TaxTMI 
TaxTMI 
2025 (11) TMI 1736
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....xcise Act 1994 on MRP/RSP basis. The SCNs proposed invoking of extended period of limitation and demanded the differential duty along with interest as well as proposed penalties. 2. Brief facts, as culled out from the appeal records, are that the appellant, a subsidiary of Kobelco, Japan is engaged in the manufacture of hydraulic excavators falling under Tariff Heading 8429 of the first schedule of the Customs Tariff Act, 1975. The goods are manufactured at the appellant's factory located at Shri City, Chittoor district, Andhra Pradesh. The appellant also operates as a dealer in spare parts, components and assemblies of excavators and parts of excavators for which they had depots at Singaperumal Kovil, Chennai and Noida, Andhra Pradesh. The imports were made through Chennai Sea Port, Chennai Air Cargo and Air Cargo New Delhi and ICD, New Delhi. The imported excavator parts were stated to be kept at the appellant's aforementioned depot. 3. The Directorate of Revenue Intelligence, Chennai Zonal Unit initiated investigation into the appellant's imports and is stated to have found that the appellant was importing parts of excavators for sales / trading without paying the CVD on R....
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....xcavators constituted manufacture under Section 2 (f) (iii) of the Central Excise Act, 1944. Hence, a Show Cause Notice dated 29.06.2012 was issued by the Commissioner of Central Excise, Noida proposing to demand central excise duty of Rs.97,86,971/- along with interest and penalty, in compliance with Notification No.19/2010 - CE (NT) dated 29.04.2010 read with Section 2 (f) (iii) and Section 4 (A) of the Central Excise Act 1994.The appellant paid the said duty demand for the period from 29.04.2010 to 30.06.2011. 6. It is his submission that the impugned Order in Original confirmed differential duty on spare parts/components imported during the period from April 2010 to September 2011 by invoking the larger period of limitation. The Adjudicating Authority held that the imported goods are covered under Legal Metrology Act as the appellant is importing goods not in bulk form but packed in cartons/polythene covers/cardboard boxes/wooden cases etc., depending on the dimension of the goods and are required to be declared with the retail sale price on the package under Legal Metrology Act. It was also held that Customs has jurisdiction to arrive at RSP of imported goods in a situation....
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....toms on MRP basis, the imported goods must be extended the benefit of SAD exemption under notification no.29/2010 - Cus. dated 27.02.2010. Ld. Counsel submits that this notification stipulates that all pre-packed goods intended for retail sale are exempt from payment of special additional duty under Section 3 (5) of the Customs Tariff Act, 1975. Reliance is placed on the decisions in Lili Foam Industries (P) Ltd v. Collector of Central Excise, 1990 (46) ELT 462 (Tri), Bakeman's Home Products Pvt Ltd. v Collector of Customs, Bombay, 1997 (95)ELT 278 (Tribunal) and Decora Ceramics Pvt Ltd v. CCE, Rajkot, 1998 (100) ELT 287 (Tri). 10. It was also contended that it is settled law that not claiming the benefit of a notification at the time of filing the Bill of Entry will not preclude an importer from claiming the same at a later point of time. Reliance was placed on the decisions in M/s. Share Medical Care v UOI, 2007 (209) ELT 321 SC, M/s. Unichem Laboratories Ltd v.CCE, Bombay, 2002 7 SCC 145, M/s. Applicom India Ltd. v. CC, Bangalore, 2007(213) ELT 317 (Tri-Bang). 11. It was pointed out that the impugned order has denied the claim for exemption under the Notification No.29/201....
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....600/2021 in the case of Flextronics Technology v CC. It is further submitted that the afforested position has also been affirmed by the Hon'ble Bombay High Court in A.R. Sulphonates Pvt Ltd v UOI, 2025 (4) TMI 578-BOMBAY HIGH COURT 13. The Ld. Counsel for the appellant further submits that the longer period of limitation is not invokable in the instant case as the Appellant has not suppressed or mis-declared any facts much less with an intention to evade payment of duty. The entire demand fails on the ground of limitation. Even if it is presumed without admitting that CVD is payable on the MRP of the imported goods as confirmed in the impugned order, the entire CVD payable shall be available to the Appellant as credit. Therefore, since no malafide can be attributed to the Appellant, the extended period is not invokable. Reliance is placed on the decision in CCE v Tenneco RC India Pvt Ltd, 2015 (323) ELT 299 (Mad) wherein the Hon'ble Madras High Court relying on the decision of the Hon'ble Supreme Court in Nirlon Ltd, 2015 (320) ELT 22, has held that when the entire exercise is revenue neutral, the Appellant could not have achieved any purpose to evade the duty. 14. Pe....
