TaxTMI 
TaxTMI 
2024 (12) TMI 1664
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....ra No.1050, Central Hope Town, Selaqui Industrial Area, Dehradun, Uttrakhand through M/s Arshiya FTWZ during the period April 2013 to August 2013 under Section 28 of Customs Act, 1962 read with Section 3 (5) of the Customs Tariff Act 1985. I order that the same be paid forthwith. (ii) I drop the demand of Rs.27,70,479.00 (Rupees Twenty Seven Lacs Seventy Thousands Four Hundred Seventy Nine Only) involved on Bill of Entry No.239 dated 08.08.2013 and Bill of Entry No.240 both dated 08.08.2013 since the importer in the case of the above two Bills of Entry is 1 not M/s Dixon Texhnologies India Pvt Ltd but M/s Dixon Global Pvt Ltd. Further the demand pertaining to these two Bills of Entry has also already been dealt with by the Joint Commissioner of Central Excise Noida II in the O- in- O No. 06/JC/ 2015- 16 dated 29.05.2015 as detailed in para 5.1 1 of this order. (iii) I order payment of interest at applicable rates on the above amount of short paid SAD under Section 28 AA of Customs Act, 1944. (iv) I refrain from imposing penalty on the party for reasons detailed in para 5.13 of this order. 2.1 Appellant is manufacturer of various lighting and Electronic....
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....., who in turn are a unit of Arshiya International Limited (now renamed as M/s Arshiya Limited) FTWZ. They have an agreement with M/s Arshiya Supply Chain Management Pvt. Ltd. as a client. ⮚ As per the CBEC circular No. 44/2012 dt. 30.12.2013, wherein the issue of exemption from SAD under said Notification No.45/2005-Cus has been clarified, they had to pay the SAD at the time of import, as they had used the imported goods in the manufacture of finished goods and had not sold the imported goods as such on payment of local taxes like VAT etc. 2.4 A Show Cause Notice dated 12.05.2014 was issued to the Appellant alleging that they - ⮚ had imported the goods (which are in the nature of their inputs) for use in the manufacture of finished goods in their factory; ⮚ did not sell the goods as such in the market on payment of local taxes, though they used to pay the local taxes on the finished goods manufactured in their factory by using imported goods; ⮚ As per Section 3(5) of the Customs Tariff Act, 1985, the Additional Duty (SAD) is levied to counter-balance the sales tax, value added tax, local tax or any other charges fo....
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....w cause as to why:- (i) Special Additional Duty amounting to Rs. 1,51,07,205/- (Rs. One Crore fifty one lakh seven thousand two hundred five only) on the goods imported through M/s Arshiya FTWZ during the period w.e.f. April, 2013 to August, 2013, should not.be demanded & recovered from them under Section 28 of the Customs Act, 1962 read with Section 3(5) of the Customs Tariff Act, 1985; (ii) Interest should not be charged from them under Section 28AA of the Customs Act, 1962 on the above mentioned amounts of Special Additional Duty not paid; (iii) Penalty should not be imposed upon them u/s 112 & 117 of the Customs Act, 1962 for the contravention of the provisions of Customs Act, 1962. 2.6 Show cause notice has been adjudicated as per the impugned order referred in Para 1 above. Aggrieved both Appellant and Revenue have filed these appeals. 2.7 In their appeal Appellant has challenged the confirmation of demand and revenue has filed appeal against non imposition of penalties on the Appellant 3.1 We have heard Shri B L Narsimhan and Shri Atul Gupta, Advocate for the Appellant and Shri Santosh Kumar Authorized Representative for the Revenue. 3.....
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.... as it introduced a new condition. Noticee contended that the notification should be read as per words in the notification and not as per supposed intention. Further the Noticee contended that the Circular has prospective effect and cannot have retrospective effect. 5.5 I the above reference, I find that in terms of Notfn No. 102/2007-Cus dated 14.09.2007, clearances from ports other than SEZ, importers have to pay SAD on goods imported and then claim refund of SAD from jurisdictional Customs Authorities on production of proof of payment of VAT/Sales tax on such goods. In such a situation I find that no exemption shall be available to the importers in case of stock transfer of goods. While in case of clearances from SEZ the SAD is exempt vide Notification 45/2005-Cus, ab-initio if the goods imported are not exempt from VAT/sales tax. Since varying practices were being followed, CBEC issued a clarificatory circular No. 44/2013 dated 30.12.2013 where in para 3 it is clarified that "in the case of clearances which are in the nature of stock transfer from SEZ/FTWZ unit to the DTA unit for self-consumption i.e. otherwise than for sale as such, no sales tax/VAT is leviable on su....
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.... integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning where for the notification has to be interpreted in terms of its language, once an Assessee satisfies the eligibility clause, the exemption clause therein may be construed liberally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning." (b) In the case of A.P. Steel Re-Rolling Mill Ltd. v. State of Kerala, (2007) 2 SCC 725, it was held that "____The general principles with regard to construction of exemption notification are not of much dispute. Generally, an exemption notification is to be construed strictly, but once it is found that the entrepreneur fulfils the conditions laid down therein, liberal construction would be made." (c) Further in the case of Collector of Customs (Preventive) v. Malwa Industries Ltd.,(2009) 12 SCC 735 = 2009 (235)E.L.T. 214 (S.C.), it was held that : " ____An exemption notification should be read literally. A person claiming benefit of an exemption notification must show that he satisfies the eligibility criteria. Once, h....
