, it is clear from the exemption notification that it exempts only Zinc Ash which is produced from duty paid inputs. In order to satisfy this condition, it is necessary that a manufacturer seeking exemption should show that the Zinc Ash was produced from duty paid inputs. Imported goods are incapable of fulfilling this condition and therefore, could not claim the exemption under notification 19/88. We hold that the Zinc Ash imported by the appellant was not eligible for the exemption under notification No. 19/88. with respect hold that the legal position stated in Chandigarh Zinc and Residue Pvt. Ltd. v. CCE [1995 (2) TMI 203 - CEGAT, NEW DELHI] to be not correct law. The reference is thus answered in favour of the Revenue and appeal of M/s. Priyesh Chemicals & Metals is dismissed. Issues involved: The judgment deals with the eligibility of an importer for exemption from Additional Customs Duty on imported Zinc Ash, based on the conditions specified in Notification No. 19/88.Summary:1. The appellant imported Zinc Ash in 1995, subject to Additional Customs Duty under Section 21 of Customs Tariff Act, 1975, equivalent to Central Excise Duty on domestically produced Zinc Ash. The issue was the appellant's eligibility for exemption under Notification No. 19/88. 2. The proviso to the notification required no credit of duty on inputs used in manufacturing the goods. The appellant's claim for exemption was rejected on this ground.3. The appellant argued that since the domestically produced article was exempt from Central Excise Duty, no equivalent additional duty should be levied on imports. They contended they met the proviso's condition as they did not avail Modvat Credit. The case was referred to a Larger Bench due to conflicting decisions.4. At the hearing, the appellant did not appear but submitted written arguments. The issue was whether the imported goods were liable for additional customs duty.5. The appellant claimed their import met the exemption conditions, citing relevant decisions. The Revenue argued that importers must fulfill exemption conditions, as per legal precedents.6. The Revenue contended that the exemption required no credit of duty on inputs used in manufacturing the goods. The appellant's claim was deemed invalid as the imported goods did not meet this condition.7. The Tribunal agreed with the Revenue, stating that imported goods must satisfy exemption conditions. The appellant's claim that no Modvat Credit was taken did not fulfill the exemption requirement.8. Citing a Bombay High Court case, the Tribunal held that imported goods could not claim exemption if they did not meet the condition of duty paid on inputs. The appellant's appeal was dismissed.Conclusion: The Tribunal ruled that the appellant's imported Zinc Ash was not eligible for exemption under Notification No. 19/88, confirming the decision of the South Regional Bench and dismissing the appeal.