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2020 (1) TMI 212
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.... is filed to quash 193 Bills of Entry listed therein, as the same being contrary to law and for direction to the respondents to re-credit the Social Welfare Surcharge component in all the MEIS and SEIS duty credit scrips of the petitioner from which such surcharge was deducted and further to restrain the respondents from debiting any amount pertaining to SWS from the MEIS and SEIS duty credit scrips and from debiting any amount pertaining to BCD over and above the prescribed rate on all future imports. 3.The petitioner in both the writ petitions is one and the same. 4. The case of the petitioner is as follows: The petitioner is in the business of manufacturing and marketing edible oils and fats. Importing of goods is part and parcel of the petitioner's activities ordinarily attracting the levy of Customs Duties. The petitioner offset such Customs Duties, by procuring scrips under the MEIS (Merchandise Exports from India Scheme) and SEIS (Service Exports from India Scheme) provided for under Chapter 3 of the FTP and utilizing such scrips. The concept of MEIS and SEIS Schemes are as follows: MEIS i) A claimant needs to export notified goods (coded under the ITC-HS) to notif....
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....isions, notifications and scrips, the customs duties, that were otherwise payable by the petitioner became exempt. c) Social Welfare Surcharge (hereinafter referred to SWS) was introduced as a levy under Section 110 of the Finance Act, 2018 to meet the Government's obligations to finance education, health and social security. The said surcharge was levied at the rate of 10% of the aggregate of duties of Customs levied and collected by the Government under Section 12 of the Customs Act, 1962. d) The petitioner imported certain goods at Karaikal Port in the normal course of its business during the period July 2017 to July 2018 and its Bills of Entry were assessed. The petitioner's MEIS licenses and SEIS licenses were debited by the amounts pertaining to SWS by the second respondent by including the same as part of customs duties. The petitioner through letter dated 26.06.2019 sought to ascertain the methodology adopted by the second respondent in deducting excess duties of customs from the scrips. The second respondent responded through the impugned letter stating that there was no excess duty being collected from the petitioner. The deduction of the amounts pertaining ....
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....duty credit scrips are granted as rewards and such scrips can be used for payment of Custom Duties, payment of excise duties, payment of service tax, payment of customs duty and fee as per paragraph 3.18 of the policy. Under the earlier Foreign Trade Police namely FTP 2004-2009, the duty paid through debits under DEPB Scheme which is similar to MEIS Scheme and SEIS Scheme under FTP 2015-2020 was originally treated as exemption from duty and that goods cleared through debit under DEPB Scheme were exempted goods. Subsequently para 4.3.5 of the FTP 2004-09 was amended so as to give the benefit of Cenvat credit or duty drawback to additional customs duty paid through debit under DEPB Scheme. Customs Notification 96/2004 dated 17.09.2004 read with Customs Circular No.59/2004 dated 21.10.2004 laid down that the additional customs duty paid through debit under DEPB Scheme shall be allowed to be availed as cenvat credit or duty drawback. Thus, it is submitted that the MEIS Scheme and SEIS Scheme under FTP 2015-20, which allows the debit of basic customs duties and other duties from duty credit scrips is the same as the DEPB Scheme available under the amended para 4.3.5 of Foreign Trade Pol....
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....bit from the duty credit scrips. Clause 2 of the Notification 24/2015-Customs and Notification 25/2015-Customs dated 08.04.2015 states that the exemption mentioned in clause (1) are subject to the conditions laid down in sub clause (1) to (10) of clause 2 of the Notifications. Sub clause (8) and (9) lays down that the importer shall be entitled to avail the drawbacks of the customs duty and CENVAT credit or drawback or additional customs duty against the amount debited in the scrips. Sub clause (5) lays down that the said scrips has to be produced before the proper officer of customs at the time of clearance for the debit of the duties leviable on the goods. Thus on a conjoint reading of the clauses in the Notifications, it is evident that there is no factual exemption on the customs duty but the Notifications only speak about the debit of the leviable duties from the duty credit scrips. Thus the SWS which was introduced as an additional customs duty under Section 110 of the Finance Act, 2018 has to be treated on the same plane as the basic customs duty and other customs duties as per sub section (5) of Section 110 of the Finance Act, 2018. Thus, in such an event the debit of SWS f....
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.... the scrips obtained by the petitioner under the Merchandise Exports and India Schemes (MEIS) and the Service Exports from India scheme(SEIS) under the Foreign Trade Policy 2015-2020 relevant to two imports made at Karaikal Port and Chennai Port. The respondents instead of debiting Basic Customs Duty(BCD) at 45% on the assessable value of bill of entry from the scrips of the petitioner have debited 49.5% by adding 10% of Social Welfare Surcharge, which is illegal, arbitrary and unsustainable in law. Notification Nos.24 & 25/2015 specifically exempt goods when imported using MEIS and SEIS scrips from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act 1975 and the whole of additional duty leviable thereon under Section 3 of the Customs Tariff Act, 1975. The exemptions under the aforesaid Notifications are effectuated by way of debiting the duty amount from the value that the MEIS and SEIS scrips bear. Debiting of the scrip is only an administrative mechanism of tracking when the upper limit of exemption is reached. Therefore, it cannot be stated that the debit of scrip means payment of Customs Duties or that the duties are paid throug....
