2024 (11) TMI 1055

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....n exercise of powers conferred under sub-section (1) in section 25, Customs Act, 1962. 3. To import said goods petitioner used the scrip. There were difficulties faced and it made representation dated 27th May, 2019. The difficulties arose because of the additional levy of SWS, by section 110 in Finance Act, 2018. 4. Drawing attention to cause of the difficulties Mr. Sridharan referred to circular dated 10th January, 2020 issued by Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs. He pointed out from the circular, revenue relies on judgment of the Supreme Court in M/s. Unicorn Industries v. Union of India, reported in 2019 (370) ELT 3. It was said, ratio of the judgment is to be applied to the issue of levy of SWS on imported goods, when the basic customs and additional duty of customs are debited in the scrip. Paragraph 7 from said circular 2/2020-Cus. dated 10th January, 2020 is reproduced below. "7. The ratio of the afore cited judgment is seen to apply to the issue at hand of levy of SWS on imported goods when the Basic Customs Duty and Additional Duties of Customs are debited through duty credit scrips....

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....harge on value of the specified goods. In the case of his client, it is exempt from paying customs duty. The SWS is a percentage of the customs duty. Customs duty being zero, levy of SWS must also be zero. 8. Mr. Satapathy referred to section 110 in Finance Act, 2018. In placing sub-section (3) he submitted, SWS levied under subsection (1) is to be calculated at a percentage, inter alia, on aggregate duties, levied under section 12, including any sum chargeable on the goods specified. As such, SWS is to be paid by petitioner in spite of it entitled to benefit under the scheme. 9. For his submission he relied on M/s. Unicorn Industries (supra), paragraph 41 (Manupatra print). The paragraph is reproduced below. "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 reas....

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....odi Rubber Ltd., reported in (1986) 4 SCC 66, issue before the Supreme Court was, where there had been partial exemption of duty payable, whether additional duty was also thus exempted. The Supreme Court upheld revenue's contention that the additional duty by percentage was to be calculated on the reduced duty payable. In M/s. Unicorn Industries (supra) the Supreme Court followed Modi Rubber Ltd. (supra). 12. Today Mr. Sridharan refers us to view taken by the Division Bench of Madras High Court in confirming the learned single Judges' view in M/s. Gemini Edibles and Fats India Pvt. Ltd. (supra). View of the Division Bench was on judgment dated 10th May, 2024 in, inter alia, W.A. no.830 of 2020 (M/s. Gemini Edibles and Fats India Pvt. Ltd. v. Union of India (through its Secretary), Assistant Commissioner of Customs and others. He submits, the Division Bench differed from similar views taken by the Andhra Pradesh, Gujarat and Bombay High Courts, including earlier view taken by another Division Bench of the same Court in Commissioner of Customs, Tuticorin v. DCW, reported in (2014) 306 ELT 398. 13. He refers us to article 265 in the Constitution. The article is reproduced below.....

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....e scrip is in fact discharge of the requirement to pay customs duty. He relies on Foreign Trade Policy, Chapter-3 on Exports from India Schemes, paragraph-3.02. The paragraph 'Nature of Rewards' is reproduced below. "3.02 Nature of Rewards 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 of Basic Customs Duty and Additional Customs Duty specified under sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DOR Notification, except items listed in Appendix 3A. (ii) Payment of Central excise duties on domestic procurement of inputs or goods, (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. Merchandise Exports from India Scheme (MEIS)" (emphasis supplied) He reiterates, no exemption is available to petitioner since levy ....

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....crip petitioner holds, exempts it on collection from it, the customs duty levied. 18. In M/s. Unicorn Industries (supra) case of appellant before the Supreme Court was in resisting the levy and collection of National Calamity Contingency duty (NCCD). A finding by the Supreme Court that appeared to be obvious from the beginning was, absence of any notification issued under the legislation or Act providing for the levy and charge for collection of NCCD, being Finance Act, 2001. On behalf of petitioner clear submission is, for furthering challenge in the writ petition reliance is not placed on M/s. Unicorn Industries (supra) nor SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati, reported in (2018) 1 SCC 105. The challenge mounted is on case that where the charge is on amount of customs duty paid and such duty is exempt, the charge being a percentage of duty paid, must be zero. No duty was paid so there cannot be a percentage of it, to result in any sum payable as SWS. 19. We respectfully disagree with view taken by the Division Bench in the Madras High Court on judgment dated 10th May, 2024 (supra). Upon a person obtaining exemption, he cannot be said to....