2025 (4) TMI 254 - AT - Customs

Revenue loses appeal on customs duty exemption for imported raw silk fabric under notification 30/2004-CE

Commissioner of Customs (Port), Kolkata Versus M/s. Motisons International Ltd.

CESTAT Kolkata dismissed Revenue's appeal regarding additional customs duty on imported raw silk fabric. The tribunal held that notification amendments ... Imposition of additional customs duty on import of Raw Silk fabric - Applicability of N/N. 30/2004-CE dated 09/07/2004 as amended by N/N. 34/2015-CE dated 17/07/2015 and N/N. 37/2015-CE dated 21/07/2015 - HELD THAT:- The amendment made by N/N. 34/2015-CE dated 17/7/15 provides a condition qua payment of duty on inputs and nonavailment of Cenvat Credit by the manufacturer. Therefore, the sweep of the judgment of SRF Ltd. [2016 (7) TMI 1381 - SC ORDER] is not affected. N/N. 37/2015-CE dated 21.7.15, further relaxes the condition that the nil payment of duty on input would also qualify as payment of duty. Here again too these amendments do not bring about any change to the implication and the meaning as flows out of the apex court’s orders. The Honb'le Supreme Court in the case of AIDEK Tourism Services Pvt. Ltd. [2015 (3) TMI 690 - SUPREME COURT], has held that for the purpose of levy of duty under Section 3 of the Customs Tariff Act, actual production or manufacture of a like article in India is not necessary. It is to be Imagined that article imported has been manufactured or produced in India and it need to be seen what amount of excise duty was leviable thereon. Honb'le Supreme Court held that the importer is to be treated as a manufacturer of the goods and thereafter the amount of Excise duty/Additional Duty that is required to be paid is to be determined. Conclusion - i) The conditions in a notification that cannot be met by the importer should not be enforced. ii) The amendments to N/N. 30/2004-CE did not alter the eligibility for CVD exemption. There are no reason to interfere with the impugned orders and accordingly, the same is sustained - appeal of Revenue dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment pertains to the applicability of Notification No. 30/2004-CE, as amended by Notification Nos. 34/2015-CE and 37/2015-CE, concerning the imposition of additional customs duty (Countervailing Duty or CVD) on the import of Raw Silk fabric. The key question is whether the imported goods are eligible for exemption from CVD under these notifications.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework revolves around the interpretation of Notification No. 30/2004-CE and its subsequent amendments. The Tribunal referenced several legal precedents, including the Supreme Court's decision in the SRF Ltd. case, which established that conditions in a notification that cannot be met by the importer should not be imposed. Additionally, the Tribunal considered previous decisions such as Commissioner of Customs (Import), Nhava Sheva Vs Ashima Dyecot Ltd., which held that if inputs in the imported commodity are not chargeable to excise duty in India, CVD should not be levied.Court's Interpretation and ReasoningThe Tribunal interpreted the notifications in light of the Supreme Court's ruling in SRF Ltd., emphasizing that conditions which cannot be fulfilled by the importer should not be enforced. The Tribunal noted that the amendments introduced by Notifications 34/2015-CE and 37/2015-CE did not alter the essence of the original notification or the Supreme Court's interpretation in SRF Ltd. The Tribunal also highlighted that the amendments allowed for a nil payment of duty on inputs to qualify as payment of duty, thereby not affecting the exemption eligibility.Key Evidence and FindingsThe Tribunal found that the imported Raw Silk fabric was self-assessed by the appellant claiming NIL CVD, as the goods were exempt from excise duty under the relevant notifications. The Tribunal noted that the Supreme Court in SRF Ltd. had set a precedent that supported the appellant's claim for exemption, as the conditions of the notification could not be satisfied by the importer.Application of Law to FactsThe Tribunal applied the legal principles established in SRF Ltd. to the facts of the case, determining that the appellant was eligible for the CVD exemption. The Tribunal reasoned that since the basic raw material, Raw Silk, was not chargeable to excise duty in India, the appellant could not avail CENVAT credit on inputs, thus justifying the NIL CVD claim.Treatment of Competing ArgumentsThe Tribunal considered the Departmental Representative's arguments but found them unpersuasive in light of the established legal precedents. The Tribunal noted that the Revenue's appeal to the Supreme Court on the subject issue was admitted without a stay, indicating the Supreme Court's agreement with the prevailing interpretation favoring the respondent.ConclusionsThe Tribunal concluded that the appellant was entitled to the benefit of NIL CVD under the relevant notifications. The Tribunal emphasized that the conditions which could not be complied with should not be imposed on the importer, aligning with the Supreme Court's interpretation in SRF Ltd.SIGNIFICANT HOLDINGSThe Tribunal upheld the principle established in SRF Ltd. that conditions in a notification that cannot be met by the importer should not be enforced. The Tribunal affirmed that the amendments to Notification No. 30/2004-CE did not alter the eligibility for CVD exemption. The Tribunal referenced the Supreme Court's ruling in AIDEK Tourism Services Pvt. Ltd., which emphasized that the rate of duty should be equivalent to what an Indian manufacturer would pay under the Excise Act. The Tribunal concluded that the appeals filed by the Revenue were to be dismissed, thereby sustaining the impugned orders.The Tribunal's decision underscores the importance of adhering to established legal precedents and ensuring that conditions imposed by notifications are reasonable and capable of being fulfilled by importers. This judgment reinforces the principle of providing a level playing field for importers and domestic manufacturers regarding duty exemptions.