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....hen monies paid by way of tax would have formed part of the Consolidated Fund of India and not shown as "Duties Foregone" in the Budget Documents. Tax incentives through exemptions etc. do not form part of the Consolidated fund of India. From a perusal of Union Budget of 2018-19 and more particularly, Annexure 7 of the Receipt Budget presented before the Parliament makes it abundantly clear that Revenue Impact on account of Export Promotion Concessions such as SEIS schemes and MEIS schemes etc. adds up to the Total Customs Duty Foregone by the Government of India. It is crystal clear that the incentives available under the DEPB scheme, SEIS Scheme, MEIS Scheme etc. tantamount to Revenue Foregone by the Central Government and thus do not form part of the Consolidated Fund of India. If debit of Duty through the scrips indeed amounted to payment of Tax, then for sure, such payment would have contributed to the Revenue Earned by the Government of India and not the "Revenue Foregone". e) If debit of Duty amounts to "payment of tax" then occasion for imposition of interest in case of irregular utilization of the scrips could not have arisen. Even in a situation where Duty has been pa....
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....tion of the executive is under Section 25(1) of the Customs Act (power to grant exemption), such a delegated legislation in the form of Notification cannot be anything other than a Notification granting exemption. Any other interpretation suggestive of the Notification requiring payment of tax, would run wholly contrary to the source of power, effectuated for issuing the subject notification and thus cannot be countenanced. h) Significance of the phrase "But for this exemption". On a perusal of Clause 2(v) of the present Notification, it can be noticed that the power has been granted to the proper officer to debit the duties leviable on the goods but for this exemption. The choice of the words "but for this exemption" essentially denotes that where without the operation of the exemption notification, Customs Duty is payable, however, on application of the exemption notification, the duties are exempt. The present notification is only an exemption notification. The petitioner relies upon the Constitution Bench decision of the Supreme Court in the case of AV Fernandes vs. State of Kerala - AIR 1957 SC 657. The petitioner also relies upon the Division Bench decision of the Supreme....
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....ras High Court in Tanfac and SPIC are distinguishable. Furthermore the Tanfac decision was rendered by the Madras High Court in 2009, whereas in the year 2013, a Division Bench of the Madras High Court in case of Commissioner of Customs Tuticorin vs. DCW reported in 2014(306) ELT 398 (Mad.) in identical facts and issues involved as in the present petition, had come to the conclusion that the notification concerned therein i.e. Notification 96/2004 dated 17.09.2004 under which customs duties were being debited under the DEPB scheme, essentially granted a total exemption from the payment of Customs Duties, and consequently, it was held that Education Cess (similar to SWS) was also exempt. k) The Respondents' reliance on Circular No.5/2005 dated 21.05.2005 is wholly misplaced. It is submitted that such reliance is wholly misplaced because the said circular had been set aside as constitutionally invalid by the Hon'ble Gujarat High Court. Alternative remedy is not efficacious in the present case. In fact alternate remedy is an exercise in futility and the petitioner rightly approached this Hon'ble Court in writ proceedings under Article 226. 9. Mrs.Aparna Nandakumar, le....
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....d when there is no specific exemption. Thus, the petitioner endeavour to equate all the incentive schemes under one umbrella of exemption is wholly erroneous. The Duty Entitlement passbook Scheme or the Duty Credit Scrips Scheme cannot be treated as an exemption from payment of duty. In this regard, the second respondent herein places reliance on the decision of the Hon'ble Supreme Court in Commissioner of Customs, Calcutta v. Indian Rayon and Industries Ltd. [2008 (10) SCALE 498]. The decision of the Apex Court has been followed by the Division Bench of this Court in Tanfac Industries Ltd. v. The Assistant Commissioner of Customs, Customs Division, 2009 (165) ECR 186 (Madras). SLP 24638-24640/2009 filed against this decision dismissed by the Hon'ble Supreme Court. Tanfac Industries decision has been followed by another Division Bench of this Court in CCE v. SPIC, Heavy Chemicals Division, [2014] 25 GSTR 538 (Mad). The second respondent herein also places reliance on the decisions of the Hon'ble Supreme Court in Yasha Overseas v. Commissioner of Sales Tax, (2008) 8 SCC 681. The second respondent herein also places reliance on the decisions of the Hon'ble Gujarat H....
