TaxTMI 
TaxTMI 
2026 (10) TMI 320
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....le clearing the said goods, had availed exemption from payment of Special Additional Duties (SAD) leviable under Section 3(5) of the Customs Tariff Act, 1975 in terms of Notification No. 20/2006-Cus dated 01.03.2006. However, the said exemption claimed was found inapplicable in view of the amended 13th Schedule to the Finance Act, 2011 w.e.f. 01.04.2011. The Department vide letter dated 28.02.2013, informed the Appellant of the said discrepancy and sought payment of SAD amount of Rs. 2,10,987/-and the Appellant immediately remitted the same vide Challan dated 22.03.2013. Thereafter, the Department issued another letter dated 09.03.2013, revising the demand to Rs. 2,78,915/-, accordingly, the Appellant remitted the balance amount of 67,928/- vide Challan dated 02.04.2013. Thereafter a show cause notice (SCN) dated 17.08.2013 was issued to the Appellants proposing to demand and appropriate the SAD amount already deposited by the Appellant along with interest under Section 28AA and imposed penalty under Section 114A of the Customs Act, 1962. Furthermore, the Appellant remitted the interest of Rs. 67,814/- vide Challan dated 26.03.2014. On adjudication the proposals in the show cause n....
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....adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act." It is, therefore, clear from these judgments of the Supreme Court that the liability to interest and penalty is substantive and that provisions imposing interest and penalty are substantive (and not machinery). d. In Orient Fabrics (supra), the Apex Court interpreted Section 3(3) of Additional Duties of Excise (Goods of Special Importance) Act, 1957 which is pari-materia to Section 3, 3A of the Customs Tariff Act, 1975 and Section 90(4) of the Finance Act, 2000. Hence, the decision of the Hon'ble Apex Court in Orient Fabrics (supra) would directly apply. "33. We are also unable to accept Mr. Mishra's contentions that the charging section for imposition of CVD and SAD or surcharge is Section 12 of the Customs Act, 1962. In our view, the charging sections for imposition of surcharge, CVD and SAD are Section 90(1) of the Finance Act, 2000, Section 3(1) and Section 3A(1) of the Customs Tariff Act, 1975, respectively. Mr. Mishra's contention that Section 12 is the charging section is incor....
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.... of the Customs Act, 1962 there is no reference to any specific provision of Customs Tariff Act, 1975. On the other hand levy of CVD or SAD under Section 3 or Section 3A of the Customs Tariff Act, 1975 or surcharge under Section 90 of the Finance Act, 2000 is not relatable to the first or second schedule but the rate is prescribed in those three sections itself. This itself shows the charging section for surcharge or CVD and SAD is not Section 12 of the Customs Act, 1962 but Section 90 of the Finance Act, 2000 and Section 3 and Section 3A of the Customs Tarif 1975, respectively. 36. We find support for our view in Hyderabad Industries Ltd. v. Union of India 1999 (108) E.L.T. 321 (SC) relied upon by Mr. Sridharan. The Apex Court considered Section 12 of the Customs Act, 1962 and went on to hold that the charging section to impose CVD is Section 3 of the Customs Tariff Act, 1975. Paragraphs 12, 13 and Hyderabad Industries Ltd. (supra) read as under: 12. Section 12 of the Customs Act levies duty on goods imported into India at such rates as may be specified in the Customs Tariff Act, 1975. When we turn to Customs Tariff Act 1975, it is Section 2 which states that the....
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....tion of demand pertaining to surcharge or additional duty of customs or special additional duty of customs is incorrect and without jurisdiction." e. Acer India Pvt Ltd Vs. CC, Chennai, reported in 2023 (9) TMI 1553- CESTAT CHENNAI; Relying upon the aforesaid decision of the Hon'ble High Court of Bombay in Mahindra & Mahindra Case, has modified the order impugned therein to the extent of setting aside the demand of interest, the order of confiscation of goods, the imposition of redemption fine, penalties imposed and the appropriation of interest paid by the appellant therein without disturbing the confirmation of duty. f. M/s. Acer India (Pvt) Ltd Vs.. Commissioner of Customs (Audit), Chennai reported in 2024 (5) TMI 78-CESTAT CHENNAI, the Chennai Bench of this Hon'ble Tribunal, relying on the decision of the Hon'ble High Court of Bombay in Mahindra & Mahindra cited supra, held that confiscation of goods, interest on CVD, redemption fine and penalties in relation CVD leviable under Section 3(1) of the Customs Tariff Act, 1975, cannot sustain. g. M/s. Flextronics Technology India Pvt., Ltd. Vs. CC. Chennai Commissionerate, reported in 2025 (3) ....
