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

SC held that Chapter X procedures and Rule 192 concessions under Section 8/CVD are not inapplicable to importers merely because they are not ... Exemption under notifications issued under Rule 8 - additional duty / countervailing duty under Section 3(1) of the Customs Tariff Act - Chapter X procedure for remission of excise duty (Rule 192) - remission of excise duty for specified industrial use - Explanation to Section 3(1) - highest rate ruleChapter X procedure for remission of excise duty (Rule 192) - exemption under notifications issued under Rule 8 - additional duty / countervailing duty under Section 3(1) of the Customs Tariff Act - Whether an importer can claim the concession in CVD under a Rule 8 notification by relying on the Chapter X procedure and the purchaser's compliance therewith - HELD THAT: - The Court held that Chapter X (in particular Rule 192) is not confined to manufacturers and its terms apply to any person wishing to obtain remission on excisable goods used in a specified industrial process. Rule 192 requires the user/purchaser to satisfy the Collector as to intended use, premises, storage and to enter bonds or obtain licences or certificates (Form L-6 or CT-2) where appropriate. Section 3(1) of the C.T. Act mandates that CVD be assessed by reference to the excise duty leviable on a like article if produced in India; therefore the correct approach is to imagine the goods as manufactured in India and apply the excise concession available to the user. Consequently an importer-supplier is entitled to the concessional CVD if the purchaser who uses the goods fulfils the Chapter X procedural requirements; it is erroneous to deny refund solely on the ground that Chapter X procedure cannot be invoked by an importer as such. The Court agreed with the Board's administrative view that where intended use can be established by the importer or other evidence, the exemption/concession should not be denied merely because the procedural condition cannot be literally complied with by an imported consignment. [Paras 11]An importer can claim CVD concession under a Rule 8 notification provided the purchaser/user fulfils the Chapter X requirements (or the intended use is otherwise established); the Tribunal erred in holding Chapter X inapplicable to importers.Remission of excise duty for specified industrial use - Chapter X procedure for remission of excise duty (Rule 192) - Whether the assessee was entitled to the refund/concession in the two appeals on the facts (i.e., whether the purchasers held the requisite licence/certificate) - HELD THAT: - The Court examined the factual matrix as found by the Tribunal. It was accepted that one purchaser (Nirlon) was the holder of an L-6 licence and therefore the Collector (Appeals) was correct in allowing the concession in that appeal. In respect of the other supply to Indian Rayon Corporation, no material was produced to show that the beneficiary factory satisfied the Rule 192 requirements or held an L-6/CT-2; consequently the claim for concession in that appeal was rightly denied. The entitlement of the importer depends on the purchaser's fulfilment of the statutory/procedural conditions or on other evidence establishing intended use. [Paras 13]Allow the appeal in respect of the supply where the purchaser held the L-6 licence; deny the refund where no material established the purchaser's eligibility under Chapter X.Explanation to Section 3(1) - highest rate rule - additional duty / countervailing duty under Section 3(1) of the Customs Tariff Act - Whether, despite the notification applying to the goods in question, the Explanation to Section 3(1) requires imposition of CVD at the highest rate (80%) because Item 29A covers various parts attracting different rates - HELD THAT: - The Revenue's contention that the Explanation to Section 3(1) mandates levy of CVD at the highest rate (80%) was rejected. The Court observed that the goods in issue were not of 'exactly the same description' as others attracting different rates; the notification specifically classified the goods under S. No. 8(3) with a single effective rate for that category. The Explanation applies only where identical goods attract differing rates. Moreover, the point was not pressed earlier before the Tribunal; in any event, on merits the higher-duty contention fails. [Paras 14]The Explanation to Section 3(1) does not attract the higher rate of 80% for the goods in question; the revenue's contention on this ground is rejected.Final Conclusion: The appeal arising from the Tribunal's order quashed in part: the claim for refund/concession is allowed in respect of the supply to the purchaser holding an L-6 licence; the other claim is dismissed for lack of material establishing the purchaser's eligibility under Chapter X; the Revenue's contention under the Explanation to Section 3(1) is rejected; one appeal allowed and the other dismissed (without costs). 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.