TaxTMI 
TaxTMI 
TaxTMI 
2006 (11) TMI 80
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....g any processing, in the very same drums in which the raw materials were received, after replacing the outer labels..." A.2The appellants had affixed a label on the drums of the Ascorbic Acid (bottom page 245 of Vol. II) to comply with the labeling requirements specified in Rule 96 of the Drugs and Cosmetics Rules, 1945 (pages 531-535 of Vol. III). A.3On the TMBA and Anilino compound also cleared from the factory, the appellants affixed their own labels similar to the one affixed on Ascorbic Acid. The activity of relabelling amounts to manufacture in terms of EXIM policy. B.1Even if all the contentions of the department is assumed to be correct, no duty is payable since the activity of relabeling amounts to 'manufacture'. B.2The EOU scheme is integrally connected to the EXIM Policy framed by the DGFT, Ministry of Commerce. In fact, customs and excise provisions are made to implement the scheme made out in EXIM Policy. Therefore, definition of 'manufacture' as contained in the Exim Policy-1997-02, is useful which is extracted below for ready reference : "3.31"Manufacture" means to make, produce, fabricate, assemble process or bring into existence, by hand or by machine, a new ....
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....14" x 18" or 16"x20" Fibre Drum : Outside varnished with paper pasted on to and   bottom HDPE Drum : 14.5" x 22.5" Seal : Wire seal with Tonira's logo on lead seal C.2Even otherwise, page 474, - 492 of Vol. III are copies of packing lists accompanying the imported Ascorbic Acid. Bottom pages 247 - 248 of Vol. III are invoice for purchase of packing material showing size of fibre drum which is used for packing of finished product. C.3The appellants had produced 12 photographs numbered from A to K before the Hon'ble CESTAT, to highlight the difference between the import packing and the export packing. C.4Batch no. 64 of Ascorbic Acid was in process when the department visited the factory on 4-1-2001. Page no. 434 of Vol. III is a document giving details of drums containing lying in packing department for the purpose of final packing. The panchas have signed this document. In other words, there is contemporaneous evidence to show that at least packing was indeed on the imported Ascorbic Acid - FCC grade IV. C.5From the above, it would be clear that the imported Ascorbic Acid was at least repacked in drums of sizes which were different from the import ....
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.... months. This is sufficient to prove that some processing was indeed carried out by the appellants. G.1The appellants imported Ascorbic Acid - FCC grade IV having life of 24 months. Page 496 - Vol. III is an illustrative test certificate issued by the Chinese exporter for Ascorbic Acid - FCC grade IV. The certificate enlists a table. Just before the table, the following expression appears: "Test date: July, 2001 Expiration date: July 2003". Further, at the bottom of the certificate, the following expression appears : "Mfg. Dt. July, 2001 ; Expiry dt: July 2003". G.2Undisputedly, the appellants have sold IP grade of Ascorbic Acid. Pages 438-439 of Vol.-III is illustrative copy of purchase order placed by major customer namely M/s. Natural Products, Baroda. The Purchase order mentions that the Ascorbic Acid should be IP grade. G.3Schedule "P" to Drugs and Cosmetics Act, 1940 stipulates the life period of drugs. Serial no. 18 (at page 573 of Vol. III) states that life of Vitamin C should be 48 months. G.4In other words, the Ascorbic Acid sold by the appellants had life of 48 months. G.5Some processing was indeed done on the imported Ascorbic Acid. Otherwise, there was no way in w....
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....ve been set out in detail which conclusively prove that the appellants had indeed engaged itself in the manufacture of (i) Ascorbic acid - IP grade; and (ii) 345 TMBA (bromo free) and Anilino. 1.2The appellants also rely upon FDA audits carried out from time to time. FDA audit reports for the period 1997 to 2002 have been attached as Annexure 54 at page 447 - 463 in Vol. III. 1.3 Hence the allegations of non-manufacture are baseless. In the present case, rate of duty prevailing at the time of payment of duty is relevant in view of section 15(1)(c). At the time of payment of duty, rate of Anti-dumping duty is nil in view of Section 9A(2A). J.1The imported raw materials were warehoused. Clause (a) of Section 15(1) of the Customs Act, 1962 is not applicable. Clause (b) of Section 15(1) is not applicable since it is very case of the department that goods have not been cleared from a warehouse under Section 68. Hence, the residuary clause namely clause (c) of Section 15 (1) is applicable. J.2In the present case, the date of payment of duty will be the date of show cause notice or impugned order, being the date on which duty ought to be paid. Section 9A (2A) introduced on 11-5-2001 ....
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....toms Tariff Act, 1975 relates to calculation of value or levy of Countervailing Duty (CVD) as it stood prior to 1-3-2002, reads as under : "(2) For the purpose of calculating under this section, the additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of- (i) the value of the imported article determined under sub-section (1) of the said section 14 or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under Section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs." K.4The said Section 3(2) as it stood amended by Finance Act, 2002 reads as under : "(2)For the purpose of calculating under this section, the additional duty on any imported articles, where such duty is leviable at any percentage of its ....