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....ourt would endeavour to eschew literal construction if it produces manifest absurdity or unjust result. In Manmohan Das y, Bishun Das : (1967) 1 SCR 836, a Constitution Bench held as follows: " ___The ordinary rule of construction is that a provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out 43. We are unable to persuade ourselves to agree with the submission. It is a settled principle in excise classification that the definition of one statute having a different object, purpose_ and scheme cannot be applied mechanically to another statute. As aforesaid, the object of the Excise Act is to raise revenue for which various goods are differently classified in the Act. The conditions or restrictions contemplated by one statute having a different object and purpose should not be lightly and mechanically imported and applied to a fiscal statute for non-levy of excise_ duty, thereby causing a loss of revenue. [See; Medley Pharmaceuticals Limited v, Commis....
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....ency to increase the burden on the other unexempted class of taxpayers and should be construed against the subject in case of ambiguity. It is an equally well-known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of M/s. Parle Exports (P) Ltd. relied upon by Sri Narasimhamurthy, it was observed "While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided." The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the Legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the one stated by this, Court in Union of India & Ors. vs M/s. Wood Papers Ltd. & Ors, [....
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....ufacturing unit 5.11 The Noticee has taken a plea that out of the 12 Bills of Entry two Bills of Entry do not pertain to them and as such exemption availed on those two Bills of Entry cannot be demanded from them. I have examined the said twelve Bills of Entries and I find the Bill of Entry No.239 dated 08.08.2013 and Bill Of Entry No.240 dated 08.08.2013 involving SAD amount of Rs.8,55,890.00 and Rs.19,14,607.00 pertain to M/s Dixon Global Pvt. Ltd. and not to the Noticee in the instant proceedings i.e. M/s Dixon Technologies India Pvt. Ltd. Further, the demand of SAD on the said two Bill of Entries was the subject matter of SCN issued under C. No v (15) Adj./ Noida/Arshiya/ 162/2014/15010- 11 dated 06.08.2014 which has since been disposed of by the Joint Commissioner, Central Excise Noida II vide Order in Original No.06/ JC/ 2015 -16 dated 29.05.2015. I thus find force in Noticee's argument that SAD of Rs.27,70,497.00 involved on these two Bills of Entries cannot be fastened on them as the matter has already been adjudicated vide the above mentioned order in original. Hold accordingly. 5.12 On the issue of charging interest on the amount of duty short paid b....
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....cision in its meeting held on 30.07,2013. I do not find that any allegation has been made in SCN that the noticee had failed to follow the procedure laid out by UAC for clearance of imported goods in DTA on stock transfer basis, I find that the Noticee followed the procedure laid down by the UAC in minutes of the meeting held on 16.03.2013and availed SAD exemption. However, with the issuance of CBEC Circular No,44/2013- Customs dated 30.12.2013, the impact was that the UAC guidelines dated 16.03,2013 were rendered to be in non- conformity with the clarification given by the CBEC which was a later date than the UAC guidelines. In such circumstances, I find that, in the interest of justice, the party cannot be faulted and penalized. I thus refrain from imposing penalty on the noticee under Sections 112 and 117 of Customs Act for contravention of provisions of Customs Act, 1962. 5.14 n view of the above discussion and findings, I confirm demand of SAD amounting to Rs.1,23,36,708.00 on the Noticee under Section 28 of the Customs Act 1962 read with Section 3 (5) of the Customs Tariff Act 1985 along with interest as applicable under Section 28AA of Customs Act. Further, I drop t....
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....d to sales tax or VAT by the State. However the said goods were not exempt from payment of the sales tax/ VAT. Thus, the benefit of the exemption from payment of SAD on such goods on clearance from the SEZ was available. The benefit of the exemption cannot be denied by reading a requirement of actual sale of the same goods, which were cleared from the SEZ. 4.5 Central Board of Excise & Customs has vide Circular No. 44/2013-Customs dated 30.12.2013, clarified as follows:- 1. "It has been brought to the notice of the Board that varying practices are being followed by the field formations regarding exemption from SAD on goods cleared from SEZs / Free Trade Warehousing Zones (FTWZ) into the DTA under notification No.45/2005Customs, dated 16.05.2005. The issue raised is whether the benefit f exemption from SAD under this notification would be available when a DTA unit imports goods and routes it through SEZ/ FTWZ for self-consumption i.e. in the nature of stock transfer from SEZ/ FTWZ. 2. The matter has been examined by the Ministry. Notification No. 45/2005-Customs, dated 16.05.2005 exempts from SAD goods cleared from SEZ / FTWZ and brought into DTA. The notificati....