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.... 15. The Ld. AR further urges that in the instant case the issue is not one of leviability of interest / penalty on CVD but on customs duty as a composite duty of customs, to which provisions of Customs Act would apply. The fact remains that CVD leviable under Sec.3 (2) of the CTA gets subsumed along with other duties under the CTA and attains a composite character of "customs duty" as under Section 12 of Customs Act read with Sub Section 2 (15) of the Customs Act. A clear charging provision exists in the form of Sec. 28 AA for interest and Sec. 112 / 114 A / 114AA for penalties. The levy may be under distinct Sections, the issue that matters is one of collection and recovery which remains as a composite executive action. Even otherwise interest on tax being an implied consequence of delayed payment is automatic or implied consequence of delayed payment and as such leviable under Sec.28AA of the Customs Act. Reliance is placed on the decisions in Pratibha Processors v. Union of India (1996) 11 SCC 101, CCE & C, Aurangabad Vs. Padmashri V.V. Patil S.S.K. Ld.2007 (215) E.L.T.23 (Bomb.), Associated Cement Co. Ltd. V. Commercial Tax Officer, (1981) 4 SCC 578, Central Provinces Manga....
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....of India. On the other hand, Sec. 3 (1) of Customs Tariff Act, interalia provides for levy of CVD which is levied independently and in addition to Customs duty levied under the Customs Act. This legal position has been upheld by the constitution Bench of the Hon'ble Supreme Court in Hyderabad Industries Ltd. Vs. Union of India, 1999 (5) TMI 29 Supreme Court and therefore, the issue is no longer as res integra. The above decision of the Apex Court was followed by the Hon'ble High Court of Bombay in Mahindra & Mahindra (2022 (10) TMI 212-Bombay High Court. The above legal position has also been followed in the following decisions- a) Aidek Tourism Services Pvt. Ltd. v. CC, New Delhi, 2015 (318) E.L.T. 3 (S.C.) b) Lohia Sheets Products v. CC, New Delhi, 2015 (318) E.L.T. 3 (S.C.) c) CCE, Bhubaneshwar-1 v. Tata Iron and Steel Co. Ltd., 2003 (154) E.L.T. 343 (S.C.) d) Star Industries v. CC, Raigad, 2015 (324) E.L.T. 656 (S.C.) e) Roxul Rockwool Insulation India Pvt. Ltd. v. Union of India, 2015 (320) E.L.T. 554 (Guj.) 20. Further, it is a trite law that there cannot be two charging provisions to levy the same tax. Therefore, it is clea....
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....er the CTA. The above amendment clearly shows that even as per the Parliament, the provisions of interest and penalty under the Customs Act were not borrowed to apply for levies under the CTA, till the amendment was introduced. Further, the Hon'ble Bombay High Court in A.R. Sulphonates Pvt. Ltd. supra has held that the changes made to Section 3 (12) of Customs Tariff Act vide Finance (No.2) Act, 2024 is only prospective in nature and would apply with effect from 16.08.2024. 24. Without prejudice, the appellant submits that the levy of CVD on the goods imported by the appellant in April 2010 to June 2011, was repealed with introduction of Goods and Services Tax w.e.f. 01.07.2017. Thus, at the time the above amendment was introduced, there was no levy of CVD on the subject goods. Thus, even assuming this amendment is retrospective, it shall not affect the goods imported by the Appellant prior to 01.01.2017. In light of the above, it is submitted that interest is a substantial levy and such a levy of interest in the absence of a charging provision under Section 3(8) of CTA is incorrect and bad in law. 25. Emphasising that penalty and redemption fine are penal levies it is co....
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.... interest on the CVD imposed under CTA, the contention of the Ld. A.R. premised on unjust enrichment is misconceived. The submission of the Ld. AR on the reason for the Hon'ble Supreme Court to dismiss the appeal and review filed by the Revenue against Mahindra and Mahindra appears to be based on headnote and the decision and not on the basis of the decision of the Apex Court. The reliance placed on the decision in KBS Industries Ltd. v. CCE & ST Settlement Commission & Ors. 2025 (1) TMI 962 Delhi High Court, M/s. Texmaco Rail Engg. Ltd, v. Commissioner of Customs (Port), Kolkatta, 2024 (1) TMI 902 - CESTAT, Kolkatta, Mayur Uniquoters Ltd. V. CCE & CGST, Jaipur, 2024 (89) GSTL 269 (Tri. - Del.) are also misplaced as they are distinguishable as elaborated therein. The ratio decidendi of the Hon'ble Bombay High Court in Union of India Vs. Valecha Engineering Ltd. 2010 (249) ELT 167 (Bom.) only supports the case of the appellant as the ratio is that interest and penalty are payable only if there is a substantial provision levying the same and therefore the reliance placed on the said decision by Ld. A.R is misplaced. The decision of the Hon'ble Supreme Court in Navayuga, 2024 (390) EL....