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....icle, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 or section 3 of this Act, be the aggregate of - (i) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs; and (iii) additional duty of customs chargeable on that article under section 3 of this Act." K.8Section 3A(2) as amended by Finance Act, 2003 reads as under : "(2) For the purpose of calculating under this section additional duty on any imported article, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 or section 3 of this Act, be the aggregate of - (i) the value of the im....
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....etc. shall not be taken into account. This amendment will effect from 1-3-2002." K.10The above Budget circular expressly clarifies that the amendment made in Finance Act, 2003 is purely clarificatory/declaratory/explanatory or otherwise obvious/applicable legal position. Hence, the amendment would apply for past period also right from 1998 when section 3A was introduced. Therefore, Anti-dumping Duty cannot be part of the value for levy of SAD. K.11The above Budget circular expressly clarifies that the amendment made in Finance Act, 2003 is purely clarificatory/declaratory/explanatory or otherwise obvious/applicable legal position. Hence, the amendment would apply for past period also right from 1998 when Section 3A was introduced. Therefore, Anti-dumping duty cannot be part of the value for levy of SAD. K.12The unamended Section 3(2) has been extracted in para G.3 supra. The unamended Section 3A(2) has been extracted in para G.7 supra. The Sections are pari materia as far as present context is concerned. Therefore, the clarification in the Budget of 2002 vide para G.5 supra that Antidumping duty will not form part of the value for levy of CVD has to only apply for calculation of....
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....leviable under Section 12. That will be "as an addition to duty of Customs". It would also be "chargeable in the same manner as a duty of customs". In fact, since the duty under Section 8A is an addition to the duty leviable under Section 12, there is no sub-section in Section 8A borrowing provisions of the Customs Act on the line similar to Section 3(5) or Section 3A(4) or Section 8C(4) or Section 9A(8). Section 8A does not think it necessary to borrow the provision of Customs Act, 1962 for levy and collection of duty levied under Section 8A as the duty levied under Section 8A would be as an addition to the duty of customs. K.18Anti-Dumping Duty is not as an addition to the duty of customs. It is not as an addition to duty of customs. It is also chargeable in the same manner as a duty of customs. In fact, a separate and express provision in the form of Section 9A(8) was indeed necessary to borrow some of the machinery provisions of Customs Act, 1962. Therefore, anti-dumping duty is not covered by second leg of Section 3A(2)(ii). K.19It may be noted that though Section 3A is a new section introduced from 2-6-98, Section 3 has been there from 1975 onwards and Section 3(2)(ii) was ....
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....umped Import price should not be relevant but only the aggregate of dumped price plus Anti-Dumping Duty is relevant. Hence it is submitted that the fulcrum of Jayaswals Neco's case supra is not accurate on this point. K.24In view of the above, the demand of CVD and SAD on Anti-Dumping Duty which is equal to Rs. 94,67,767 + Rs. 12,39,020 = Rs. 1,07,06,787 is not maintainable. Demand of Anti-dumping Duty on Ascorbic Acid is bad in law since the demand is based on temporary statute namely Notification No. 104/2000-Cus. dated 21-7-2000 which has expired without any saving clause. L.1By the impugned order issued on 18-2-2005, anti-dumping Duty has been demanded on the import of 1,48,000 Kg. of Ascorbic Acid imported during the period July 2000 to November 2001. L.2Ascorbic Acid is a category of Vitamin-C used in food preparations as food additives. Following are the relevant dates and events in respect of import of Ascorbic acid : Date Event 21-7-2000 Notification No. 104/2000-Cus. dated 21-7-2000 was introduced imposing Anti-dumping Duty on Vitamin C, falling under CSH 2936.27 originating from China and Japan. The said notification was effective up to and inclusive of the 15th ....
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....he duration of the 1950-Act, till 31-3-1952, an overall time limit beyond which preventive detention cannot be continued. The Supreme Court held that detention under the temporary statute after the expiry is illegal. The relevant portion of the judgment is reproduced below : "......The general rule in regard to a temporary statute is that, in the absence of special provision to the contrary, proceeding which are being taken against a person under it will ipso facto terminate as soon as the statute expires (Craies on Statutes, 4th Edn., p. 347). Preventive detention which would but for the Act authorizing it, be a continuing wrong, cannot, therefore, be continued beyond the expiry of the Act itself......." L.7The following portion of the judgment by the Constitutional Bench in Kolhapur Canesugar Works Ltd. v. Union of India - 2000 (119) E.L.T. 257 (S.C.) is also relevant : "29.In the case of S. Krishnan v. State of Madras - AIR 1951 SC 301 this Court held that the general rule in regard to a temporary statute is that in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute exp....