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....d that no such exemption shall be applicable if such goods, when sold in domestic tariff area, are exempted by the State Government from payment of sales tax or value added tax." The Notification exempts all goods "cleared from a SEZ" and "brought to any other place in India". The nature of clearance, whether by way of sale or otherwise, is not qualified in any manner in the body of the Notification. The proviso which embodies the condition/test governing the exemption gets attracted only if the goods which are the subject matter of clearance, when sold in the DTA, are exempted from the payment of Sales Tax/VAT. In the instant case, it is undisputed that the clearance of blanks to the "DTA" is not by way of sale and that the underlying goods are not exempted by the State Government from the levy of VAT. The adjudicating Authority has himself accepted that such blanks attract VAT @ 5% as Ball Pen parts and the same is also evident from a sample Tax Invoice dated 20 April 2014 enclosed as part of the Appeal Paper Book. Therefore, the proviso is not attracted at all. There is no exemption from VAT/Sales Tax but just a deferral of the VAT/Sales Tax liability until the sale tak....
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....y implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law when the Constitution came into force, the amending Act also will be part of the existing law." It furthermore noticed the decision of the Constitution Bench in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas and Anr. [(1968) 3 SCR 623] = 2002-TIOL-700-SC-MISC, wherein it was opined that an Explanatory Act is generally made to supply an obvious omission or to clear up doubts as to the meaning of previous Act. We are herein not concerned with such a situation. In W.P.I.L. Ltd., Ghaziabad v. Commissioner of Central Excise, Meerut, U.P. [(2005) 3 SCC 73] = 2005-TIOL-51-SC-CX-LB, whereupon again Mr. Parasaran placed strong reliance, this Court, while dealing with an exemption notification which is a piece of subordinate legislation, held: "Such a notification merely clarified the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties." 31. The question as to whether a Subordinate Legislation or a Parliamentary Statute would be held to be clarificator....
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.... matter, it was held: "As noted by this Court in Commissioner of Income Tax, Bombay & Ors. v. Podar Cement Pvt. Ltd. & Ors. [(1997) 5 SCC 482] = 2002-TIOL-445-SC-IT the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so." 33. We may also notice that in that judgment itself a distinction has been made with a clarificatory provision and a substantive provision to opine that Explanation 4 was clarificatory in nature and not a substantive provision. To the same effect is the decision of this Court in SEDCO Forex International Drill. Inc. & Ors. v. Commissioner of Income, Tax, Dehradun & Anr. [(2005) 12 SCC 717] = 2005-TIOL-145-SC-IT. The explanation which was in question was added by Finance Act, 1983 with effect from 1979 was to the following effect: "Explanation. -- For the removal of doubts, it is hereby declared that income of the nature referred to in this clause payable for service rendered in India shall b....
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.... down as under: "17. As was affirmed by this Court in Goslino Mario (supra), a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. [See also: Reliance Jute and Industries. v. CIT [(1980) 1 SCC 139]. An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section (See: Sonia Bhatia v. State of U.P. [(1981) 2 SCC 585 at 598]. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force (See: Shyam Sunder v. Ram Kumar [(2001) 8 SCC 24 (para 44)]; Brij Mohan Laxman Das v. CIT[(1997) 1 SCC 352 at 354], CIT v. Podar Cement [(1997) 5 SCC 482 at 506]. But if it changes the law it is not presumed to be retrospective irrespective of the fact that the phrase used are 'it is declared' or 'for the removal of doubts'. 18. There was and is no ambiguity in the main provision of Section 9(1)(ii). It includes salaries i....
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....1 (SC)] "10. We are of the view that the reasoning of the Bombay Bench of the Tribunal as well as that of the Andhra Pradesh High Court must be affirmed and the decision of the Delhi Tribunal set aside insofar as it relates to the eligibility of the LSP 340 to the benefit of the exemption notification. The Andhra Pradesh High Court was correct in coming to the conclusion that the Board had, in the impugned circular, pre-determined the issue of common parlance that was a matter of evidence and should have been left to the Department to establish before the adjudicating authorities. The Bombay Bench was also correct in its conclusion that the circular sought to impose a limitation on the exemption notification which the exemption notification itself did not provide. It was not open to the Board to whittle down the exemption notification in such a manner. The exemption notification merely reproduced the language of Entry 8525-20-17 and since the exemption notification merely reproduced the tariff entry, the limitation sought to be imposed by the Board would tantamount also to reading the limitation into the classification itself. Since the issue would be ultimately a question....
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.... No. 17 it would not be permissible to permit revenue to impose such condition by way of circular. If the revenue is allowed to undertake such an exercise, the requirement of publication in official gazette and laying a notification before each House of the Parliament would become nugatory and such a course of action is not envisaged by the Act. It would give licence to the executive to bypass/override the legislature and cannot be countenanced." 6. We entirely agree with the view taken by the High Court that the department could not, by issuing a circular subsequent to the notification, add a new condition to the notification thereby either restricting the scope of the exemption notification or whittle it down." * Sundar Micro Circuits Ltd. [2008 (229) ELT 641 (SC)] "5. The issue relating to effectiveness of a Circular contrary to a Notification statutorily issued has been examined by this Court in several cases. A Circular cannot take away the effect of Notifications statutorily issued. In fact in certain cases it has been held that the Circular cannot whittle down the Exemption Notification and restrict the scope of the Exemption Notification or hit it....