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....s under Section 47 of the Customs Act. Given that the decisions distinguishing the Judgement of Bombay High Court in Mahindra and Mahindra continues to be pronounced, the leviability of interest and penalty on CVD ought to be held in Revenue's favour applied the doctrine of stare decisis. The Hon'ble Delhi High Court in the case of Interglobal Aviation Ltd. Vs. Principal Commissioner of Customs, New Delhi in WP No.934/2023, 7845/2023, 4673/2024, vide its order dated 04.03.2025, since upheld by the Hon'ble Supreme Court, has held that Section 3 of the Customs Tariff Act is fully a collection mechanism as proposed to independent levy of integrated tax under the IGST Act as pleaded by the appellant's counsel in that case. Since it is only that CVD has been replaced by IGST and since Section 3(7) of the Customs Tariff Act and Section 3 (2) on the same footing and similar worded it can be inferred that the levy of CVD is not under the Customs Tariff Act but under the Parent Customs Act where substantial provision for levy of interest and penalty exists. In view of the same, it is prayed that the demand for interest and penalty confirmed in the impugned Order in Original be upheld. Relia....
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....xemption under Notification no.29/2010-Cus. dated 27.02.2010 and also as to the applicability of interest and penalty provisions under the Customs Act, 1962 to the levy of CVD under Section 3 of the Customs Tariff Act, 1975. LD. A.R. too, given the aforesaid conceded position, has not addressed us on the issue of whether CVD is payable on MRP basis or on transaction value. 37. Thus, given the mutually agreed upon respective stated positions, we are not called upon to decide the tenability of the levy of CVD, whether it ought to be on MRP, or whether it ought to be on transaction value. We have also not been addressed on this aspect. Thus, based on the limited disputes on which we have been addressed, the issues that arise for our determination are: A) Whether the appellant's claim for SAD exemption under Notification No.29/2010-Cus dated 27.02.2010 is tenable? B) Whether the interest, penalty, confiscation, and the redemption fine imposed in the instant case is tenable? C) Whether the extended period of limitation invoked is tenable? 38. On the issue of the appellant's claim for SAD exemption under the Notification No.29/2010-Cus dated 27.02.2010, w....
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.... the duty payable by an assessee and the duty actually paid by him earlier. The correct quantum of duty payable by an assessee, in cases where the goods are subjected to ad valorem rate of duty, depends on the value of the goods and also the rate of duty. Therefore, determination of the correct rate of duty for the goods on which differential duty is demanded is the first step before quantifying the demand. We accordingly over-rule the objection raised by the learned Departmental Representative that the appellant should not be permitted to raise the dispute regarding the determination of rate of duty." (emphasis supplied) 41. Again, the Hon'ble Apex Court in Share Medical Care v Union of India, 2007 (209) ELT 321 (SC), has noticed its observations in Unichem Laboratories Ltd v. Collector, 2002 (145) ELT 502 (SC) and has held as under: 12. .. In Unichem Laboratories Ltd. v. Collector of Central Excise, Bombay, (2002) 7 SCC 145 : JT 2002 (6) SC 547, the appellant was a manufacturer of bulk drugs. Exemption was granted to him under one item. He, thereafter, filed a revised classification list categorizing its bulk drugs under the other Head claiming more benefit. ....
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....ing the legality of the interest, penalty, confiscation, and the redemption fine imposed in the instant case. 44. We find that the Hon'ble High Court of Bombay has in its decision in Mahindra & Mahindra Ltd v. Union of India, 2022 (10) TMI 212-BOMBAY HIGH COURT : (2023) 3 Centax 261 (Bom.) has held as under: "32. In Valecha Engineering (supra), the judgments of the Hon'ble Apex Court in Orient Fabrics (supra), India Carbon (supra) and J.K. Synthetics (supra) were referred to. It was held in paragraphs 14-16 and 27 that interest and penalty can be only leviable if there be substantive provisions in the statute imposing interest and penalty. However, in paragraph 30, it was then held that provisions for interest form part of machinery provisions. This observation in Valecha Engineering (supra) is purportedly based on the ratio of India Carbon (supra) and J.K. Synthetics (supra). In the decisions of the Apex Court in India Carbon (supra) and J.K. Synthetics (supra) interest and penalty were held to be substantive in nature. In J.K. Synthetics (supra) it was held as follows: "Therefore, any provision made in a statute for charging or levying interest on delayed....