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....under a notification. Also, Section 5 of the Orissa Sales Tax Act itself referred to the rate as specified by notification issued from time to time. L.9Though Anti-Dumping Notification no. 104/2000-Cus. is issued under Section 9A(1), it is a notification which itself levies and imposed Anti-Dumping Duty and is thus self-contained/self operating code. Once such notification has an in-built expiry date with no saving clause and it expires by the efflux of time specified in the notification, it is as if the notification has never been issued except in respect of things passed and closed. Pending proceedings seeking to impose duty based on such Notification would automatically die. So also, no fresh proceedings can be initiated for imposing duty pursuant to that expiry notification. The true principle in this regard is already set out in para L.6 supra. Section 159A is not applicable for various reasons. LA.1Section 159A is pari materia to Section 6 of the General Clauses Act, 1897. For the reasons submitted supra, Section 159A is also not applicable to the present case. - Even otherwise, Section 159A is applicable when any rule, regulations, notifications or order is amended, repea....
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.... clearly state that the samples were received in sealed condition and that the test have been carried out as per IP standard. The test reports also state the standard levels of various ingredients and the actual levels of those ingredients in the samples. Apart from other ingredients and the actual levels of those ingredients in the samples. Apart from other ingredients, the appellants rely on the content levels of oxalic acid in the RG-1 sample vis-a-vis FG-1 sample. The oxalic acid contents in the RG-1 sample is not as per IP grade whereas oxalic acid levels in the FG-l sample confirms the IP grade. M.5The impugned order relies upon irrelevant evidence viz., the CIPL, Ghaziabad test reports and totally ignores relevant evidence viz., the Choksi Lab report. Such an order is vitiated and hence liable to be set aside on this ground itself because it is well settled that where a fact finding authority acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of that authority was affected by the irrelevant material used by it in arriving at its finding. It was the duty of the fact finding authority to consider each and every material, w....
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.... name is mentioned on BMR by the Production Executive. O.2The actual procedure being follower is as follows. The QA Chemist is the officer who is nominated under the FDA rules to issue, keep and maintain the BMRS. The QA Chemist issues blank BMR which is the first step for starting any batch. On the BMR, the QA chemist mentions the batch size and the quantity of various raw materials required for manufacturing that batch. Thereafter the Production Executive along with the Shift Chemist go to the stores along with the BMR. The Production Executive prepares the Raw material Issue Slip based on BMR and handover such Slip to the Stores Officer. The Stores Officer issues the raw material mentioned in the Slip to the Production Executive and signs the Slip. Such Slip is retained by the Stores Officer for his accounting purpose. The Production Executive does not give the BMR to the Stores Officer at all. The Production Executive mentions the name of the Stores Officer who issued the Raw Material. The Production Executive hands over the Raw Material to the Shift Chemist. After the batch is completely manufactured, the completed BMR is again handed over to the QA Chemist for future referen....
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....es, DSR is relevant for multi-stage product like Athnolol, famatodine, Benzbromarone, etc. and not relevant for single stage product like Ascorbic Acid - IP or TMBA. Hence DSR is not at all relevant to conclude as to whether any manufacturing was carried out or not. P.4The actual document which records the manufacturing process is the Batch Manufacturing Record (BMR, for short). Refer page 526-528 of Vol. III for an illustrative BMR. This fact has been confirmed by statement of Mr. M.J. Patel, Works Manager who stated that BMR is used for recording production. Statement dated 4-1-2001 of Mr. C.M. Pandya - Production Manager. Q.1The statement of Mr. Pandya that Daily shift Register records charging the Raw Material is factually incorrect. Even for products where no demand has been raised and which have been undisputedly manufactured, the DSR does not record the charging of raw material. As explained in para H.3 & H.4 supra, DSR does not record charging of Raw Materials. Q.2In view of the above, the subsequent portion of the statement that "batch process records of all products are fabricated" is also incorrect. There is no connection between Batch Manufacturing Record and Daily ....
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....corbic Acid while in process. Therefore, Mr. J.M. Patel stated in his statement dated 26-12-2001 that he has not tested Ascorbic Acid while in process. S.2On receipt of the raw material, the appellants take a sample and test it. Thereafter a Goods Receipt Note (GRN, for short) is prepared and this GRN give reference to the sample test. Refer GRN no. 231 dated 22-7-2000 at page 541 of Vol. III for receipt of 7000 Kg. of TMBA. This GRN refers to test sample certificate no. RM/QA/231/2000-01 dated 25-7-2000. Page 543 of Vol. III is copy of test sample certificate no. RM/QA/231/2000-01 dated 25-7-2000. This certificate, at sr. no. 5, states that it contains bromo compound. S.3The manufacture of TMBA itself contains bromine compound. This bromine compound must be removed to manufacture final drug "TRIMETHOPRIM". It is also strictly prohibited as per pharmacopoeial specification. The entire quantity of imported TMBA was sold to manufacturers of TRIMETHOPRIM drug. S.4Hence the input TMBA was subjected to de-bromination process. Hence the statement of Mr. J.M. Patel is not correct and contrary to documentary evidence. Statement dated 3-10-2002 of Mr. Sanjay N. Shah - Shift Chemist. T.....
