1992 (8) TMI 156 - SC - Customs

Importers can claim concessional CVD under Section 8 and Rule 192 if buyer has L-6/C.T.2 licence and Chapter X complied

THERMAX PRIVATE LTD. Versus COLLECTOR OF CUSTOMS

SC held that Chapter X procedures and Rule 192 concessions under Section 8/CVD are not inapplicable to importers merely because they are not ... Interpretation of similar notifications issued under Section 8 - claimed exemption from the additional duty of customs leviable under Section 3(1) - Applicability of Chapter X procedures to importers​​​​​​​ - Rejection for assessee’s claim for concession - assessee imported goods described as “Sanyo Single Effect Chiller” from Japan for the purpose of using the same for refrigeration/air-conditioning of the factories of Indian Rayon Corporation at Veraval and Nirlon Synthetics Fibre and Chemicals Ltd. - Held that:- The assessee’s claim for concession has, however, been rejected not on the ground that the second of the above conditions has not been fulfilled but on the broader ground that the procedure of Chapter X is designed to facilitate clearances only for the purposes of central excise and that the said procedure cannot be fulfilled at all in the case of an importer. In other words, the view was that the second condition was such that it was attracted only for purposes of central excise and could not at all be invoked to claim a concession in CVD. It is the correctness or otherwise of this conclusion that has to be determined in these appeals. It will at once be seen that there is nothing in the scheme of the rule which makes it inapplicable to an importer of goods. The assessee here has imported the goods and is selling them for use in a factory, a use which qualifies for the concession under the Section 8 notifications. Since the concession under Rule 192 turns only on the nature and use to which the goods are put by the user or purchaser thereof and on whether he has gone through the procedure outlined in Chapter X, it would not be correct to deny it to a supplier of such goods on the ground that he is an importer and not a manufacturer. That aspect is provided for by Section 3(1) of C.T. Act which specifically mandates that the CVD will be equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called upon to pay in that event. Thus, if the person using the goods is entitled to the remission, the importer will be entitled to say that the CVD should only be the amount of concessional duty and, if he has paid more, will be entitled to ask for a refund. In our opinion, the Tribunal was in error in holding that the assessees could not get a refund because the procedure of Chapter X of the rules is inapplicable to importers as such. The assessee is not entitled to the concession claimed in both these appeals. Its entitlement will depend on whether the purchaser is the holder of an L-6 licence (or C.T. 2 certificate) or not. The Tribunal has pointed out that the goods were supplied by the assessee to Indian Rayon Corporation and M/s. Nirlon Synthetics Fibre and Chemicals Ltd., of which the latter was the holder of an L-6 licence. The position in regard to the former is not known. The grant of concession in respect of the former by the Collector (Appeals) in the first appeal is, therefore, correct and is upheld. So far as the other appeal is concerned, the assessee produced no material to show that the “beneficiary” factory was eligible for the concession under Rule 192. The benefit of such concession to the assessee must therefore be held to have been rightly denied in that appeal. Issues Involved:1. Interpretation of notifications under Section 8 of the Central Excises & Salt Act, 1944.2. Applicability of Chapter X procedures to importers.3. Eligibility for concessional rates under Notification Nos. 63/85 and 93/76.4. Additional duty of customs (CVD) calculation and applicability of exemptions.5. Procedural compliance for claiming exemptions.6. Fresh contention regarding the highest duty rate under Section 3(1) Explanation of the C.T. Act.Detailed Analysis:1. Interpretation of Notifications under Section 8 of the Central Excises & Salt Act, 1944:The case centers on the interpretation of two notifications issued under Section 8 of the Central Excises & Salt Act, 1944, which provide concessional rates for certain goods. The assessee imported 'Sanyo Single Effect Chiller' and sought exemption from additional duty of customs (CVD) based on these notifications. The court examined the language of these notifications and their applicability to imported goods.2. Applicability of Chapter X Procedures to Importers:The assessee's claim for a concessional rate was rejected on the ground that the Chapter X procedure of the Central Excise Rules, 1944, could not be applied to importers. The court analyzed Rule 192 and related provisions, concluding that the procedure is not inherently inapplicable to importers. The court emphasized that the benefit of Chapter X could be claimed by any person, not necessarily a manufacturer, provided they fulfill the specified conditions.3. Eligibility for Concessional Rates under Notification Nos. 63/85 and 93/76:The notifications in question provide concessional rates for specific uses of goods, such as in factories, hospitals, and other specified places. The court found that the imported chillers used in a factory met the first condition for concessional rates. However, the second condition, compliance with Chapter X procedures, was disputed. The court held that the procedure could be followed by importers, thus making them eligible for the concession.4. Additional Duty of Customs (CVD) Calculation and Applicability of Exemptions:Section 3(1) of the Customs Tariff Act mandates that imported goods are liable to additional duty equal to the excise duty on like goods produced in India. The court noted that if the goods are entitled to remission under Rule 192, the importer can claim a concessional rate for CVD. The court rejected the Tribunal's view that Chapter X procedures could not be applied to importers, affirming that importers could claim the same concessions as domestic manufacturers.5. Procedural Compliance for Claiming Exemptions:The court examined the procedural requirements under Chapter X, including the need for a licence (Form L-6) or a certificate (Form CT-2). The court emphasized that the benefit of the exemption should be granted if the intended use of the material can be established by the importer or other evidence. The court found that the assessee's entitlement depended on whether the purchaser held the necessary licence or certificate.6. Fresh Contention Regarding the Highest Duty Rate under Section 3(1) Explanation of the C.T. Act:The Revenue raised a new contention that the CVD should be calculated at the highest rate of 80% due to the varied rates applicable to different parts of refrigerating and air-conditioning equipment. The court declined to entertain this new argument, noting it was not raised earlier. The court also found the contention unfounded, as the goods in question consistently fell under a specific category with a single rate of duty.Conclusion:The court allowed the appeal related to the order dated 16-4-1985, granting the assessee the claimed concession. However, the second appeal was dismissed due to a lack of evidence showing the 'beneficiary' factory's eligibility for the concession. The court rejected the Revenue's fresh contention regarding the highest duty rate, affirming the consistent application of the concessional rate for the goods in question.