TaxTMI 
TaxTMI 
2009 (6) TMI 48
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....e referral order, are as follows : (a) The appellant is a 100% EOU having their unit in the area specified by the State Government of Uttar Pradesh for the purposes of concession from payment of Sales Tax/VAT; they are engaged in the manufacture of CDR, CD ROM, DVDR. DVD ROM falling under Chapter Heading 8523 of the Central Excise Tariff. (b) The appellant has been issued with an eligibility certificate on 30/7/02 for availing the exemption from Sales Tax/VAT available for units set up in specified backward-area. (c) The appellant sold part of their goods in DTA on payment of concessional rate of duty in terms of Notification No. 23/03-CE dated 31.3.03. Such goods cleared in DTA were exempt from Sales Tax. (d) Department felt that while calculating the aggregate value of Customs duty under Notification No. 23/03-CE readwith notification No. 22/2006-CE dated 1.3.06, the duty (SAD) element of 4% should be included on the ground that the goods cleared by the said EOU to DTA are exempt from payment of Sales Tax. Accordingly, show cause notice was issued proposing to include the element of 4% duty (SAD). (e) The Commissioner, by his impugned ....
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....3 (5) is not attracted since there is nothing to counterbalance in this regard. (d) The levy of SAD is assessee specific. Where the assessee is able to satisfy that there is a domestic sales tax exemption notification, then in such a case, SAD is not leviable. In other words, the very same exercise which is being done for the levy of CVD under Section 3 (1) as per the law laid down by the Hon'ble Supreme Court has to be followed in the case of SAD on a claim being lodged by the assessee. (e) The appellants are availing the concession under Section 4A of U.P. Trade Tax Act and therefore the goods cannot be said to be exempt from payment of Sales Tax/Value Added Tax. This does not mean that the goods cleared without payment of sales tax by availing the concession/incentive under Section 4A, 4AA etc. have become exempted from payment of sales tax. (f) In such a scenario SAD cannot be levied under Section 3 (5) of the Customs Tariff Act as it will be beyond the scope and objective of the provision. 5. Learned Jt. CDR made the following submissions : (a) The levy under Section 3 (5) of the Customs Tariff Act is to provide a level playing field ....
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....ied by the State Governments. 7.2 The submission that since SAD is imposed in order to counterbalance the sales tax/value added tax in each case of import, the rate of SAD would depend upon the rate of sales tax/VAT imposable on the imported goods in the state where the same are to be sold, and the SAD would be nil if the sales tax/VAT on the imported goods in the state, where the same are to be sold is nil, is incorrect as - (a) Unlike the Additional Customs duty under Section 3(1) of the Customs Tariff Act, in respect of which in the subsection itself, the rate of duty for the goods, other than alcoholic liquor for human consumption, is mentioned as equal to the 'central excise duty for the time being leviable manufactured in India', in respect of SAD, Section 3 (5) is only an enabling provision, authorising the Central Government to levy this duty on imported goods, in order to counterbalance the sales tax value added tax, local tax on any other charges for the time being leviable or like article on its sale, purchases or transportation in India, at a rate not exceeding 4% adv. by a notification issued in this regard ; (b) the Central Government, by ....
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.... under proviso to Section 3 (1) there is similar arrangement for levy of Additional customs duty on alcoholic liquor for human consumption, whose rate is notified by the Central Government taking into account the state excise duty leviable on alcoholic liquor for consumption in different State Governments. 7.4 The exemption granted by some of the states cannot affect the rate prescribed under Section 3 (5) notification and similarly the exemption granted by a state government in respect of assessee in some specified areas can have no bearing on the rate of SAD, fixed by the Central Government by a notification issued under Section 3 (5). 7.5 The Tribunal is not the forum to consider whether the Central Government has correctly fixed the rate of SAD so as to counterbalance the sales tax/VAT and local taxes/charges or not and no appeal against such decision to impose SAD by a notification issued by the Central Government lies with the Tribunal. Similarly whether the SAD levied in any way against the statement/assurance given by the Finance Ministry in his Budget speech that the Government of India is imposing SAD in order to counterbalance the sales tax/VAT imposed on domestica....
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....se duty equal to the aggregate of duties of customs, chargeable on the goods. It is settled law that an exemption notification has to be strictly construed, on its own wordings. [Hon'ble Supreme Court's judgment in cases of - (i) M/s Novapan India Ltd. vs. CCE, Hyderabad reported in 1994 (73) E.L.T. 769 S.C. (ii) CCE, Trichy vs. Rukmani Packwell Traders, reported in 2004 11 SCC 801 and (iii) CCE, Chandigarh - I vs. Mahan Dairies reported in 2004 11 SCC 798]. 8.1 It has been pleaded that levy of SAD on DTA clearances neutralises the exemption from sales tax enjoyed by the Appellant while the DTA units do not suffer such a levy. This contention is unacceptable for the simple reason that Hon'ble Supreme Court in a series of judgments CIT, WB vs. Central India Industries AIR 1972 S.C. 397; Laxmikant vs. Wealth Tax Commissioner - AIR 1973 S.C. 2258 and CIT vs. Gwalior Rayon Silk Manufacturing Co. - AIR 1992 S.C. 1782, has held that equitable considerations are not relevant in construing a taxing statute. 8.2 It has been pleaded that the Appellants are availing the concession under Section 4A of the U.P. Trade Tax Act and, therefore, the goods cannot b....
