TaxTMI 
TaxTMI 
2006 (11) TMI 80
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds imported by them, as such without doing 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) Size : 26" x 42" Thickness : 0.25 mm Weight : 90 gram Fibre Drum : 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that the Revenue is bound by this Circular and the Revenue is barred from arguing contrary to the Circular. Life of the imported Ascorbic Acid is 24 month whereas the life of Ascorbic Acid cleared from the factory is 48 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) sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be cleared for home consumption. Manufacturing process was indeed carried out on imported Ascorbic Acid - FCC grade IV and 345 TMBA. 1.1The appellants rely upon ground set out in para A. 1 to A. 12 of the appeal memo wherein positive evidences have 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 resi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. K.2Anti-Dumping Duty is neither a duty of customs levied under Section 12 of the Customs Act, 1962 nor a duty levied under Section 3 of the Customs Tariff Act. Hence, Anti-Dumping Duty will not form part of Value for levy of SAD under Section 3A. K.3Section 3(2) of the Customs 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or levy of CVD, Anti-dumping duty will not form part of the value. K.7Section 3A(2) of the Customs Tariff Act, 1975 as it stood prior to amendment by Finance Act, 2003 with effect from 1-3-2002 reads as under : "(2) For the purpose of calculating under this section special 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 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 un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c.i.f. price, landing charges, basic customs duty and the additional duty of customs will be included. Similarly for determining special additional duty of customs (SAD), only the c.i.f. price, landing charges, basic customs duty and the additional duty of customs will be included. Other duties such as anti-dumping duty, safeguard duty, 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 be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... an addition to duty of customs" and should be in the same manner as the duty of customs. Anti-dumping duty is not chargeable as an addition to a duty of customs. "As an addition to duty of customs" is different from "in addition to a duty of customs". K.17For example, if a duty is levied under Section 8A, that will be an increase in the import duty 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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elow prevailing market prices for identical goods." K.23It is clear from above that for the purposes of Basic Custom Duty, the import price is to be taken even though it is a dumped price and thus below the prevailing market price. Thus, where for the purpose of Basic Custom Duty a dumped price can be a transaction value, there is no reason to suggest that for levy of; CVD, dumped 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 Vitami....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of the 1950-Act until 31-3-1952. The Supreme Court dismissed the challenge of the petitioners and upheld the validity of the 1951-Act under Article 22(4)(b). While upholding the validity under Article 22(4)(b), the Supreme Court held that although the 1951-Act does not expressly provide for a period for which any person may be detained [which is a pre-requisite for Article 22(4)(b)], it fixes, by extending the 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppose, the rate of Sales tax is mentioned in Section 5 itself and the rate is being amended from time to time. In such a situation, the assessee could not have contended that once the rate of tax is amended in the Section 5, taxes remaining unpaid for the period prior to the amendment cannot be levied and collected after the amendment. The Supreme Court held that the position was no different where the rate of tax is specified 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lwar, Chief Chemist, CIPL, Ghaziabad, Refer bottom page 102 of Vol. I where in request for cross-examination was made. This cross-examination request has been denied. M.3The assay of FG-1 sample had substantially increased when compared with the assay of the sample RM-1. This itself shows that certain processing was carried out. M.4On the other hand, the test reports of FDA approved lab namely M/s. Choksi Laboratory (at bottom pages 107-111 of Vol. I) 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 evide....