TaxTMI 
TaxTMI 
2026 (7) TMI 856
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....t Commissioner under the Foreign Trade Policy. The appellant procured raw materials duty-free under Notification No. 52/2003-Cus and Notification No. 22/2003-CE. During the relevant period, certain raw materials which had become obsolete or unusable were destroyed within the factory after due intimation to the department. Proceedings were initiated on the premise that prior to the amendments made in 2015, the notifications did not permit destruction without payment of duty and that the Foreign Trade Policy could not override statutory provisions, resulting in confirmation of demands of BCD, CVD, SAD and Excise duty along with interest and penalties. The present proceedings arise from four appeals which are clubbed for hearing on account of commonality of the issue involved. 2. Aggrieved with the confirmation of the demands, the Appellant is before this Tribunal in respect of the following cases as tabulated below: - Sl. No. Appeal No. OIA No. & Date Nature (Customs / C.Ex) Duty Demand Interest Penalty 1 C/42658/2017 -DB 43/2017 SLM-CEX dt. 27.09.2017(Period - 03/2014-11/2014) Customs Rs. 6,63,018/-+ Rs. 5,58,524/- As Applicable Rs. 12,21....
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.... in nature and apply retrospectively. The appellant has relied upon several judicial precedents to contend that beneficial schemes such as the EOU scheme must be interpreted liberally and that procedural or interpretational ambiguities should not defeat substantive benefits. Reliance has also been placed on the decision in Sandoz Pvt. Ltd. to contend that while duty liability must be determined under statutory provisions, the scheme must be read holistically and not in isolation. It is further submitted that the appellant had intimated the Department prior to destruction and acted bona fide. 5. Per contra, the Ld. Authorized Representative has submitted that exemption must strictly flow from statutory notifications and that the Foreign Trade Policy cannot override the provisions of the Customs Act and Central Excise Act. It is contended that prior to 2015, the notifications did not permit destruction without payment of duty and that the amendments are clearly prospective. Reliance has been placed on Sandoz Pvt. Ltd. to argue that FTP provisions cannot extinguish duty liability in the absence of corresponding the notifications support. 6. We have carefully heard the submission....
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....ssociation [2005 (187) E.L.T. 162 (S.C.)], wherein it was held that beneficial notifications must be interpreted with reference to the object sought to be achieved and that even amendments can be treated as retrospective if they are intended to cure defects or align implementation with policy. The ratio of this decision clearly supports the appellant's contention that the notification must be read in the light of the FTP provisions and not in isolation. 9.3.1 Further, reliance has been placed on Mehler Engineered Products India Pvt. Ltd. vs. Union of India [2018 (364) E.L.T. 27 (Mad.)], wherein the Hon'ble Madras High Court held that substitution of entries in a notification must be read as having retrospective effect where it seeks to correct or align classification or scope. This judgment reinforces the appellant's argument that the subsequent amendments permitting destruction only clarify the existing position. 9.3.2 The appellant has also relied upon the Tribunal's decision in Sandoz Pvt. Ltd. vs. Commissioner of Central Excise, Belapur [2025 (6) TMI 1283 - CESTAT MUMBAI], (this decision is distinct from the earlier decision of the Tribunal in 2012 relied upon by the Reve....
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.... arises under the operational framework of the Foreign Trade Policy. Further, the appellant has complied with all procedural requirements and there is no allegation of misuse. Accordingly, the ratio of Sandoz is confined to its facts and does not apply to the present case. 9.4.1 The Revenue has also relied upon Principal Commissioner vs. Teva API India Pvt. Ltd. [2019 (367) E.L.T. 618 (M.P.)], affirmed by the Hon'ble Supreme Court [2020 (371) E.L.T. A252 (S.C.)], to contend that destruction of goods without proper permission disentitles exemption under Notification No. 52/2003-Cus and Notification No. 22/2003-CE. A perusal of the judgment shows that denial of exemption was based on clear violation of notification conditions, particularly absence of proper permission and non-fulfilment of procedural requirements. The decision is distinguishable on facts, as in the present case the appellant had intimated the department prior to destruction and acted in accordance with the Foreign Trade Policy and the Letter of Permission, with no breach of conditions. Accordingly, the ratio of Teva API is confined to cases of non-compliance, whereas the present case involves interpretation of exe....
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....f raw materials within the factory under intimation does not attract duty liability. Accordingly, it is held that destruction of raw materials within the factory under due intimation does not attract duty liability. 9.6 Before concluding, it is necessary to examine the scope of Notification No. 52/2003-Cus dated 31.03.2003 and Notification No. 22/2003-CE dated 31.03.2003 as they stood prior to and after amendment. Prior to amendment, the notifications did not contain any explicit provision permitting destruction of goods without payment of duty. However, vide Notification No. 30/2015-CE and Notification No. 34/2015Cus dated 25.05.2015, an express provision was inserted to the effect that "any capital goods, raw material, consumables, spares or goods manufactured, processed or packaged, and scrap or waste or remnants or rejects are destroyed within the unit after intimation to Customs authorities...", thereby permitting destruction subject to procedural compliance. A comparative reading shows that while the pre-amended notifications were silent, the amended provisions expressly recognize destruction as a permissible mode of disposal. This amendment does not introduce a new condit....
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....ication No.22/2003-CE dated 31.03.2003, respectively. It is their submission that due to rapid technological advancements few of the materials imported by them have become obsolete, remained unutilized and could not be used in the manufacture of the final product and hence necessarily have to be scraped being obsolete and unfit for manufacture of export goods. 17. We find that the relevant extract of the Notification No. 52/2003 dated 31.03.2003 reads as under:- "(8) Subject to the satisfaction of the said officer, duty shall not be leviable in respect of- (i) the capital goods, if such capital goods are destroyed within the unit or outside the unit, when it is not possible or permissible to destroy the same within the unit, in the presence of Customs or Central Excise Officer; (ii) the scrap or waste material or remnants arising in the course of production, manufacture, processing or packaging, if such scrap or waste material or remnants are destroyed within the unit or destroyed outside the unit when it is not possible to destroy the same within the unit:" 18. The notification was amended and raw materials were also allowed to be destr....
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....idering the similar issue of the appellant, this Tribunal has allowed the appeals filed by the appellant. 22. In view of the above discussion and in the facts and circumstances, we find that there is no plausible reason to interfere with the ratio of precedent decisions of this Tribunal mentioned at Para 8 supra, hence the 8(eight) appeals are allowed with consequential relief, if any, in accordance with the law." Issue No. (ii) whether the amendments made in 2015 permitting destruction of inputs are clarificatory and retrospective or prospective in nature 10.1 The second question relates to whether the amendments introduced vide Notification No. 30/2015-CE and Notification No. 34/2015-Cus are clarificatory and retrospective or not. The appellant has relied upon Indian Tobacco Association and Mehler Engineered Products (Supra) to contend that amendments intended to align implementation with policy must be treated as retrospective. 10.2 A perusal of the amended provisions shows that destruction of goods within the unit under intimation was expressly incorporated. It is significant that Para 6.15 of FTP already permitted such destruction even prior to amendment. The....