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....ection 12 of the Customs Act, 1962, surcharge on customs duty under section 90 of the Finance Act and CVD and SAD under the Customs Tariff Act, 1975 would all be covered under any law for the time being in force. Therefore, according to Mr. Mishra CVD under section 3 and SAD under section 3A of the Customs Tariff Act, 1975 and surcharge under section 90 of the Finance Act, 2000 are all levied under section 12 of the Customs Act, 1962. Therefore, imposing interest under section 28AB on surcharge, CVD and SAD would be correct in law. 34. Section 9A(8) of the Customs Tariff Act, 1975 which borrowed provisions from Customs Act, 1962 did not borrow provisions relating to interest and penalty. The Hon'ble Courts, in judgments cited supra, held that in view of no specific borrowing, no interest and penalty can be imposed on anti-dumping duty. Later on, Finance (No.2) Act, 2004 amended sub-section (8) of Section 9A suitably to include interest and penalty. However, similar amendments have not been made to Section 3(6) of the Customs Tariff Act, 1975 relating to CVD, i.e., additional duty equal to excise duty or Section 3A(4) of Customs Tariff Act, 1975 relating to SAD, i.e., s....
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....) on an article imported into India is not relatable to the First and the Second Schedule of the Customs Act but the additional duty if leviable has to be equal to the excise duty which is leviable under the Excise Act. This itself shows that the charging section for the levy of additional duty is not Section 12 of the Customs Act but is Section3 of the Customs Tariff Act, 1975. This apart sub-sections (3), (5) and (6) of Section 3 refer to additional duty as being leviable under sub-section (1). In sub-section (5), for instance, it is clearly stated that the duty chargeable under section 3 shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. 14. There are different types of customs duty levied under different acts or rules. Some of them are; (a) a duty of customs chargeable under section 12 of the Customs Act, 1962; (b) the duty in question, namely, under section 3 (1) of the Customs Tariff Act; (c) additional duty levied on raw-materials, components and ingredients under section 3 (3) of the Customs Tariff Act; and (d) duty chargeable under section 9A of the Customs Tariff Act, 1975. Customs Act 1962 and the Cu....
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....ain in its decision in A.R. Sulphonates Private Limited v. Union of India, 2025 (4) TMI 578-BOMBAY HIGH COURT, in a challenge to an order seeking demand of interest, penalty and redemption fine from the petitioner in connection with the demand of IGST leviable under section 3(7) of the Customs Tariff Act, 1975, relying on its decision in Mahindra & Mahindra Ltd, supra, went on to pass orders as under: "76. For all the aforesaid reasons, we pass the following orders:- (i) It is declared that Circular No.16 of 2023-Customs dated 7th June 2023, to the extent that it purports to levy interest upon the IGST payment, is beyond the provisions of the Customs Tariff Act, 1975 and is bad in law; (ii) The impugned Order dated 1st August, 2024, to the extent that it seeks to recover interest, confiscate goods, impose redemption fine and impose penalty, is quashed and set aside; (iii) It is declared that the amendment to the provisions of Section 3(12) of the Customs Tariff Act, 1975 by Finance (No.2) Act, 2024 dated 16th August, 2024 is prospective in nature and is applicable only from 16th August 2024 onwards; (iv) Rule is made absolute in the afor....
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.... claimed any exemption notification, if any available in respect of goods captively consumed. It is only implied that by the said term the appellant appears to have not used the goods for the purpose stated. There is nothing brought out in the appeal records to indicate that the Department's interpretation of what the term 'captive use' is, has been communicated, understood and acknowledged by the appellant to have been used understanding it to be such, when the declarations were made. Thus, when the intention attributed is contested, and it is unclear whether the Department and the appellant are at idem as to what was meant by the term 'captive use', the benefit of doubt would go to the appellant. Dehors the existence or otherwise of any intention of mis-declaration; when it is a contested position, whether the goods, in the manner in which they were imported, stood covered as those intended for retail sale requiring compliance under the Legal Metrology Act and rules, and when there is nothing on record to indicate that Customs Authorities are empowered as adjudicators of such disputes in the event of a contested position under the Legal Metrology Act and the relevant rules made t....