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... office was sufficient for the purpose. N.4Hence the Commissioner's reliance on retracted statements has vitiated the impugned order and therefore the impugned order is liable to be set aside. Statement of various employees explained. Statement dated 4-1-2001 of Mr. R.V. Singh - Stores officer. O.1Mr. R.V. Singh is not concerned with maintenance of Batch Manufacturing Record. An illustrative copy of BMR is at page 526-528 of Vol. III. Mr. Singh has not signed the BMR. Only his 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orrect and contrary to documentary evidence. P.3Daily Shift Register is not intended to record the charging of raw materials. Daily Shift Register (refer page 509-518 & 519-524 of Vol. III) is not intended to record charging of raw material. It is a document merely to record the state in which the various processes were when one Shift chemist hands over the charge to the successor Shift chemist. If the process is complete before the handover takes place then there would not be any noting on DSR. Besides, 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 R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e raw materials to obtain Ascorbic Acid - IP and TMBA (bromine free) and Anilino compound. In the face of such a document, the statement does not reflect the true state of affairs. The appellants have obtained production register showing production with date from the records seized by the department. Statement dated 26-12-2001 & 3-5-2002 of Mr. J.M. Patel - QA Chemist. S.1Ascorbic Acid - IP is a single process product i.e., there is no intermediate product emerging in between. Hence, there is no question of testing Ascorbic 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wing the payment of duty amount of Rs. 15,82,968 as Annexure-38, bottom page 36-45 of Vol. I. V.2The appellants have paid duty amounting to Rs. 1,05,97,114 in terms of Notification no. 2/95-C.E. on Ascorbic ACID IP grade cleared in DTA. The aforesaid amount of duty already paid by the Appellants is to be abated from the total duty demand. The details of duty paid by the applicants in terms of notification No. 2/95 along with documentary evidence showing payment of duty are enclosed as Annexure-33, bottom page 57-90 of Vol. I. No duty demand in respect 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....voke the extended period either under the Customs Act or under the Excise act, it is must that charge of suppression coupled with intention to evade payment of duty should be established. In view of this, entire demand amount, whether pertaining to customs or excise, is time-barred and, therefore, liable to be dropped forthwith on this ground itself. No penalty imposable under the Customs Act. X.1Penalty under Section 114A of the Customs Act can be imposed only when the demand is confirmed under proviso to Section 28 of the Customs Act. Appellants crave leave to refer 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 no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(INPUT) & Ascorbic Acid IP (Final Product) were got tested from Central Indian Pharmacopoeia Laboratory, (CIPL) Ghaziabad. The CIPL vide Test Reports dated 29-11-2001 reported that both Ascorbic Acid FCC Grade (Raw Material) as well as Ascorbic Acid IP (Final Product) -"conforms to the Requirement of IP" (Pages 191 and 192 bottom numbering). Since both the samples Raw material and Final Products, conforms to IP. Grade, it is confirmed that no processing was done and same IP Grade Ascorbic Acid was imported and cleared to DTA. (C) APPELLANTS CONTENTIONS regarding the cited reports of Private 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) I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cument called 'Manufacturing Process' of Ascorbic Acid and stage-wise batch process records of temperature, date sheets and packing details for Ascorbic Acid IP was prepared. These statements are prepared by him and signed by Shri L.M. Pandya, Production Manager and Shift Chemist. He stated that all the above entries were made by him as per the instructions received by him from M.J. Patel and the said entries are fictitious. Regarding the Register showing production of Ascorbic Acid and TMBA he said that the entries being made only for record purpose. He also stated that same drums were used in which the 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 di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....K. Shah, M.J. Patel, J.M. Patel, which were read and understood by him. In token of having read the statements he put his dated signature of these statements on 6-5-2002. He stated that Lalit Modi was responsible for these two products. (ix) Statement of Sanjay Shah, Shift Chemist dtd. 3-10-2002 (Para 17 Pg 9 of SCN) - He stated that he has tested other final products but has only tested inputs only in respect of TMBA and has never tested Ascorbic Acid. 4. Regarding the contention Retraction of Statements on 9-1-2001, SDR submitted that - (i) During the hearing it was contended 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 numbe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there was no issue of further breaking of any bulk pack to retail. In the present case 25 Kg drums of Ascorbic Acid and TMBA (both falling under Chapter 29) were cleared in same 25 kg drums by changing only paper labels. Therefore, the Supreme Court judgment supra would apply and it is clear that there is no manufacture as per Section Note 11 to Chapter 29. Also 25 kg drums for Ascorbic Acid and TMBA cannot be said to be rendering the same marketable to the consumer. (b) Also the Board Circular No. 576/2001 is in regard to Pharmaceuticals whereas the impugned goods are Drug Intermediated. 