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...., 1962 would not be applicable in absence of a substantive provision providing for the same. Accordingly, the imposition of interest under Section 28AA and penalty under Section 114A of the Customs Act, 1962 is unsustainable and liable to be set-aside. Furthermore, any amounts deposited towards the same in the course of the proceedings is liable to be refunded to the Appellant herein. 6. The learned counsel further submits that the impugned show cause notice (SCN) has been issued seeking to recover duty, interest and penalty under the provisions of Section 28 of the Customs Act. However, Section 28 provides for two primary situations basis which the period of limitation to institute such proceedings differs; in terms of Section 28(1), where there is absence of ingredients such as wilful misstatement, collusion, suppression etc., the period of limitation during the impugned period was of 1(one) year from the relevant date (subsequently vide Finance Act, 2016 amended to a period of 2(two) years, not applicable in the present case); Section 28(4) provides for an extended period of limitation 5(five) years in cases where ingredients such as willful misstatement, collusion, suppressi....
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....d if the excise department places reliance on the proviso it must be specifically stated in the show cause notice which is the allegation against the assessee falling within the four corners of the said proviso. In the instant case that having not been specifically stated the Additional Collector was not justified in inferring (merely because the assessee had failed to make a declaration in regard to waste or by-product) an intention to evade the payment of duty. The Additional Collector did not specifically deal with this contention of the assessee but merely drew the inference that since the classification list did not make any mention in regard to this waste product it could be inferred that the assessee had apparently tried to evade the payment of excise duty. 3. For the above reasons, we see no merit in this appeal and dismiss the same with no order as to costs." 7. The learned counsel submits that the show cause notice issued without any reference to the specific provision of Section 28 under which it is issued is untenable both in law and on facts. Squarely covered by the decision of the Hon'ble Supreme Court in the case of Amrit Foods (supra). 8. The lear....
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....t of SAD was provided vide Customs Notification No. 20/2006-Cus dated 01.03.2006 read with Notification No. 21/2012 dated 17.03.2012. The goods imported by the appellant were eligible for exemption from payment from SAD vide Sl. No. 50 and Sl. No. 12 of the said Notifications, respectively. However, the Chapter Heading pertaining to the said goods in question were omitted from the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, with effect from 08.04.2011 of Thirteenth Schedule to Finance Act, 2011. Hence, from 08.04.2011 up to the date of Notification No. 21/2002 i.e., 17.03.2012, importers were liable to payment of 4% SAD. Commissioner (A) upheld the Order-in-Original dated 05.04.2014. The Period involved is from 17.10.2011 to 20.12.2011 and duty involved is SAD amounting to Rs. 2,78,915/- + interest Rs. 67,814/- and Penalty of Rs. 3,46,729/- under section 114A of Customs Act, 1962, as amended. 10. Learned Authorised Representative (AR) further submits that as regards the contention of the appellant that the show cause notice (SCN) does not mention the sub-section of Section 28 invoked, extended period invoked in the SCN is hit by lim....
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....D)) leviable under sub section (1) of section 3 of Customs Tariff Act, 1975, as amended on the goods falling under The Additional Duties of Excise (Goods of Special Importance) Act, 1957, i.e., goods falling under The First Schedule of the Customs Tarriff Act 1975, as amended. Parallelly, vide Sl. No. 50 of Notification No. 20/2006 dated 01.03.2006, as amended, in lieu of State Taxes / VAT exemption from levy of 4% SAD was extended to all goods specified in the first schedule to the Additional Duties of Excise (goods of special Importance) Act, 1957 (58 of 1957). However, to arrive at the quantum of 4%, for the purposes exemption from the levy of SAD, the method prescribed for adoption of value, remained same, as prescribed (and explained supra) vide Notification No. 19/2005-Cus dated 01.03.2005, as amended. Further, the Notification No. 20/2006-Cus dated 01.03.2006 was super ceded by Notification No. 21/2012-Cus dated 17.03.2012. However, the benefit extended vide Sl. No. 50 of the erstwhile Notification dated 01.03.2006 was extended vide Sl. No. 12 of the new Notification dated 17.03.2012. In both the Notifications benefit of exemption from payment of SAD was meant for imported g....