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....t of the material imported subsequent to the initiation of investigation. V.3The appellants processed about 30 MT of Ascorbic Acid - FCC grade IV up to time of visit of the Central Excise Officer in their factory (January, 2001). Rest of the material (about 118 MTs) has been imported and used subsequent to the investigations initiated by the department as is evident from the copies of B/E's itself. It is astonishing to note that the department has presumed 'no manufacture' even in respect of the goods imported subsequent to the investigations. Statements made by the functionaries in the unit of the appellants about the 'no manufacture' of ascorbic acid may be relevant for the past clearances but cannot be made statements. The appellants had imported one consignment of 3,4,5 TMBA and nine consignments of ascorbic acid after the visit of the central excise officers in their factory. Details of such imported materials were furnished by the appellants vide letter dated 19-9-2002 to the DGCEI (Annexure-34, bottom page 55-56 of Vol. I) i.e., much later than the visit of the central excise officers in the factory. In the show cause notice no duty was demanded in respect....
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.... to and rely upon the submissions made in the foregoing para relating to demand of customs duties. It has been submitted that no duty demand can be made under proviso to Section 28 of the Customs Act in view of the factual and legal background of the case. Accordingly, no penalty under Section 114A of the Customs Act is imposable. Therefore, the imposition of penalty under Section 114A of the Act is liable to be set aside. X.2Penalty on an EOU is not imposable for one more reason. In terms of the Bond executed by the EOU, it undertakes to be liable to pay duty and interest in case the imported materials are not used for the intended purpose. Notification No. 53/97 also provides that the unit shall be liable to pay duty in case the materials are not used for intended purposes. Therefore, in the case of EOU only duty demand can be made even if the materials are not used for intended purpose. No Penalty under the Central Excise Act. Y.1It is submitted that penalty under Section 11AC can be imposed only when there is a demand determined under proviso to Section 11A of the Central Excise Act. It has been submitted in detail that no excise duty is payable by the Appellants. Accordingl....
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....e Laboratory of M/s. Choksi Laboratories Ltd. (at Pg 106 to 110 bottom Numbers) and incompetency of CIPL, Ghaziabad to conduct such test is untenable because of following reasons - (I) Samples were drawn on 4-1-2001. CIPL Lab Test Reports are dated 29-11-01. CIPLL Test Reports were on of Relied upon documents in Annexure to the SCN dtd. 26-8-2003 (See pg 53 of Appeal Memo Book). However, the CHOKSHI LAB'S REPORTS are dtd. 29-3-2004. Therefore, the Chokshi Lab Report is more than 6 months after the issuance of SCN, when the appellants were aware of the contents of CIPL Test Reports. (II) It has been admitted that at no point of time the appellant has requested for RETEST as envisaged under Rule 56(4) of Central Excise Rules, 1944 or Section 17 of Customs Act, 1962. When NO RETEST is requested, the Test Report of Govt. Alab becomes final, Private Laboratory Test Report of Chokshi Lab dtd. 29-3-2004 is an afterthought. (III) Supreme Court in Bombay Oil Industry - 1995 (77) E.L.T. 32 (S.C.) [Annexure-A] has held that if no retest has been requested by the assessee under Rule 56(4) of CE Rules, 1944 or u/s 17 of Customs Act, 1962, then it becomes final and binding on the importer and....
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....e two chemicals are received and only relabelling is done. He stated only fake production Record were created but no manufacturing activity or processing was done on Ascorbic Acid and TMBA. He sated that these goods were sold after replacing the labels on Raw Material drums. (iii) Statement of Shri Shailesh J. Shah, Plant Incharge, Tonira (Para 6 of page 4&5 of SCN), dated 4-1-2001. Regarding Ascorbic Acid and TMBA he stated he does not know whether these are manufactured in TP2 Plant (he is Plant Incharge). That he has signed Batch Sheets only as per directions of Shri Modi. That he does not know the manufacturing process of two products. (iv) Statement of Shri C.M. Pandya, Production Manager of Tonira dtd. 4-1- 2001 (page 5 Para 7 of SCN) - He stated that batch process records are fabricated and it is only on the basis of daily shift report one can ascertain that a product is manufactured in their factory. He agreed that there is no entry in daily shift Register regarding any process done for the manufacture of Ascorbic Acid and TMBA. (v) Statement of Madhubahi J. Patel, Works Manager of M/s. Tonira Pharma dtd. 5-1-2....