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....UOI (Rajasthan High Court) RLW 2007(4) Raj.2995. The provisions of Section 110 of the Finance Act, 2018 are similar to Section 93 of the Finance Act, 2004 by which Education cess was introduced. While Section 93(1) of the Finance Act 2004 is comparable to Section 110(1) of the Finance Act, 2018, Section 93(2) and 93(3) of the Finance Act, 2004 are comparable to Section 110(4) and (5) of 2018. Thus, it is submitted that the decision in Banswara rendered in the context of education cess is applicable in all fours to the issue of SWS. The decision of the Hon'ble Rajasthan High Court in Banswara has been affirmed by the Hon'ble Supreme Court in SRD Nutrients v. CCE, (2018) 1 SCC 105 and in Bajaj Auto Ltd. Vs. UOI 2019 (366) ELT 577 (SC). f) Based on the ratio laid down by the Hon'ble Supreme Court, when the basic customs duty is not exempted and is debitable from the duty credit scrips, the SWS which takes the colour of parent levy viz., basic customs duty and is not an independent levy, is also debitable from the duty credit scrips. The Constitutional Bench of the Hon'ble Supreme Court in Commissioner of Customs v. Dilip Kumar 2018 9 SCC 1 has laid down that exempt....
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....ger rely upon the decisions of the Apex Court in SRD Nutrients Private Limited and Bajaj Auto Limited cases, in support of their contention that the Social Welfare Surcharge is not an independent levy but took the colour of the parent levy. However, the revenue sought to contend that the present issue is not a case of exemption of basic customs duty to test whether the exemption is at all applicable to social welfare surcharge and on the other hand, the issue revolves around the question whether the payment of SWS can be debited from the duty credit scrips like the customs duty. 12. In the additional written submissions filed on behalf of the petitioner, they relied on the recent decision of the Apex Court made in Unicorn Industries case, and contended that SWS could not have been debited from the scrips because notification Nos. 24 and 25 of 2015 exempted only Customs Duties levied under the Customs Act and Customs Tariff Act and therefore, in the absence of any machinery for debiting SWS from the scrips, the revenue ought not to have debited the same from the scrips. 13. Heard Mr.Sujith Ghosh, learned counsel for the petitioner and Mrs.Aparna Nandhakumar, learned counsel for t....
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.... (iii) Deleted (iv) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 and fee as per paragraph 3.18 of this Policy." 16. The Central Board of Indirect Taxes and Customs issued two notifications in Nos.24/2015 and 25/2015, both dated 08.04.2015. The petitioner seeks to rely on the above said notifications in support of their contention that the Social Welfare Surcharge (SWS) cannot be debited from the above duty credit scrips. 17. Notification No.24/2015-Customs dated 08.04.2015 reads as follows: "[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 24 / 2015- Customs New Delhi, the 8th April, 2015. G.S.R. 269 (E).- 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 goods when imported into India against a duty credit scrip issued by the Regional Authority under the Merchandise Exports from India Scheme i....
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....ed on the said scrip; (5) that the said scrip is produced before the proper officer of customs at the time of clearance for debit of the duties leviable on the goods and the proper officer of customs taking into account the debits already made under this exemption and debits made under the notification Nos.20/ 2015 - Central Excise, dated the 8th April, 2015 and 10/ 2015 -Service Tax, dated the 8thApril, 2015,shall debit the duties leviable on the goods, but for this exemption; (6) that the said scrip and goods imported against it shall be freely transferable; (7)that where the importer does not claim exemption from the additional duty of customs leviable under section 3 of the said Customs Tariff Act, he shall be deemed not to have availed the exemption from the said duty for the purpose of calculation of the said additional duty of customs; (8) that the importer shall be entitled to avail of the drawback of the duty of customs leviable under the First Schedule to the said Customs Tariff Act against the amount debited in the said scrip; (9)that the importer shall be entitled to avail drawback or CENVAT credit of additional duty leviable under section 3 of the said Custom....
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.... precious metal/diamond are used or Articles which are studded with precious stones; and xix Exports made by units in FTWZ. [F.No.605/55/2014-DBK] (Sanjay Kumar) Under Secretary to the Government of India" 18. Notification No.25/2015-Customs dated 08.04.2015, reads as follows: "[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No.25 / 2015- Customs New Delhi, the 8th April, 2015. G.S.R. 270 (E).- 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 goods when imported into India against a Service Exports from India Scheme duty credit scrip issued by the Regional Authority under paragraph 3.10 read with paragraph 3.08 of the Foreign Trade Policy (hereinafter referred to as the said scrip) from,- (a) the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as said Customs Tariff Act); and (b) the w....