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....re prescribed in Chapter X of the Central Excise Rules, 1944, would be applicable for determining the Addition Customs duty under Section 3 (1) of the Customs Tariff Act on the like goods manufactured outside India and imported into India for the same specific end use, but in respect of which, Chapter X procedure cannot be followed. The issue involved in the present case is totally different whether while calculating the central excise duty equal to the aggregate of duties of customs chargeable on DTA clearances of a 100% EOU in terms of the provisions of exemption Notification No. 23/03-CE dated 31/03/03 as amended by Notification No. 22/06-CE dated 1/3/06, SAD leviable under Section 3 (5) of the Customs Tariff Act is to be included even when the DTA sales are exempt from sales tax or Value Added Tax (VAT) and there is no issue relating to observance of a procedural condition for availing an exemption notification is involved. The condition for non inclusion of SAD, that the goods should not be exempt from sales tax/VAT cannot be called a procedural condition. Therefore the Hon'ble Supreme Court's judgment in case of Thermax Private Limited (supra) does not help the Appell....
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....cision of Morarjee Brambana (supra) wherein it has been held that SAD is not applicable to sales by EOU to DTA, is not applicable for the reasons as arrived in the order impugned, as extracted supra. The non levy of Additional Duty of Excise (Goods of Special Importance) Act, 1957 would not Ipso facto lead to a conclusion that SAD has to be charged. (b) The assessee is admittedly not discharging sales tax for the reason of being situated in an area, as specified under the Sales Tax Act. The Appellant has strongly contended that when there is no sales tax, there can be no levy of SAD. The said levy was introduced w.e.f. 2/6/98 under new Section 3A of the Customs Tariff Act, 1975 and was applicable only to imports. Apart from the fact that whether sale from EOU to DTA has to be treated imports or not, we also note that the measure of the said levy was equivalent to sales tax and when the appellant was not required to pay sales tax; no SAD can therefore be confirmed also. When Tribunal decision in case of Morarjee Brembana Ltd. (100% EOU) vs. CCE, Nagpur (supra) or readwith Jindal Photo Film Ltd. 2004 (178) E.L.T. 955, we see no reason to take a different view. We accor....
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....able and falling within the First Schedule to the said Customs Tariff Act : Provided that in respect of the goods specified against S. Nos. 2, 3 and 4 of the said Table, Nil rate shall be subject to the conditions, if any, subject to which the goods are exempt either partially or wholly from the duty of customs leviable thereon which is specified in the First Schedule to the said Customs Tariff Act. 3. All goods falling under the said First Schedule, Nil Which are exempt from - (a) the whole of the duty of customs leviable thereon under the said First Schedule, and (b) the whole of the additional duty of customs leviable thereon under sub-section (1) of section (3) of the said Customs Tariff Act. 4. All goods falling under the said First Schedule - Nil (a) in the case of which Free rates of duty of customs are specified in column (4) or column (5), as the case may be, of the said First Schedule, and (b) which are exempt from the whole of the additional duty of customs leviable thereon under sub-section (1) of section (3) of the said Customs Tariff Act or on which no amount of said additional duty of customs is payable for any reaso....
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....3 (1) of Customs Tariff Act and SAD under Section 3A of the Customs Tariff Act was not to be taken into account. It is on this ground that in Morarjee Brembana Ltd. case, the demand of duty on account of inclusion of SAD component was set aside. The Tribunal's decision in Hanil Era Textile case does not discuss as to how the decision in Morarjee Brembana Ltd. is applicable to the case of Hanil Era Textile where the issue involved was whether SAD under Section 3A of Customs Tariff Act would be required to be taken into account for determining the Central Excise duty chargeable on the DTA clearances of the unit, when DTA sales were fully exempt from Sales tax, which was not involved at all, in Morarjee Brembana case. 11.3.1 As regards Tribunal's decision in case of Jindal Photo Films Ltd. vs. CC, Mumbai reported in 2004 (178) E.L.T. 955, the ratio of this decision was that the word 'chargeable' in the proviso to S. No. 5 of the table to Notification 22/99-CUS dated 28/2/99 and its predecessor Notification No. 56/98-CUS has been used in the sense synonymous with leviable and accordingly any goods fully exempt from sales tax in a region by virtue of an exemptio....
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.... aggregate of duties of customs for determining central excise duty chargeable in respect of the DTA clearances. Therefore Tribunal's observations in para 2 (a) of the decision in Hanil Era Textile case regarding eligibility for exemption from SAD in terms of S. No. 3 of the table to Notification No. 22/99-CUS are not correct. 11.5 Tribunal's observation in para 2 (b) of its decision in Hanil Era Textile case that the measure of SAD under Section 3A of the Customs Tariff Act was equivalent to Sales tax, no SAD can be conformed, is factually incorrect. As can be seen from the provisions of Section 3A, as reproduced in para 11.1 above, sub-Section (1) of Section 3A is only an enabling provision enabling the Central Government to levy SAD at a rate to be specified by notification, having regard to maximum sales tax, local taxes or any other charges leviable on a like articles on its sale or purchase in India, with a proviso that until such a rate is specified, SAD shall be collected at the rate of 8% adv. sub-Section (2) of Section 3A defines the assessable value for calculating SAD. Sub-Section (5) of Section 3A, states that no SAD would be chargeable on the goods which ar....