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2024 (3) TMI 86
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.... availing exemption of BCD under Notification No. 24/2015-Cus & 25/2015-Cus, issued under the MEIS/SEIS Scheme, which are export promotion schemes. 3. Vide Finance Act 2018, SWS was imposed as a duty of Customs to be levied and collected in accordance with Chapter VI of the Finance Act 2018, on the goods specified in the First Schedule to the Customs Tariff Act, 1975, being the goods imported into India, to fulfil the commitment of the Government to provide and finance education, health and social security. 4. Further, Sec 110(3) of the Finance Act, 2018 provides - that SWS levied under sub-sec (1), shall be calculated at the rate of ten percent on the aggregate of duties, taxes and cesses, which are "levied and collected" by the Central Government under Sec 12 of the Customs Act, 1962, and any sum chargeable on the goods specified in sub-sec (1) under any other law for the time being in force, as an addition to, and in the same manner as a duty of customs, but not including - (a) The safeguard duty referred to in Sec 8B & 8C of the Customs Tariff Act; (b) The countervailing duty referred to in Sec 9 of the Customs Tariff Act; (c) The anti-dumping d....
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....e SWS computed at the rate of 10% on "zero" should also be "zero". The CBIC in its later Circular No. 03/2022 - dated 01.02.2022 has also clarified the said position at Para 4 set out hereunder: "4. Thus, it is clarified that the amount of Social Welfare Surcharge payable would be "Nil‟ in cases where the aggregate of customs duties (which form the base for computation of SWS) is zero even though SWS has not been exempted." It is further stated that the aforesaid Circular, being a beneficial one shall be retrospectively applicable to the facts of the current case in terms of the judgement of the Hon'ble Supreme Court in the case of Suchitra Components Vs. Commissioner of Central Excise, Guntur [2007 (208) E.L.T. 321]. (b) The same very issue involved in the present proceedings stands decided by the Hon'ble Division Bench of the Bombay High Court in the Appellant's own case vide order dated 27.09.2022 passed in Writ Petition bearing No. 1447 of 2021. Pursuant to the said order, refund of SWS amount has also been sanctioned to the Appellant vide refund sanction order dated 13.04.2022. The said legal position has been reiterated by the Bombay High Cour....
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....le Court was whether EC and SHEC shall also come within the scope of exemption although not specified therein. Since refund of the specified duties was only possible post collection, the question of leviability of EC and SHEC was not gone into by the Hon'ble Supreme Court in the said decision. The appellant on the other hand in these proceedings is questioning the liability/computation of SWS with reference to notional BCD under Section 110(3) of the Finance Act, 2018 when BCD is specifically exempted under Notification No.. 24/2015 - Cus., and 25/2025 - Cus., both dated 08.04.2015. Therefore, the ratio of the decision of the Hon'ble Supreme Court in Unicorn Case (supra) is clearly not applicable in view of the principle laid down by the Hon'ble Supreme Court in the case of IndusInd Media and Communications Limited Vs. CC, New Delhi [(2019) 17 SCC 108] as also in light of the judgement of the Hon'ble Supreme Court in the case of CCE Vs. Srikumar Agencies [2008 (232) E.L.T 577]. (e) The jurisprudence available in the context of quantification of Education Cess (EC) and Secondary and Higher Education Cess (SHEC) (which are also in the nature of surcharge) in case of imports ....
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....me Court in the case of Somaiya Organics Ltd vs State of Uttar Pradesh (supra) has held in no uncertain terms that the expression "collection" in the context of tax laws would mean "physical realization of tax". In the facts of the instant case, collection of BCD is absent, which is ex-facie evident on the face of the Bills of Entry. The debit to the scrip is only a matter of procedure not vitiating the factum of exemption from BCD as held in the decision of the Hon'ble Gujarat High Court in Gujarat Ambuja Exports Ltd (supra). 11. Learned Commissioner (Appeals) has erred by relying upon the provisions of FTP to hold that since the amount debited to the scrips is allowable as Cenvat credit or drawback, there is no absolute exemption under the aforementioned notifications. Assailing, learned Counsel urges that the conditions as regards entitlement of drawback and Cenvat credit of duties debited to the scrips had also fallen for consideration before this Tribunal in the case of Bhushan Steel & Strips Ltd (supra) in the context of goods imported against Target Plus Scrips and this Tribunal held that the said conditions did not alter the factum of BCD having been exempted under Notif....