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....ed on the following case laws; a. M/s. J. K. STEEL LTD. (1978 (2) E.L.T. J 355 (S.C.)) b. M/s. PRADYUMNA STEEL LTD. (1996 (82) E.L.T. 441 (S.C.)) c. M/s. FORTUNE IMPEX (2001 (138) E.L.T. 556 (Tri. - Kolkata)}- On appeal upheld by the Hon'ble Supreme Court. 13. Learned Authorised Representative (AR) submits that in the above cited case laws it is held that wrong quoting / mentioning of Rules does not vitiate the Notice to Show Cause or the demand, whereas in the case at hand the issue is not that of wrong mentioning of Rules /Act, only the subsection is not mentioned. The contention of the appellant regarding non-mentioning of sub section of Section 28 of Customs Act, 1962, as amended, is not legally tenable. It is pertinent to note that the non-mentioning of sub section of Section 28 of Customs Act, 1962, as amended in no way has affected the understanding of the appellants with respect to the allegations communicated in the SCN. The appellants have correctly understood the allegations and appropriately replied to the same before the Adjudicating Authority /First Appellate Authority. 14. Authorised Representative (AR) as regards that the Notice ....
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....the invoking of extended period and demand of duty thereto was correctly upheld by the impugned Order-in-Original/ Order-in-Appeal. In this regard reliance is placed on the case laws, wherein the Hon'ble Tribunal has upheld the invoking of extended period when goods are cleared under RMS: a. IBM India (P) Ltd. -2024 (387) E.L.T. 323 (Tri. - Bang) b. Panasonic Sales & Services India P. Ltd.-2009 (245) E.L.T. 495 (Tri.- Mumbai) c. Interglobe Aviation Ltd. 2022 (379) E.L.T. 235 (Tri. - Bang.) 16. Learned Authorised Representative (AR) further submits that it is also seen that the appellants have not raised the point/ issue of extended period before the original authority or the First Appellate Authority and the same is a new ground before this Hon'ble Tribunal. All along the appellants have not questioned the levy of duty and interest and paid the same. Even otherwise, as submitted above the invoking of the extended period is correct, just and legal. The appellants have cited the case laws of M/s. Chemphar Drugs and Liniments, M/s. Padmini Products, M/s. Gopal Zarda Udyog, M/s. Anand Nishkawa Co. Ltd., M/s. Lubri-Chem Industries Ltd. and M/s. Cosm....
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....ecause of order/ decision in the case of some other assessee, at a later date -Ref Mafatlal Industries -1997 (89) E.L.T. 247 (S.C.). In light of the above submissions the appeal is not legally tenable and merits dismissal. 19. Heard both sides, perused the records and the detailed submissions of the Appellant and the Respondent. 20. I find that the appellant while clearing the goods imported vide bills of entry during the period 17.10.2011 to 20.12.2011 had availed exemption from payment of Special Additional Duties (SAD) leviable under Section 3(5) of the Customs Tariff Act, 1975 in terms of Notification No. 20/2006-Cus dated 01.03.2006. However, the said exemption claimed was found inapplicable in view of the amended 13th Schedule to the Finance Act, 2011 w.e.f. 01.04.2011. The Department vide letter dated 28.02.2013, informed the Appellant of the said discrepancy and sought payment of SAD amount of Rs. 2,10,987/- and the Appellant immediately remitted the amount vide Challan dated 22.03.2013. Thereafter, the Department issued another letter dated 09.03.2013, revising the demand to Rs. 2,78,915/-, accordingly, the Appellant remitted the balance amount of Rs. 67,928/- vide C....
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.... the case laws cited by learned counsel for the appellant and the submissions of the learned AR. I find that in view of the decision of the Tribunal in Mahindra and Mahindra Ltd., as affirmed by the Hon'ble Apex Court imposition of interest and penalty on the SAD amount is not sustainable and these decisions are followed by the Tribunal in catena of judgments cited, supra. As regards the contention of the appellant that the confirmation of the demand by invoking the extended period of limitation is not sustainable, since the show cause notice was issued on 17.08.2013 whereas the goods were imported and cleared between the period from 17.10. 2011 to 20.12.2011, I find that the appellant while clearing the said goods, had availed exemption from payment of Special Additional Duties (SAD) leviable under Section 3(5) of the Customs Tariff Act, 1975 in terms of Notification No. 20/2006-Cus dated 01.03.2006. However, the said exemption claimed was found inapplicable in view of the amended 13th Schedule to the Finance Act, 2011 w.e.f. 01.04.2011, therefore, the appellant ought to have not claimed the benefit of the exemption Notification No. 20/2006-Cus dated 01.03.2006. The clearance ....