TaxTMI 
TaxTMI 
2014 (12) TMI 270
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....rket. These clearances by the Special Economic Zone ('SEZ' for short) unit to the Domestic Tariff Area ('DTA' for short) would be subject to certain conditions imposed by the Government. The question in the petition involves one of chargeability of additional customs duty or popularly referred to as Countervailing Duty ('CVD' for short) on such clearances by the petitioner from its SEZ unit to a DTA. As per the petitioner, in view of the fact that the local manufacturers are not liable to pay any excise duty on manufacture of the said goods by way of exemption notification, no CVD can be collected from the petitioner. The SEZ authorities, however, held a different view. The petitioner, therefore, applied to the said authority for refund of such duty already collected, and for exemption from payment of such duty on the clearances made, where such duty was not so collected. On such application, the said authority passed the impugned order dated 23rd January 2013 holding that the petitioner is not exempt from payment of the CVD. He relied on Section 5A of the Central Excise Act, 1944 to argue that any exemption from payment of excise duty to a local manufacture....
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....a single mechanism through a Central Act was necessary. The SEZ Act was, therefore, enacted with the above objects in mind. The term 'Domestic Tariff Area' was defined in Section 2(i) as to mean the whole of India including the territorial waters and continental shelf, but does not include the areas of the Special Economic Zones. The term 'Special Economic Zone' was defined in Section 2(za) as to mean an economic zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4, including Free Trade and Warehousing Zone, and includes the existing Special Economic Zones. Chapter VI of the SEZ Act pertains to special fiscal provisions for SEZs. Section 26 contained in the said Chapter grants exemptions, drawbacks and concessions to every developer and entrepreneur, such as, exemption from payment of any customs duty, excise duty, etc. Section 30 pertains to domestic clearances by a SEZ unit and reads as under: 30. Domestic clearance by Units.-Subject to the conditions specified in the rules made by the Central Government in this behalf:- (a) any goods removed from a Special ....
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....ntage of the value of the imported article: Provided that in case of any alcoholic liquor for human consumption imported into India, the Central Government may, by notification in the Official Gazette, specify the rate of additional duty having regard to the excise duty for the time being leviable on a like alcoholic liquor produced or manufactured in different States or, if a like alcoholic liquor is not produced or manufactured in any State, then, having regard to the excise duty which would be leviable for the time being in different States on the class or description of alcoholic liquor to which such imported alcoholic liquor belongs. Explanation.- In this sub-section, the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is l....
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....sp; (a) a duty of excise to be called the Central Value Added Tax (CENVAT)] on all excisable goods which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, - (i) in a free trade zone or a special economic zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any ot....
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....place in India, unless specifically so provided. 16. In the present form relevant portion of Section 3(1) and Section 5A(1) read as under: "Section 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall be levied and collected in such manner as may be prescribed, - (a) a duty of excise to be called the Central Value Added Tax (CENVAT)] on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods (excluding goods produced or manufactured in special economic zones) specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. Provided that the duti....
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....able as leviable on such goods when imported. Such DTA clearance by a SEZ unit would, thus, be treated as imports for computation of CVD. We may recall CVD is authorized under Section 3(1) of the Customs Tariff Act providing for a collection of additional duty on any article imported into India. A duty equal to the excise duty for the time being leviable on a like article, if produced or manufactured in India, and if such excise duty on a like article is leviable at any percentage of its value the additional duty, to which the imported article shall be so leviable, shall be calculated at that percentage of the value of the imported article. Explanation to sub-section (1) of Section 3 of the Customs Tariff Act explains the expression 'the excise duty for the time being leviable on a like article if produced or manufactured in India' as to mean the excise duty for the time being in force, which would be leviable on a like article, if produced or manufactured in India, or if a like article is so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the hig....
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....ncing the excise duty leviable, the additional duty can be levied only if on a like article excise duty could be levied. It was observed that the observation in the case of Khandelwal Metal & Engineering Works Vs. Union of India reported in 1985 (20) E.L.T. 222 (S.C.) suggesting that, even if no process of manufacture or production has taken place, the imported articles can as well be subjected to the levy of additional duty, does not appear to be correct. 20. In the case of Lucky Star International Vs. Union of India reported in 2001 (134) E.L.T. 26 (Guj.), the petitioner had challenged a circular issued by the Government of India providing that reprocessing and handling done in Kandla Free Trade Zone or Export Processing Zone not being done in India, the benefits of exemption notifications would not be available. In such case also, the excisable goods produced or manufactured in India other than in Kandla Free Trade Zone or Export Processing Zone were exempted from payment of excise duty. The petitioners contended that they were not claiming exemption of payment of excise duty, but questioned the liability to pay countervailing duty under Section 3 of the Customs Tariff Act, in ....
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....d. It appears that the same was to be omitted from a date to be notified. Such notification has not been issued. Today, therefore, Section 5A of the Central Excise Act, 1944 continues to contain a reference to a Special Economic Zone in the proviso providing that any exemption granted by a notification under Section 5A would not apply to any goods produced or manufactured in Special Economic Zone and brought to any other place in India. This omission to omit the reference to Special Economic Zone from said proviso appears to be a legislative oversight. 23. This, however, would not alter the situation since in the charging Section 3 of the Central Excise Act, 1944 itself a specific exclusion is contained providing that the duty of CENVAT and the additional duty liability would be excluded on goods produced or manufactured in SEZs. Even the proviso to Section 3, which previously required the payment of the duties of excise on goods produced or manufactured in Free Trade Zones or Special Economic Zones and brought to any other place in India, now has been amended, dropping reference to Special Economic Zone. 24. To summarise, before enactment of SEZ Act, by combined reading of Secti....