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....at SWS is not specifically exempted under Notification No. 24/2015 & 25/2015 and as such the same cannot be assumed to be nil or exempted. Learned Counsel urges that Appellant is not seeking an exemption from SWS in the instant Appeals. Rather, the leviability of SWS is itself being challenged when the BCD is nil. It is a well stated principle in law that exemption presupposes a liability and it can only operate when there is a valid levy/liability. The issue of leviability of SWS is no more res integra, in view of the judgment of the Division Bench of the Hon'ble Bombay High Court in La Tim Metal & Industries (supra) as also in the Appellant's own case. Further, the self-same issue was considered by the Kolkata Bench of this Tribunal and vide Final Order No. 76944- 77103/2023 dt.22.09.2023, the issue has been decided in favour of the Appellant. In La Tim Metal & Industries Ltd (supra), the Hon'ble Bombay High court, after considering the judgment in Unicorn Industries (supra) has held that when the BCD is nil, SWS amount, being 10% of the aggregate of duties, shall also be calculated as nil. 14. Opposing the Appeals, Special Counsel for Revenue - Mr. P.R.V. Ramanan urges that t....
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....ash or other modes normally used. 18. Further urges that Para 3.02 of the FTP with respect to nature of rewards, provides as follows: "Duty credit scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported/domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for: (i) Payment for Customs Duties for import of inputs or goods including capital goods; (ii) Payment of Excise Duties on domestic procurement of inputs or goods including capital goods, as per DOR notification; (iii) Payment of Service Tax on procurement of services as per DOR notification; (iv) Payment of Customs duty and fee as per Para 3.18 of FTP." 19. Thus, it is abundantly clear that the very intention of the MEIS is to provide the importer the means to discharge the duty liability on the goods he imports through the medium of duty credit scrips, which are used as 'deemedto- be' currency. 20. So far, the reliance placed by the Appellant on the ruling of the Apex Court in Somaiya Organics (supra), the judgment refers to Sec 3 of Central Excise Act and observed that 'levy' and 'colle....
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.... only the general implication of charging SWS in those cases where the BCD and/or ACD payable is nil. It does not deal with cases where the duty due has been paid out of the MEIS/SEIS scrips. 23. Further urges that as per Board Circular dt.10.01.2020, there appears to be no exemption from SWS in the FTP in the relevant Customs exemption notification. Keeping in view the ruling of the Hon'ble Apex Court in Unicorn Industries (supra), it has been clarified that SWS is not exempted and has to be levied and collected on the imported goods. 24. Further urges that the Hon'ble Madras High Court (Single Judge) has, in the case of Gemini Edibles and Fats India Pvt Ltd held that the petitioner is liable to pay the appropriate SWS on BCD in respect of the subject imported goods either in cash or any other mode and that necessary debit and recredit entries may be made on the scrips. 25. Further urges that Hon'ble Bombay High Court has erred in accepting that proper officer has assessed the Bills of Entry charging nil BCD and ACD. Whereas, in fact, the Bills of Entry has been assessed with BCD at the prescribed percentage of Tariff and the same has been paid by the Appellant by debitin....