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....that the benefit under this notification shall not be available to the items listed in Appendix 3A of Appendices and Aayat Niryat Forms of Foreign Trade Policy 2015-2020. Explanation.- In this notification- (I) "Capital goods" has the same meaning as assigned to it in paragraph 9.08 of the Foreign Trade Policy; (II) "Foreign Trade Policy" means the Foreign Trade Policy, 2015-2020, published by the Government of India in the Ministry of Commerce and Industry notification number 01/2015-2020, dated the 1st April 2015 as amended from time to time; (III) "Goods" means any inputs or goods including capital goods; (IV)"Regional Authority" means the Director General of Foreign Trade appointed under section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorised by him to grant an authorisation including a duty credit scrip under the said Act. [F.No.605/55/2014-DBK] (Sanjay Kumar) Under Secretary to the Government of India" 19. Under the above said two notifications, the Central Government, in exercise of the power conferred under Section 25(1) of the Customs Act, 1962, exempted goods imported into India, against a duty credit scri....
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....Tariff Act, 1975 and therefore, when there is a total exemption granted for payment of basic customs duty and additional customs duty, the Social Welfare Surcharge leviable at 10% of such basic customs duty under normal circumstances, cannot be levied and collected in the case of the petitioner. It is their further contention that under the above said notifications, the Revenue is entitled to debit only the basic customs duty and additional customs duty, if any, on the goods imported from the value of the scrips and not the SWS, since those two notifications do not refer or include SWS anywhere for effecting the debit on that account also, out of the value of the scrips. According to them, in view of exemption granted duty paid is NIL and so, SWS also should be treated as NIL. 22. In support of their contention, the learned counsel for the petitioner relied on the certain decisions, which are discussed as hereunder: a) A Division Bench of this Court, in a case of Commissioner of Customs, Tuticorin, Vs. DCW Limited, 2014 (306) E.L.T. 398 (Mad.), while dismissing a Civil Miscellaneous Appeal filed by the Revenue, confirmed the order of the CESTAT. The issue raised before the Divis....
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....D.O.F. No. 334/3/2004-TRU on the specific issue as to whether goods that are fully exempted from excise duty/customs duty or are cleared without payment of excise duty/customs duty (such as clearance under bond of fulfilment of certain conditions) would be subjected to Cess. It was stated therein that since education cess has to be calculated at the percentage on the duty liability, when the goods are fully exempted from excise duty or customs duty, are chargeable to Nil duty or are cleared without payment of duty under specified procedure such as clearance under bond, the question of education cess to be levied does not arise. 3. Having regard to the specific understanding given on the principle of levy of education cess, and the subsequent Circular also issued in Circular No. 5/2005-Cus., dated 31-1-2005 (F. No. 605/54/2004- DBK), we have no hesitation in confirming the order of the Tribunal by dismissing the appeal. In the result, the above Civil Miscellaneous Appeal is dismissed. No costs. Consequently, connected MP is closed." b) It is to be noted at this juncture that Notification No.96/2004 dated 17.09.2004 referred to in the above decision is similar to the subject matt....
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....port product. 18. From the nature of DEPB scheme noted above and the exemption from payment of customs duty on imports made under such scheme, it can be gathered that the very purpose of granting such exemption is to neutralise the customs duty, on the import component of the export product. In essence, the Government of India grants duty remission at prescribed rates on the imports made under such a scheme. 19. It can thus not be denied that for the imports made under the DEPB scheme, there is total or partial, as the case may be, exemption in payment of customs duty. At the relevant time, for the goods other than edible oil, such exemption was total. For edible oil, such exemption was to the extent of 50% of the customs duty and additional duty payable. In essence, therefore, for imports made under the DEPB scheme, of course, subject to the conditions specified in the exemption notification, the customs duty was exempt. Merely because the conditions provided for adjustment of credit in the DEPB scrips, it cannot be stated that either there was no exemption from payment of customs duty or that the Central Government was levying and collecting customs duty from the importers in....
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....ision of Madras High Court in the case of Tanfac Industries Ltd. v. Asstt. Commr. of Cus., Cuddalore reported in - 2009 (240) E.L.T. 341. In the said case, in the background of interest on warehoused goods where such demand of interest on goods cleared beyond 90 days arose, the Division Bench of the High Court came to the conclusion that on the imports under DEPB scheme, the importers pay duty not by cash but by way of credit and, therefore, the goods cleared under DEPB scheme cannot be treated as exempted goods. It can only be treated as duty-paid goods. 24. With respect, we are unable to concur with such a view. Firstly, in the said decision, the question of levy of Education Cess was not involved. More particularly in our view, the exemption Notification No. 45/2002 is issued under the exercise of powers under Section 25 of the Customs Act, 1962. Such notification grants total exemption from payment of customs duty and additional duty on all goods other than edible oils which are imported under DEPB scheme. It is, of course, subject to conditions specified in the notification itself. Such conditions require adjustment of the credit in the DEPB scrip against the customs duty ....