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....nded that the statements of Modi, S.J. Shah etc. dtd 4-1-2001. and 5-1-2001 were retracted by them on 8 & (1-2001. Commissioner in the Order-in Original has observed that the letters of retraction is belated and afterthought. (ii) In support of their contention appellant has shown Pvt. Courier challans. However they failed to show the receipt of any such letter at the office of DGAE or the Commissioner. It is common knowledge that no courier company delivers a letter without taking acknowledgement along with stamp and phone number of receiver. Here the appellant has failed to show that any such letter of retraction was received by the authorities. (iii) Importantly, the alleged retractions were on 8th and 9th January, 2001, however, statements of J.M. Patel, Q.A. Chemist dtd. 26-12-2001 and 3-5-2002 M.C. Shriraman, Director (Tech) on 22-4-2002, Mahesh N. Shah, Managing Director dtd. 6-5-2002 and Sanjay Shah on 3-10-2002 are all subsequent to 9-1-2001 and have not been retracted. (iv) Mahesh N. Shah, Managing Director on 6-5-2002 during his statement has seen/read/understood all the statements and signed them. He does no....
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....f Manufacture as per EXIM policy 1997-02 which lists 'labelling' as a process amounting to manufacture, the following was submitted by the SDR. (i) The notice sought permission of C. Ex. Department for addition of Ascorbic Acid giving flow sheet, multistep manufacturing process and consumption norm of various inputs (kindly see pages 215 to 226 bottom of page numbering). (ii) Drug Controller gave them permission to manufacture Ascorbic Acid as per multistep manufacturing process (pages 238 to 240 bottom no.) through EDTA Route. This manufacturing process was approved by the Development Commissioner also. The assessee during personal hearing contended that they have relabelled and repacked the material. It is submitted that what was received in factory was in 25 Kg pack drums and what was cleared was also same 25 kg pack drums. Shri Lalit Modi and others in their statements have stated that only paper labels were changed. The photographs of empty drums shown by the appellants were taken in February 2006 does not in any way prove that repacking was ever done. The contention raised after 5 years is clearly a case of constructing a foot to fit a shoe. (iii) It is submitted that f....
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....hat, the power to recover duty does not flow from the notification so as to render any such recovery proceedings incompetent only because of repeal of notification. (c)The effect of repeal of the notification has been elaborately dealt with by Hon'ble Madras High Court in case of Apollo Hospital Enterprises v. UOI, 2001 (133) E.L.T. 58 (Mad), wherein relying on - (i) Mediwell Hospital, 1997 (89) E.L.T. 425 (S.C.), (ii) State of Orissa v. Titaghar Paper Mills, (1985) Supp SCC 280 (SC), and (iii) State of Rajasthan v. Mangilal Pindwal, 1996 (5) SCC 60 (SC), it was held that repeal of a statute does not affect the previous operation of the law which has been repealed during the period it was operative prior to the date of such repeal. Paragraphs 32 to 37 of Apollo Hospital, 2001 (133) E.L.T. 58 (Mad) are extracted below :- "The effect of repeal of the notification : 32.It is contention of the learned Counsel for the petitioners that the Notification 64/88, where the benefit of exemption of the Customs Duty was granted to the hospital like the petitioners and the obligation of the free treatment and reservation of bed had been imposed on the petitioners, had been rescinded by the su....
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....hile considering this question, it is worthwhile to refer the two judgments of the Supreme Court. In the case of State of Orissa v. Titaghur Paper Mills Co. Ltd - (1985) Supp SCC 280 it has been held as follows : "Yet another contention raised by the contesting respondents with respect to the impugned provisions was that the two notifications dated December 29, 1977 having been made in "supersession" of all previous notification dated May 23, 1977. The High Court held that to hold that the liability which had accrued under the notifications dated May 23, 1977. The High Court held that to hold that the liability was so wiped out would amount to giving a retrospective effect to the notification dated December 29, 1977, and as the Legislature had not conferred upon the State Government the power to issue notification having retrospective effect, to so hold would be to render the said notification void. The High Court referred to a number of decisions on the question of the power to make subordinate legislation having retrospective effect. We find it unnecessary for the purpose of deciding this point to refer to any of the authorities cited by the High Court. Both the noti....
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....ational Dictionary at page 2296 defines the word "supersession" as the "the state of being superseded removal and replacement". Thus, by using in the notifications dated December 29, 1977, the expression "in supersession of all previous notifications" all that was done was to repeal and replace the previous notifications by new notifications. By repealing and replacing the previous notifications by other notifications, the result was not to wipe out any liability accrued under the previous notifications. If this contention of the respondents were to be accepted, the result would be starting. It would mean, for example, that when a notification has been issued under Section 5(1) prescribing a rate of tax, and that notification is later superseded by another notification further enhancing the rate of tax, all tax liability under the earlier notification is wiped out and no tax can be collected by the State Government in respect of any transactions effected during the period when the earlier notification was in force." 36.In State of Rajasthan v. Mangilal Pindwal - (1996) 5 SCC 60 the Supreme Court has held as follows : "As pointed out by this Court, the process of a substitution of....