6. Regarding appellant's contention of Definition of 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r relating to non-levy, short-levy shall apply to the duty chargeable under this Section. It was submitted that since provisions of Short-levy and non-levy of Customs Act are applicable here by implication the provision of Section 159A of Customs Act shall be applicable here. II(a)Hon'ble Supreme Court in case of Mediwell Hospital and Health Care v. UOI - 1997 (89) E.L.T. 425 (S.C.) has held that the exemption notification imposed a continuing obligation on the part of those who obtained certificated of exemption for import without duty payment. (b)Hon'ble Karnataka High Court in Chaparral Health Services Ltd. v. UOI, 2001 (130) E.L.T. 34 (Kar) [Annexure-I] held that, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r repealed, the law is clear on this aspect that the benefits accrued on the persons cannot be taken away and similarly the liabilities arising out of such notification can be enforced. The petitioners having the benefit of the exemption of Customs Duty, it is not open to them to plead that they are not liable to discharge the obligation contemplated under the said Notification 64/88. Since the Apex Court in the Mediwell Hospital case [1997 (89) E.L.T. 425 (S.C.) = (1997) 1 SCC 759] held that the obligation being a continuous one, it is always open to the authorities to take against the petitioners for the violation of such conditions. Hence the impugned proceedings are quite valid. 35.While 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 lia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated December 29, 1977, the word 'supersession' is used in the same sense as the word 'repeal' or rather the words "repeal and replacement". The shorter Oxford English Dictionary, third edition, at page 2084, defines the word "supersession" as meaning "The action of superseding or condition of being superseded". Some of the meanings given to the word 'supersede' on the same page in that dictionary which are relevant, which are relevant for our purpose are "to put a stop to render superfluous or unnecessary to make of no effect to annul to take the place of (something set aside or abandoned); to succeed to the place occupied by; to supply the place of a thing". Webster's Third New International 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 noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Section 159A of Customs Act, 1962. (e) Settlement Commission in case of Santogen Textile Mill, 2002 (140) E.L.T. 558 has held that when Raw material cleared as such to DTA without using same in manufacture of finished product exemption is not available. This matter has been affirmed by Bombay High Court in 2002 (143) E.L.T. 289 (BHC) and affirmed by SC, 2002 (145) E.L.T. A162 (f) It may be mentioned that the EOU has executed a Bond and is under obligation to fulfil all the conditions imposed." 4.We have carefully considered all the arguments from both sides and perused the case records as well as the cited case laws. As regards the demand of excise duty of Rs. 14,13,208/-, the ld Advocate for the appellants 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appellants had relabelled the product and hence satisfied the condition of manufacturing as per the relevant Chapter Note under the Excise Law and also under the EXIM Policy is also not tenable and we do not find any evidence to suggest that they have repacked from bulk containers into retail containers/packs as they have imported the materials in 25 kg packs and sold the same in 25 kg packs. We are of the view that the appellants have merely done relabelling and the same does not amount to manufacture under the Excise Law in the absence of repacking and such relabeling also cannot be considered to meet the criteria under the EXIM Policy. It is also clear that the appellants have not undertaken the multi-stage manufacturing 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 du....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rds the penalty, we are of the view that the penalty imposed equal to duty amount is excessive and we reduce the same to 10% of the duty amount. 12.While confirming the duty demands as above, we have duly considered the ground of limitation taken by the appellants. In view of the fact that the appellants have not undertaken any manufacturing activity in regard to the impugned goods as held by us and they have suppressed the fact of non-manufacturing and consequent infraction of the conditions of the Customs Notification under which they had obtained duty free goods, we hold that the finding of the lower authority applying extended period of limitation is correct in law. As regards interest, we are of the view that the same is payable 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 Balasu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted/omitted. It is relevant to note here that in the present case the question of divesting the Revenue of a vested right does not arise since no order directing refund of the amount had been passed on the date when Rule 10 was omitted. 