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....tification Nos. 24 and 25 of 2015. e) Challenging the above order of the Gujarat High Court made in Pasupati Acrylon Ltd. case, which in fact, followed its earlier decision of Gujarat Ambuja Exports Ltd. case, the Revenue filed SLP before the Apex Court. By an order dated 08.05.2013, the Hon'ble Supreme Court dismissed the Special Leave Petitions by observing that no ground was made out to interfere with the matter. f) A Division Bench of the Bombay High Court in the case of Commissioner of Customs (Export) Vs. Reliance Industries Ltd., 2015 (322) E.L.T. 121 (Bombay) considered the issue as to whether the Education Cess is leviable on imports made under the DEPB scheme. The notification No.45/2002-Customs dated 22.04.2002 was the relevant notification therein. The Division Bench of the Bombay High Court, by taking note of the decision made by this Court in 2014 (306) E.L.T. 398 (Mad.), and that of the Andhra Pradesh High Court in 2014 (305) E.L.T. 268 (A.P.), and also by taking note of the fact that the view taken by the Gujarat High Court in Pasupati Acrylon case, following the Gujarat Ambuja Exports Ltd. Case, has not been interfered with by the Hon'ble Supreme Court,....
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.... and special additional duties of Customs. However, in terms of the conditions specified in the said notification, the exemption operates by allowing duty credit in the Duty Entitlement Pass Book on exports at the rate specified and subsequently by debiting an amount equal to duty payable, against such credit in the pass book, on imports. As such, such crediting and debiting of duty amounts is a matter of procedure and convenience, but the notification basically provides full exemption from Customs duty. Our view is supported by earlier decision of the Tribunal in Essar Steel Ltd. v. CCE, Visakhapatnam, 2004 (173) E.L.T. 239 (Tri.) wherein it was held that Modvat credit against DEPB debits cannot be allowed as duties are exempted under DEPB Scheme and the relevant notification." We find that the provisions in the said Finance Act specify the Education Cess as 2% of the Customs duty levied and collected. In the case of imports under the DEPB Scheme, which are fully exempt, the Customs duty is nil. Hence, the Education Cess being 2% of the Customs duty is also nil. If it were the intention of the Parliament to debit and credit Education Cess for imports under DEPB Scheme, then th....
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....th this issue. It has expressed an opinion that the duty exemption remission scheme and the duty exemption passbook scheme are essentially to promote economic growth and in terms of the new policy adopted by the Government of India. The education cess on imported goods shall be in addition to any other duties of Customs chargeable on such goods under the Customs Act, 1962 or any other law for the time being in force. By Section 84(3) the provisions of the Customs Act, 1962 and the rules and regulations made thereunder including those relating to refund and exemption from duty and imposition of penalty shall as far as may be applied in relation to levy and collection of the education cess on the imported goods. If education cess is to be collected from the Customs duty levied and collected by the Central Government, then, in the given facts and circumstances when there is exemption from payment of that duty which exemption is in favour of the respondent assessee, then, there is no collection of the Customs duty. The Customs duty may be leviable but in the light of the exemption in favour of the respondent assessee, the duty has not been recovered and collected from the assessee. I....
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....en moved the CESTAT, Relying on its decision in Ruchi Health Foods Ltd. v. CC, Cochin, 2007 (81)' RLT 309 (CESTAT-Ban.) and the decision of the CESTAT, Mumbai in CC (Exports), CC, Mumbaiv.Reliance Industries Ltd., -[2005 (7-1). RLT 681 (CESTAT-Mum.) :2005 (188) E.L.T. 449 (Tri.-Mum.)] the CESTAT allowed the appeal holding that education cess is not leviable in respect of duly free import under DEPB scheme. 4. The Senior Standing Counsel for Central Excise submits that the exemption available under DEPB scheme is not an unconditional exemption. It is available only when the merits imports are made under normal course and the duty is debited from the credit available in DEPB scrips-. While doing so, an importer is entitled to claim the benefit only with regard to basic customs duty and not the education cess. He would rely on the circular of the CBE & C dated 31-3-2005. 5. A copy of the notification No. 45/2002 issued under Section 25(1) of the Customs Act, 1962 is placed before us. Under the said notification the whole of the duty of Customs leviable, the whole of the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 and the whole of the special additional....