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.... does not press his appeal due to the amount being small. However, he prays for setting aside the penalty of equal amount imposed on the appellants. Considering the fact that the appeal against the excise duty demand is not being pressed, we uphold confirmation of excise duty demand of Rs. 14,13,208/-. As regards the penalty amount, we are of the view that in the circumstances of the case, imposition of penalty of Rs. 14,13,208/- equal to the duty amount is not warranted in this case. As such, we reduce the penalty to 10% of duty amount. 5.As regards the customs duty demand, we find that there are two products involved: Ascorbic Acid and TMBA. We take up the case of Ascorbic Acid first. It is the charge of the department that the appellants have imported ascorbic acid of IP grade and removed the same for home consumption without undertaking any manufacturing activity. The total duty demand on ascorbic acid is Rs.7,49,07,092/-. The main argument on behalf of the appellants is that they imported ascorbic acid of FCC grade-IV and converted the same to ascorbic acid of IP grade and also sold these in relabeled containers. Hence, it is argued by them that no duty is payable on the impo....
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....ng process, which they have projected before the Excise authorities as well as before the Drugs Control authorities and the Development Commissioner in-charge of their EOU. 8.As regards the imposition of anti-dumping duty, the appellants have argued that once the anti-dumping notification has lapsed, such duty cannot be demanded and recovered subsequently even for the earlier period. Such arguments, if allowed, will amount to circumvention of the anti-dumping duty and will defeat the very purpose of its imposition as a trade remedies measure designed to curb dumping of imported goods, which is a measure permitted under the WTO Rules. Anti-dumping notifications are always issued for a specified period unless they are reviewed and continued for a subsequent period. The arguments advanced by the appellants would result in collection of anti-dumping duty from honest tax payers who paid the duty on time and those importers who evade the payment of anti-dumping duty would escape from paying the same just because evasion is detected afterwards and the show cause notice and the adjudication order are issued subsequently after lapse of the anti-dumping duty notification. Such an outcome co....
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....yable in accordance with law at appropriate rates as held by the lower authority. 14.In view of our findings as above, the duty demands are confirmed but the penalties are reduced to the extent of 10% of duty amount confirmed. The appeals are dismissed except for reduction in the penalty amounts. (Pronounced in Court on..........................) Sd/- (Chittaranjan Satapathy) Member (Technical) Dated : 20-4-2006 15.[Per : Jyoti Balasundaram, Vice-President]. - I have carefully perused the order recorded by the learned Member (Technical) and while agreeing with his finding regarding levy of customs duty and excise duty, I regret that I am unable to persuade myself to agree to the finding regarding levy of anti-dumping duty and hence I am recording my separate order on this aspect. 16.Levy of anti-dumping duty has been confirmed on 1,48,000 kgs of ascorbic acid imported during the period from July 2000 to November 2001. On 21-7-2000, Notification 104/2000-Cus. was issued imposing anti-damping duty on Vitamin C falling under Customs Tariff Heading 2936.27 originating from China and Japan (ascorbic acid is a category of Vitamin C used in food preparations as food additives). Th....
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.... relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position." 17.The decision of the Apex Court in State of Orissa v. Titaghur Paper Mills, 1985 (Supp) SCC 280 cited by the learned DR is not relevant for the reasons that the notifications considered in the Titaghur case were not those having a built-in expiry date and further the notifications were not a self-contained code levying taxes but only specify the rate stipulated by the main charging section, viz. Section 5 of the Orissa Sales Tax Act. Although notification 104/2000-Cus. has been issued under the provisions of Section 9A(1), it is the notification which both levies and imposes anti-dumping duty and is thus a self-contained code and since it has a built-in expiry date with no saving clause and expires by efflux of time specified therein, pending proceedings seeking to demand duty based on such notification, would automatically come to an end. Section 159A of the Customs Act which is pari materia to Section 6 of the General Clauses Act, 1897 will not apply so as to save the levy of anti-dumping d....
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....es the applicable legal position and hence the amendment would apply even for the period prior to 2003. Therefore, the demand of Rs. 94,67,767/- CVD and Rs. 12,39,020 SAD (total Rs. 1,07,06,787/-) by including the amount of anti-dumping duty is not sustainable. 19.In the result, I hold that the demand of anti-dumping duty for the entire period in dispute, i.e. Rs. 5,51,31,859/- and the demand of Rs. 1,07,06,787/- by including anti-dumping duty in the calculation of the assessable value for levy of CVD and SAD cannot be sustained and is required to be set aside. Sd/- (Jyoti Balasundaram) Vice-President Dated : 28-6-2006 DIFFERENCE OF OPINION 20.The following difference of opinion is hereby referred to Hon'ble President Third Member for his decision : (1) Whether the demand of anti-dumping duty for the period prior to and subsequent to 11-5-2001 is required to be sustained, as held by the learned Member (Technical), or to be set aside as held by the learned Vice-President ? (2) Whether the anti-dumping d....
