TaxTMI 
TaxTMI 
2026 (9) TMI 654
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....lectric motors, generators and spare parts falling under Chapter 85 of the Central Excise Tariff Act, 1985, cleared "Alternators" during the period from June 2013 and August 2014 without payment of duty by availing exemption under Notification No. 12/2012-CE against International Competitive Bidding contracts linked to corresponding exemption under Notification No. 12/2012-Cus. The Department alleged non-fulfilment of conditions under the customs notification and issued the SCN & SOD demanding duty of Rs.17,20,387/- and Rs.47,25,484/- respectively along with interest and penalty. The demands were confirmed vide Order-in-Original dated 30.11.2015 and subsequently upheld by the Commissioner (Appeals), leading to the present appeal. 3. The Ld. Advocate Shri Joseph Prabhakar appearing for the appellant, submitted that the impugned order proceeds on an erroneous understanding of relevant exemption notification. It was argued that the appellant had cleared the goods against valid International Competitive Bidding contracts after furnishing prior intimation dated 08.05.2013 to the jurisdictional authorities and enclosing the Project Authority Certificate issued by the competent authori....
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.... 12/2012-CE on the ground of alleged non-fulfilment of conditions under Notification No. 12/2012-Cus is legally sustainable? ii. Whether the consequential duty demand, interest and penalties confirmed under the impugned order are sustainable in law? 6. We now proceed to examine the issues arising for determination in the present appeal sequentially. Issue No. (i): Whether denial of exemption under Notification No. 12/2012-CE on the ground of alleged non-fulfilment of conditions under Notification No. 12/2012-Cus is legally sustainable? 7. The exemption claimed by the appellant arises under Serial No. 336 of Notification No. 12/2012-CE dated 17.03.2012, which grants exemption to goods supplied against International Competitive Bidding subject to Condition No. 41. The condition provides that exemption shall apply where such goods, if imported into India, are exempt from customs duties and where the customs exemption is subject to prescribed conditions, such conditions shall apply mutatis mutandis. Revenue proceeds on the assumption that since the corresponding exemption under Notification No. 12/2012-Cus contemplated documentary and procedural conditions, identical ....
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....bai v Tullow India Operations Ltd. reported in 2005 (189) E.L.T. 401 (S.C.) relied upon by the appellant. In the said decision, while interpreting exemption notification governing goods required for petroleum operations, the Hon'ble Supreme Court held that although eligibility conditions in an exemption notification are to be construed strictly, once the substantive requirements for grant of exemption stand satisfied, procedural conditions attached thereto must receive a liberal construction. The Court specifically held that where the substantive conditions of exemption are fulfilled and the assessee is otherwise entitled to the benefit, exemption cannot be denied merely because procedural requirements such as production of essentiality certificate were not complied with in the exact manner or at the precise stage contemplated under the notification, particularly when such compliance depended upon acts of public authorities. The Hon'ble Supreme Court further observed that conditions which are procedural in nature should not be interpreted in a manner that defeats the substantive exemption itself. The ratio laid down therein squarely supports the appellant's case, since in the prese....
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....enied solely because procedural conditions framed primarily for importers are mechanically imported into excise exemption provisions. All the cases rely on the principle of Lex non cogit ad impossibilia (the law does not compel a man to do that which he cannot possibly perform) and the premise that Central Excise and Customs notifications operate independently. 14. We have also carefully considered the decisions relied upon by the Ld. Authorized Representative, namely Audco India Ltd. v Commissioner of Central Excise Chennai reported in 2013 (297) E.L.T. 374 (Tri.-Chennai) and Delton Cables Ltd v Union of India reported in (2023) 2 CENTAX 61 (Del.), in support of the Department's contention that exemption notifications must be strictly construed and that where the notification prescribes specific statutory conditions, exemption cannot be granted in absence of strict compliance. We are unable to accept applicability of the aforesaid decisions to the facts of the present case. The controversy before us does not concern non-fulfilment of any substantive eligibility condition or a claim dehors the exemption notification. The dispute here is limited to whether procedural conditions p....
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....ning exemption under Notification No. 12/2012-CE. The Department has incorrectly assumed that every procedural condition prescribed under the corresponding customs notification automatically applies with identical force to domestic manufacturers. Such interpretation overlooks both the legal meaning of mutatis mutandis incorporation and the consistent judicial precedents governing the field. We therefore hold that denial of exemption to the appellant under Notification No. 12/2012- CE is not legally sustainable. Issue No. (ii): Whether the consequential duty demand, interest and penalties confirmed under the impugned order are sustainable in law? 18. Having held that denial of exemption itself is unsustainable, we now examine the consequential duty demand, interest and penalties. In our considered opinion, once the substantive basis for levy fails, the consequential liabilities cannot independently survive. 19. The impugned Order-in-Original dated 30.11.2015 confirmed two separate demands arising from two proceedings initiated against the appellant. The first demand arises out of Show Cause Notice No. 40/2014 dated 05.07.2014 concerning clearances effected during June 2013,....