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....mption from duty, if it is necessary in public interest to do so, either absolutely or subject to such condition as may be specified. The Duty Entitlement Pass Book- Customs Duty Exemption Notification, which deals with DEPB refers to exemption from payment of duty as well as additional duty under Sub-section 3 of the Customs Tariff Act. 6. We are here concerned with the question, whether the debits under DEPB is equivalent to payment of duty in cash. ........ 10. The Duty Entitlement Pass Book Scheme has the objective of neutralising the incidence of Customs duty on the import content of the export product and it is provided by way of grant of duty credit against the export product and the additional customs duty/excise duty paid in cash or through debit under DEPB shall be adjusted as CENVAT Credit or Duty Drawback. The important paragraphs of the Circular dated 20.7.2007 are extracted hereunder: Interest payable on clearance of warehoused goods when duty paid through DEPB debit. Subject : Waiver of interest on goods cleared from a warehouse when duty is paid by way of debit in DEPB licenses-Regarding. I am directed to refer to instructions contained in Board's Ci....
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....Scheme, the situation is slightly different. As explained above, the notification issued under DEPB Scheme provides for exemption subject to debit of duties in DEPB scrips. It is thus not a case where the goods are unconditionally exempt from duty. 6. In the light of the position explained above, it is clarified that interest is chargeable on duty paid by way of debit in DEPB on goods cleared from the warehouse. ....... 12. In fact, in that case, there were three bills of entries, only one of them was goods exported under DEEC Scheme and other two were under the DEPB Scheme. The difference drawn by the Supreme Court in the above judgments make it clear that under the DEEC Scheme, the clearance is allowed duty free, whereas under DEPB Scheme, the exporters are issued DEPB scrips which allows them specific amounts to be utilised for payment of Customs duty. Therefore, the importers, who use DEPB scrips, pay duty not by cash but only by way of credit. This is clear from the judgment of the Supreme Court extracted above. Therefore, the goods cleared under DEPB Scheme cannot be treated an exempted goods, but they can only be treated to be duty-paid goods and therefore, the interes....
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....h has to be adjusted as per the Export and Import Policy, prescribing DEEC to the eligible assessee. In the context of the notification and in the context of relevant clause 7.25 of the Export and Import Policy, he submitted that the Tribunal committed serious error in denying the relief to the assessee. 8. The learned counsel appearing for the assessee also referred to the decision reported in [1999] 106 ELT 3 (SC) Eicher Motors Ltd. v. Union of India, as to the meaning of the expression "paid" occurring in the said rule as meaning "actual payment". Thus, the purport of the scheme as well as rule 57Q of the Central Excise Rules cannot be lost sight of to deny the relief to the assessee. 9. Countering the stand of the assessee, the learned standing counsel appearing for the Revenue, however, supported the order of the Tribunal, particularly in the face of the larger Bench decision in the case of Essar Steel Ltd. v. CCE [2004] 173 ELT 239 (Trib.-Delhi) [LB] on the strength of Notification No. 34/1997, dated April 7, 1997. The learned standing counsel appearing for the Revenue submitted that in the face of clause 7.41 of the Export and Import Policy on DEPB, unless and until the ....
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....duties leviable on the goods exempt from duty, the exemption from duty shall not be admissible if there is insufficient credit in the said duty entitlement passbook for debiting the duty leviable on the goods but for the exemption notification. Thus the notification gives exemption from payment of customs duty leviable as specified under the First Schedule to the Customs Tariff Act, 1975 and the additional duty leviable under section 3 of the Customs Tariff Act, subject to the condition that the importer was issued duty entitlement passbook in pursuance of paragraph 7.25 read with paragraph 7.29 of the Export and Import Policy and that the exemption would be available only when there is sufficient credit in the duty entitlement passbook for debiting the duty leviable on the goods, but for the exemption. The notification issued, however, has no relevance to the case where the assessee pays the duty by way of credit entry, in which event, the question of exemption of the notification, does not operate. 22. Thus, in view of the limited scope of exemption, the notification cannot be construed as a non-liability for the purpose of claiming Modvat credit. Read in the context of the dec....
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....er Limited (supra) has considered the similar question in the backdrop of the facts that what is the meaning of the expression 'duty of excise' employed in the notifications dated 1.8.1974 and 1.3.1981, issued by the Government of India under Rule 8(1) of the Central Excise Rules. A question arose whether expression 'duty of excise' is limited in its connotation only to basic duty levied under the Central Excises and Salt Act, 1944 or it also covers special duties of excise levied under the various Finance Bills and Acts, additional duty of excise levied under the Act of 1957 and other kind of duty of excise levied under the Central enactments. ..... 38. This Court in Modi Rubber Limited (supra) also considered the provisions of Section 32 of the Finance Act, 1979, levying special duty making applicable to the provisions of the Act of 1944 and the Rules made thereunder, relating to refunds and exemptions from duties. They shall, as far as may be, apply in relation to the levy and collection of the special duty of excise as they apply to the levy and collection of the duty of excise under the Act of 1944. It was held that reference to the provisions under section 32 of the Finan....