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....l procured by them for the said finished products. A show cause notice came to be issued on 20-8-2003 to the appellants by the Additional Director General, DGCEI to show cause as to why the duty of Customs totaling at Rs. 8,85,41,522/-, as detailed in Annexure 'B' to the show cause notice, involved in the clearance of ascorbic acid and benzaldehyde imported duty free by them without any processing and without payment of appropriate duty, should not be demanded and recovered from them under Section 28 of the said Act. The appellant was also called upon to show cause why duty of excise to the tune of Rs. 14,13,208/- short paid in the clearance of atenolol and fanotidine in the DTA by wrongly availing the benefit of Notification No. 8/97 dated 1-3-1997, should not be demanded and recovered from them under Section 11A of the Central Excise Act, 1944. Annexure 'B1' of the show cause notice was a statement showing the details of imports of ascorbic acid by the appellant under various bills of entry indicating basic customs duty, surcharge, anti-dumping duty, CVD and SAD, the total of these customs duties being Rs. 7,49,07,092/-. Similarly, Annexure 'B2' was the statement showing th....
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.... 24.After hearing the appellants, the learned Member (Technical) in his opinion dated 7-2-2006 verbatim set out the written synopsis given by the learned advocate for the appellants in paragraph 2 of the order and the synopsis given by the learned SDR in paragraph 3 of the order. The challenge against the demand of Rs. 14,13,208/- was given up by the learned advocate for the appellants as recorded in paragraph 4 of the opinion by the learned Member (Technical). It was then held that the conclusion of the adjudicating Commissioner that the appellants initially imported ascorbic acid of IP grade and sold the same without further manufacturing process in the domestic market was well founded. It was held that the appellants did not undertake any manufacturing process as projected before the Excise authorities, the Drug Control authorities and the Development Commissioner in-charge of EOU. 24.1As regards the imposition of anti-dumping duty, the learned Member (Technical), dealing with the contention that once the anti-dumping notification had lapsed, such duty cannot be demanded and recovered subsequently even for the earlier period, held that, if such an argument was ac....
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....r on 28-6-2006, for holding that since the Notification dated 21-7-2000 imposing anti-dumping duty on vitamin-C (ascorbic acid is a category of vitamin-C) originating from China and Japan had expired on 15-4-2003 by efflux of time and not by way of repeal, and that Section 6 of the General Clauses Act could not be invoked, and further that there being no saving clause incorporated in the said notification, a demand of anti-dumping duty by the impugned order which was made after expiry of the Notification No. 104/2000 dated 21-7-2000, cannot be sustained. The learned Vice-President placed reliance on the decision of the Apex Court in Kolhapur Canesugar Works Ltd. v. UOI reported in 2000 (119) E.L.T. 257 (S.C.), in which it was held that an exception engrafted, in the provisions of Section 6(1) of the General Clauses Act, to the common law rule that, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed and the statute must be considered as a law that never existed. It was held that Section 159A of the Customs Act, which was pari materia to Section 6 of the General Clauses Act, 1897, did....
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....cluding anti-dumping duty in the calculation of the assessable value for levy of CVD and SAD cannot be sustained and was required to be set aside. 26.The learned counsel appearing for the appellants contended that notification imposing anti-dumping duty under Section 9A(1) of the Customs Tariff Act did not have any independent existence, but Section 9A(1) itself did not impose any duty. He submitted that chargeability/leviability of anti-dumping duty was directly linked to Section 9A(1) coupled with the notification imposing such duty and if anyone of them expired without a self-contained saving clause, then notwithstanding the fact that the other survives, no duty could be collected. It was submitted that once the notification expire, no proceeding could be commenced for collecting the anti-dumping duty thereafter because the duty ceases to be chargeable except for the past and closed transaction, "as though it never existed from the day it was issued". He contended that neither Section 6 of the General Clauses Act, which was inapplicable to notification, nor Section 9A of the Customs Act [(sic) Customs Tariff] could authorize recovery of the anti-dumping after the ....
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....licable. Moreover, clause (b) of Section 16(1) was also not applicable since the goods had not been cleared from a warehouse under Section 68. Therefore, the residuary clause 15(l)(c) was applicable. Even for imports prior to 11-5-2001, no anti-dumping duty could be leviable under Section 9A(1). Therefore, the entire demand of anti-dumping duty was not sustainable. 26.1The learned counsel for the appellant relied upon the following decisions in support of his contentions: - (1) S. Krishnan v. State of Madras reported in AIR 1951 SC 301 (2) State v. Gian Singh reported in 1999 (9) SC 312 (3) Salasar Fortune Marketing (I) Ltd. v. CC, reported in 2004 (166) E.L.T. 353 (T) (4) State of Uttar Pradesh v. Kasturilal Harlal reported in 1988 (Supp.) SCC 302 (5) Commissioner of Income Tax, Madras v. Indian Bank Ltd., AIR 1965 SC 1473 (6) Innamuri Gopalan and Others v. State of Andhra Pradesh and Anr., 1964 (2) SCR 888 (7) Sneh Enterprises v. CC reported in....