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....ng the aforementioned observations of the Apex Court, the Hon'ble Madras High Court in Tanfac Industries Ltd (supra) has held that it is clear that under DEEC scheme, the clearance is allowed duty free, whereas, under DEPB scheme, the exporters are issued DEPB scrips, which allows them specific amount to be utilized for payment of duty. Therefore, the importers who use DEPB scrips pay duty not by cash but by way of credit. Thus, it is evident that goods cleared under DEPB scheme cannot be treated as exempted goods but they can only be treated as duty-paid goods and therefore, attracts consequential interest. The debit of any amount under the DEPB scheme is a mode of payment of duty on the imported goods and cannot be treated as exempted goods, unlike the goods under DEEC scheme. 30. Significantly, it is also seen that Notification No. 11/2018 as amended by Notification No. 41/2018, fully exempts a large number of goods from the levy of SWS and the preamble invokes Sec 25 read with Clause (108) of the Finance Bill 2018 (later to become Sec 110 of the Finance Act 2018). 31. Further urges that Circular dt.10.08.2004 clarifying the issue - whether goods that are fully exempted fr....
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....inding that the Appellant fulfilled the conditions thereunder. The aforementioned notifications have been issued in exercise of power to grant exemption under Sec 25 of the Customs Act. BCD stands exempted subject to condition, inter alia, of debit to the MEIS/SEIZ scrips (as the case may be) of the BCD leviable on the goods, but for the exemption. Thus, we find that there is no actual collection of BCD in view of the exemption. As per Sec 110(3) of the Finance Act 2018, SWS leviable under sub-sec (1) has to be calculated @10% on the aggregate of duties/taxes and cesses, which are levied and collected under Sec 12 of the Customs Act. Thus, in the instant case, admittedly, the aggregate of duties/taxes and cesses collected is nil, as is evident from the perusal of the Bills of Entry. Thus, we hold that SWS will be nil, as anything multiplied with zero is also zero. There is no specific provision made under Statute for calculation of SWS on notional BCD, when the actual BCD is exempted subject to fulfilment of stipulated conditions of the notification. 39. The contention of Revenue is that debit of BCD to the scrip under the said notifications is an alternate method of payment and....
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....ilar facts and circumstances, the ruling of this Tribunal in Ruchi Health Foods Ltd (Chennai Bench) and Reliance Industries Ltd (Mumbai Bench) have become final as the Revenue has not challenged the same in further Appeal. Accordingly, the Hon'ble High Court dismissed the Appeal of Revenue. 41. The Hon'ble Gujarat High Court in the case of Gujarat Ambuja Exports (supra) has held that the condition of debit of the exempted duties to the scrips is merely procedural as the scrip has value and would not change the nature of benefit from one being of exemption, having been issued in exercise of powers conferred under Sec 25 of the Customs Act. It was also held that merely because the conditions are provided for adjustment of credit in the DEPB scrip, 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 the form of adjustment of credit in the DEPB scrips. 42. The aforementioned view of the Hon'ble Gujarat High Court has been followed by the Hon'ble Bombay High Court in CC (Export) vs Reliance Industries Ltd (supra). 43. Since both EC and SWS are in the natu....
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.....31.01.2005 which provided for levy and collection of Education Cess in case of goods imported under the notifications operationalizing the DEPB Scheme was held to be not in consonance with provisions of Section 94 of the Finance (No.2) Act, 2004. Therefore, the circular dated 10.1.2020 which takes the same view for SWS as was canvassed in Circular dt.31.01.2005 for Education Cess cannot be given primacy over the latter circular dt.01.02.2022. 45. We further find that reliance placed by Revenue on the ruling of the Hon'ble Apex Court in Unicorn Industries (supra) is misplaced as the same was concerned with the interpretation of Exemption Notification No. 71/2003-CE granting area based exemption to units located in the North-East. Such units were entitled to refund of specified duties paid on value addition and the question before the Court was - whether EC/SHEC/NCCD imposed vide Finance Act, which were not specifically exempted under the Notification No. 71/2003 shall also come within the scope of the said exemption for the purposes of refund. For ease of reference, we reproduce Para 2 & Para 22 of Unicorn Industries (supra) as follows: "2. The question involved in the ....