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....d be granted in relation to the duty of excise payable under the Central Excises and Salt Act, 1944. The argument of the respondents based on this premise was that the reference to Rule 8(1) as the source of the power under which the notifications dated August 1, 1974 and March 1, 1981 were issued could not therefore be relied upon as indicating that the duty of excise from which exemption was granted under these two notifications was limited only to the duty of excise payable under the Central Excises and Salt Act, 1944 and the expression "duty of excise" in these two notifications could legitimately be construed as comprehending special duty of excise. This argument is, in our opinion, not wellfounded and cannot be sustained. It is obvious that when a notification granting exemption from duty of excise is issued by the Central Government in exercise of the power under Rule 8(1) simpliciter, without anything more, it must, by reason of the definition of 'duty' contained in Rule 2 clause (v) which according to the well recognised canons of construction would be projected in Rule 8(1), be read as granting exemption only in respect of duty of excise payable under the Central Excise....
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....n respect of special duty of excise or additional duty of excise and in each of these notifications, we find that the source of power is described as subrule (1) of Rule 8 of the Central Excise Rules, 1944 read with the relevant provision of the statute levying special duty of excise or additional duty of excise by which the provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder including those relating to exemption from duty are made applicable. Moreover, the exemption granted under all these notifications specifically refers to special duty of excise or additional duty of excise, as the case may be. It is, therefore, clear that where a notification granting exemption is issued only under subrule (1) of Rule 8 of the Central Excise Rules, 1944 without reference to any other statute making the provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder applicable to the levy and collection of special, auxiliary or any other kind of excise duty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excises and Salt Act, 1944 and cannot cover such special, auxiliary or other k....
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....nate Bench. ..... 41. The Circular of 2004 issued based on the interpretation of the provisions made by one of the Customs Officers, is of no avail as such Circular has no force of law and cannot be said to be binding on the Court. Similarly, the Circular issued by Central Board of Excise and Customs in 2011, is of no avail as it relates to service tax and has no force of law and cannot be said to be binding concerning the interpretation of the provisions by the courts. The reason employed in SRD Nutrients Private Limited (supra) that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making the computation of additional duties, which are payable under NCCD, education cess, secondary and higher education cess. Moreover, statutory notification must cover specifically the duty exempted.....
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....hemes. The scheme provides that objective of DEPB is to neutralise incidence of customs duty on import component of export product which would include special additional duty in case of non-availment of CENVAT credit. Neutralisation would be provided by way of grant of duty credit against export product which would be at a specified percentage of FOB value of export. The holder of DEPB would have an option to pay additional customs duty in cash also. DEPB is freely transferable. The Foreign Trade Policy of 2009-2014 contained an additional clause which hitherto was not a part of the policy and reads as under: "Applicability of Drawback. Additional customs duty/Excise Duty and Special Additional Duty paid in cash or through debit under DEPB may also be adjusted as CENVAT Credit or Duty Drawback as per DOR rules." 16. It can thus be seen that the DEPB scheme aims at neutralising the incidence of customs duty on import component of export product, where upon export, credit would be given at specified rate on the FOB value of the exports. Such credit could be utilised for payment of duty in future or may even be traded. It was in this background that Supreme Court in case of Li....
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.... such view. However, the above two decisions are now considered by the Larger Bench of the Apex Court in M/s.Unicorn Industries case. The Hon'ble Supreme Court, after considering those two decisions and also the earlier decision of the Apex Court made in Union of India v. Modi Rubber Limited, (1986) 4 SCC 66, found that the duty on NCCD, Educational Cess and Secondary and Higher Education Cess are in the nature of additional duties imposed by different legislation for a different purpose. The learned counsel for the Revenue fairly submitted that in view of the above recent decision of the Apex Court made in M/s.Unicorn Industries, the Revenue can no longer rely upon SRD Nutrients Private Limited and Bajaj Auto Limited cases in support of their contention that Social Welfare Surcharge is not an independent levy. Therefore, in view of the above recent decision of the Apex Court made in M/s.Unicorn Industries, I hold that Social Welfare Surcharge levied under Section 110(3) of the Finance Act, 2018, is an independent levy imposed and collected under different enactment viz., Finance Act 2018. Consequently, I hold that SWS intended totally for a different purpose is not taking the....
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.... Trade Policy and the subject matter notifications will not give any room for doubt as to whether the duty is collected from the petitioner or not. Clause 3.02 is clear and categorical that the duty credit scrips can be used for payment of basic customs duty, additional customs duty and payment of central excise duties and therefore, the purpose for which the duty credit scrips are given is evident and apparent viz., for payment of customs and excise duties. The duty credit scrips thus, are having money value and therefore, the same can be used in lieu of cash for payment of the above duties. The exemption notifications, as already discussed supra, specifically stipulate that those duty credit scrips should be produced before the concerned officer of customs by the importer, who imports goods against those scrips, for the purpose of debiting the duty leviable on such goods, but for exemption. It is to be noted at this juncture that the term "but for exemption" is to denote that the duty liable to be paid in cash, in view of exemption, is to be accepted by way of debiting such quantum of duty from the value of scrips. 29. Therefore, it is evident that the exemption granted under t....