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....sentative for the department placed reliance on the following decisions in support of his contentions: - (1) Jayaswals Neco Ltd. reported in 2005 (188) E.L.T. 281 (2) Nitco Tiles Ltd. v. Designated Authority reported in 2006 (193) E.L.T. 17 (3) Vetcare Alltech Pvt. Ltd. reported in 2004 (178) E.L.T. 874 (4) Torrent Laboratories v. UOI reported in 1991 (55) E.L.T. 25 (Guj.-HC) (5) Chaparral Health Services Ltd. reported in 2001 (130) E.L.T. 34 (Kar.-HC) (6) Apollo Hospital Enterprises Ltd. reported in 2001 (133) E.L.T. 58 (Madras HC) (7) Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India reported in 1997 (89) E.L.T. 425 (S.C.) (8) Bombay Hospital Trust (Bombay HC) reported in 2005 (188) E.L.T. 374 (Tri.-LB) (9) Sterlite Optical Technology reported in 2005 (188) E.L.T. 210 (10) Commissioner of Customs, Kandla v. Essar Oil Ltd., reported in 2004 (172) E.L.T. 433 (S.C.....
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....e of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension : Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year". It will thus be seen that the uninterrupted period of imposition of anti-dumping duty upon importation of the article in respect of which notification under Section 9A(1) is issued is full five years. As per the second proviso to sub-section (5), in cases where a review is initiated before the expiry of the period of five years, but not concluded, the anti-dumping duty may continue to remain in force pending the outcome of such review for a further period not exceeding one year. It appears that review of imposition of duty, which was started during the currency of the said notification before it expired on 15-4-2003, was concluded on 31-7-2003 and a notification imposing&n....
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....nt by Section 113 of the Finance Act, 2001 have been enforced at all material time and that recovery shall be made of all such amounts of duty or interest or penalty or fine or other charges which have not been collected, as if the amendment made by Section 113 of the Finance Act, 2001 had been inforce at all material time. Thus, any obligation or liability that was incurred under the notification imposing anti-dumping duty prior to the expiry of the notification on 15-4-2003 continued to remain enforceable against the appellant in respect of the imports made during the currency of the notification. The contention that Section 159A of the Customs Act, 1962 was inapplicable because it was not a notification under the Customs Tariff Act, 1975 and therefore, cannot apply to notifications issued under Section 9A of the Tariff Act is without any substance for the simple reason that sub-section (8) of Section 9A of the Customs Tariff Act has specifically incorporated all the provisions of the Customs Act, 1962 and the rules and regulations made thereunder relating to non-levy, short levy, refunds and appeals, as far as may be applicable, to the duty chargeable under Section 9A as t....
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....ve could be enforced under Section 28 of the Customs Act read with Section 9A(1)(5) of the Customs Tariff Act, it would not be open for the appellant to argue that the liability incurred, which was enforceable till 15-4-2003, suddenly become unenforceable on dis-continuance of the duty from that date. It is thus clear that the recovery proceedings were correctly initiated in respect of the liability to pay anti-dumping duty upon the imports made during the period of currency of the said notification till 15-4-2003 and the order recovering anti-dumping duty cannot be challenged on the ground that the notification expired from 15-4-2003. 31.As regards the contention that the anti-dumping additional duty could not have been included for calculating the additional duty under Section 3 of the Customs Tariff Act, 1975, it appears that the aggregate value of the imported article, duty of customs chargeable under Section 12 of the Customs Act, and any sum chargeable on the article imported under any law for the time being in force, "as an addition to" and in the same manner as a duty of customs, were includible in the value of imported article for calculating the additional duty p....
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....umping duty imposed thereunder will apply to such article imported by a 100% EOU. Thus, in such cases there will not be any imposition of anti-dumping duty on the articles imported by the EOU even during the currency of the notification. The provision of sub-section (2A) of Section 9A is not made dependent upon any exemption from paying customs duty on imports made by EOU under the EXIM Policy. No provision was pointed out from the Exim Policy which could have a bearing on the blanket exemption conferred on the imports made by 100% EOU by sub-section (2A) of Section 9A and, therefore, an incongruous situation would necessarily arise, where 100% EOU who does not fulfil the conditions of the Exim Policy and therefore, would not be entitled to exemption of customs duty can nonetheless, with impunity, claim exemption from payment of anti-dumping duty on the ground that the notification was not specifically made applicable to articles imported by a 100% EOU in view of sub-section (2A) of Section 9A of the Tariff Act. No orders making the notification imposing anti-dumping duty specifically applicable to articles imported by 100% EOU have been produced, and it is stated that no such orde....
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....First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India by a hundred percent export oriented unit or a unit working in a free trade zone and when such goods are wholly exempted from the duty of customs specified in the said First Schedule to the Customs Tariff Act, 1975 (51 of 1975) by virtue of any notification of the Government of India in the Department of Revenue and Banking or in the Ministry of Finance (Department of Revenue), from the whole of the additional duty leviable thereon under section 9A of the said Customs Tariff Act.' [emphasis added] 32.2It is, therefore, ....