38. The position is well known that at common law, 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. To this rule, an exception is engrafted by the provisions of Section 6(1). if a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final 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 expi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....L.T. 353 dealing with an identical question relating to a unit in a special economic zone. The anti-dumping duty on imports of ascorbic acid after 11-5-2001 is Rs. 3,10,48,402/- which is required to be set aside. I also see force in the submission of the appellants that the value for levy of CVD and SAD will not include anti-dumping duty as it is neither a duty of customs levied under Section 12 of the Customs Act, 1962 nor a duty levied under Section 3 of the Customs Tariff Act. The Budget circular of Union Budget 2002-2003 also expressly clarifies that while calculating the value for levy of CVD, anti-dumping duty will not form part thereof. The circular expressly clarifies that the amendment made in Finance Act, 2003 is purely clarificatory and declares 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 in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rugs, such as, farmotidine, atrenolol, nifidipine etc. and were procuring various raw materials duty free by way of import as well as from indigenous manufacturers. The appellant had imported ascorbic acid and trimethoxy benzadehyde (TMBA) duty free under Notification No. 53/97-Cus. dated 3-6-1997 as amended and cleared the said goods, being subjected to any processing, to buyers in the domestic tariff area (DTA), without discharging appropriate customs duty, thereby contravening the provisions of the said notification. The appellants were clearing atrenolol and farmotidine manufactured by them in DTA by availing the concessional rate of duty in terms of Notification No. 8/97-C.E. dated 1-3-1997, as amended, which was not admissible to them as they did not maintain separate records regarding the receipt, issue etc. of the imported and indigenous raw material 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 ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nefit was not available to the appellant by virtue of the findings given by the Commissioner in paragraph 32 of the said order in which it was held for cogent reasons that, since no manufacture/process had been carried out as required by the Notification No. 53/97-Cus. dated 3-6-1997, the appellant was not entitled to the benefit of the said notification and, therefore, not eligible for exemption from anti-dumping duty under Notification No. 53/97-Cus. dated 3-6-1997. As regards the CVD and SAD, the contention raised before the Commissioner was that, the calculation made by the department by adding the amount of anti-dumping duty was patently incorrect. The Commissioner rejected this contention on the ground that the anti-dumping duty had been imposed with a view to protect the domestic industry from injury and that the calculations were correctly made. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claim that duty was not payable on the ground of the notification having lapsed. He agreed with the conclusion drawn by the adjudicating Commissioner and upheld the duty demand of Rs. 1,36,09,668/- in respect of TMBA while reducing the penalty to 10% of the duty amount. It was found that the appellants had not undertaken any manufacturing activity in regard to the impugned goods and they had suppressed the fact of "non-manufacturing" and consequent infraction of the conditions of the notification under which they obtained duty free goods and, therefore, the extended period of limitation was correctly invoked. 25.The learned Vice-President while agreeing with the findings of the learned Member (Technical) regarding levy of customs duty and excise duty, could not agree with the finding regarding levy of anti-dumping duty and therefore, gave a separate order 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1962, nor a duty levied under Section 3 of the Customs Tariff Act. Reference was made to the budget circular of Union Budget 2002-2003, which expressly clarified that while calculating the value of levy of CVD and SAD, anti-dumping duty will not form part thereof. It was clarified in the circular that the amendment made in Finance Act, 2003 was purely clarificatory and declared the applicable legal position and, therefore, the amendment was applicable even for the period prior to 2003. It was, therefore, opined that 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, was not sustainable. The learned Vice-President, therefore, held that the demand of anti-dumping duty for the entire period in dispute, of 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 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 di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any increase in the other customs duties and, therefore, it was as in addition to other duties. Referring to the provisions of Section 9A(4)(8), it was submitted that these provisions indicated that anti-dumping duty was in addition to other duties and therefore, could not have been added in the value of goods for working out CVD and SAD. It was further contended that after the expiry of the notification imposing anti-dumping duty, there remained no provision to enforce recovery of such duty, because, chargeability would vanish from the beginning. It was then argued that for the period after 11-5-2001, due to amendment under Section 11A by insertion of sub-section (2A), no anti-dumping duty was leviable from the appellants-EOU. It was submitted that the imported raw materials were warehoused and therefore, clause (a) of Section 15(1) of the Customs Act, 1962, was not applicable. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Policy, which was also reflected in Section 9A(2A) of the Act. He also submitted that intent of Section 9A of the Tariff Act was to save the domestic industry from injury and the effect of a notification issued under Section 9A(1) was for a full period of five years. The liability to pay anti-dumping duty that arose during the period of notification could be enforced even after its expiry and no saving clause for the purpose was required to be incorporated in the notification because expiry of a notification by efflux of time did not repeal any provision of the statute under which the liability arose and could be enforced. The learned authorized representative for the department also supported the finding of the Commissioner to the effect that anti-dumping duty could be considered for working out the value for the purpose of CVD and SAD under Section 3 of the Tariff Act. 27.1The learned authorized representative 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal, value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article." Such anti-dumping duty is a duty in addition to any other duty imposed under the Customs Tariff Act or any other law for the time being in force, as specifically laid down in sub-section (5) of Section 9A, which provides for the duration of the impost reads as under :- "9A. (5) The anti-dumping imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition : Provided that if the Central Government, in a review, is of the opinion that the cessation of such is likely to lead to continuation or recurrence 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 : ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the basis of that proviso. However, Section 159A of the Customs Act, 1962, which, inter alia, provides for the effect of amendments etc. of notifications and laid down that unless a different intention appeared, such amendment, repeal, suppression or rescinding thereof shall not affect its previous operation or anything duly done or suffered thereunder or affect any right, privilege, obligation or liability acquired, accrued or incurred thereunder or any penalty, forfeiture or punishment incurred thereunder and legal proceeding, may be instituted, continued or enforced in relation to such notification as if it had not been repealed, superseded or rescinded. This Section was introduced with effect from 11-5-2001 by the Finance Act, 2001. By Section 114 of the Finance Act, 2001 it was also, inter alia, provided that any action or omission under any notification etc. shall be deemed to be and to have always been for all purposes as validly and effectively taken or done as if the amendment 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 whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dumping duty did not at all obliterate the liability that had already arisen upon importation of the articles under the notification by virtue of Section 9A(1)(5) of the Act which continued to remain in force to create and continue the liability arising under the notification which could be enforced under Section 28 of the Customs Act by virtue of sub-section (8) of Section 9A, which incorporated the provisions of the Customs Act, having bearing on non-levy, short levy, refunds etc. The case of the appellant, who did not pay the anti-dumping duty was clearly a case of non-levy and therefore, recovery could be affected under the provisions of Section 28 of the Customs Act read with Section 9A(1)(5)(8) of the Customs Tariff Act in respect of the liability to pay anti-dumping duty that had arisen upon importation of the articles on which the duty was imposed and had remained operative till 15-4-2003. Since the liability arising under the provisions of the statute which continued to remain operative 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, whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 1,07,06,787/-), by including the amount of anti-dumping duty in the aggregate was not sustainable. 32.It is contended that with effect from 11-5-2001 when sub-section (2A) was introduced in Section 9A of the Tariff Act by Section 118 of the Finance Act, 2001, no anti-dumping duty remained imposable on a 100% EOU under the said notification. By sub-section (2A) of Section 9A of the Tariff Act it is provided that notwithstanding anything contained in sub-sections (1) and (2) of Section 9A of the Tariff Act, a notification issued thereunder, unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to articles imported by a 100% Expert-Oriented Undertaking or a Unit in a free trade zone or in special economic zone. This provision requires that when anti-dumping duty is intended to apply to articles imported by 100% EOU, it should be specifically made applicable. In other words, if it is not specifically made applicable, no anti-dumping 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... duty of customs by virtue of any notification issued by the Government of India from the whole of customs duty leviable thereon under Section 9A of the Customs Tariff Act. Therefore, mere being 100% EOU was not sufficient to earn the exemption under the notification dated 18-1-1994 (reproduced hereunder), but it was also necessary that there should be exemption from the duty of customs by virtue of any notification of the Government of India from the whole of additional duty leviable thereon under Section 9A of the Customs Tariff Act :- "Notification No. 5/94-Cus. dated 18 Jan. 1994 All goods imported into India by a 100% EOU or a unit working in a free trade zone and exempted from basic customs duty are also exempt from additional duty In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the 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 a....