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....fications, is by way of debiting the value of such duty from the scrips. If no duty is leviable and payable in view of the exemption granted under the above said notifications, as contended by the petitioner, it makes no sense for imposing conditions therein for making debits towards customs duty leviable from and out of the value of the scrips. Admittedly, in this case, the petitioner is not opposing or denying or disputing the debit of customs duty from the value of the scrips. Their only grievance is against the levy and collection of SWS. 31. Their contention against such levy and collection is that when the levy of customs duty itself is exempted, the Revenue cannot levy and collect the Social Welfare Surcharge. I have already pointed out that the exemption granted under the above said notifications is not an exemption from payment of customs duty in toto and on the other hand, subject to the conditions stipulated therein, which I have already discussed supra. Needless to state that exemption notifications have to be read in full to know the purport, ambit and scope of such notification. Isolated reading of any clause of the said notifications would not serve the purpose of k....
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....rips is an exemption from payment of duty in toto (duty paid is Nil), I bound to follow the Tanfac Industries Ltd. Case, confirmed by the Apex Court. It is true that the Gujarat High Court has taken a different view in Gujarat Ambuja Exports Ltd. case, which was followed in Pasupati Acrylon Ltd., case. It is also true that in Gujarat Ambuja Exports Ltd. case, the Gujarat High Court has taken note of the view expressed in Tanfac Industries Ltd. case and however, had chosen to differ from such view. But perusal of the decision made in Gujarat Ambuja Exports Ltd., reported in 2013 (289) E.L.T 273 (Gujarat), would show that the decision of the Apex Court in dismissing SLP filed against Tanfac Industries Ltd. case seems to have not been placed before the Gujarat High Court. As already pointed out Tanfac Industries Ltd. decision of this Court was not interfered with by the Apex Court by dismissing SLP as early as on 09.10.2009. Further the Gujarat High Court in its latter decision in Ratnamani Metals And Tubes Ltd. v. Union of India, 2016 (339) ELT 509 (Guj), as extracted supra, found that when an importer imports goods under DEPB scheme or pays customs duty on the imports on purchased ....
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....der Section 57Q of the Central Excise Rules, irrespective of whether the duty is paid in cash or through credit entry in the pass-book. Therefore, the above view expressed by the other Division Bench following TANFAC Industries Ltd., made after DCW Ltd. case, undoubtedly, drive me to follow the view taken by TANFAC Industries Ltd. Case. Accordingly, I hold that the petitioner is not justified in contending that total exemption is granted to them from payment of customs duty and that there is nil rate of duty. 34. Reliance placed on the decision of the Apex Court reported in AIR 1957 SC 657, AV Fernandes vs State of Kerala, by the petitioner to contend that the subject matter notifications granted total exemption from payment of duty, is neither helpful nor applicable to the case of the petitioner. In that case, the question was whether the assessee therein is entitled to take into computation of his sales of oils outside the state and that whether he is entitled to deduct from his gross turnover the purchase price of copra allocated to the oil sold to the persons outside the state. Under Travancore Cochin GST Amendment Act, 1951, a provision was made therein that a tax on the sal....
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....ly spoken to therein. A benefit given in an exemption notification must be confined only with such of those benefits referred to therein in strict sense and not to be extended beyond its scope. If the notification is unambiguous, there is no need to interpret the same. Thus, under the guide of interpreting an exemption notification, a benefit conferred on a person cannot be extended as an "undue benefit", which he is not entitled to otherwise under the notification. Going by the terms of the above exemption notifications and in view of the fact that levy and collection of Social Welfare Surcharge is an independent levy, that too, under a different enactment viz., the Finance Act, 2018, I am of the view that the respondents/Revenue are not empowered to make the debit of Social Welfare Surcharge, from and out of the value of the scrips apart from making debit of the duties leviable on the subject matter goods. 39. It is argued by the learned counsel for the petitioner that certain decisions relied on by the Revenue are the judgments passed are sub silentio, since in those cases, the issue as to whether the relevant notification therein, grants exemption or not, has not been examined....
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....it relates to service tax and has no force of law and cannot be said to be binding concerning the interpretation of the provisions by the courts. The reason employed in SRD Nutrients Private Limited (supra) that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making the computation of additional duties, which are payable under NCCD, education cess, secondary and higher education cess. Moreover, statutory notification must cover specifically the duty exempted. When a particular kind of duty is exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted." 42. Above categorical finding rendered by the Apex Court, would show that the exemption granted in respect of a particular excise duty cannot be a bar for determin....