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2021 (1) TMI 577 - AT - CustomsLevy of IGST on re-import of aircrafts and parts thereof after repairs - Exemption from IGST - Availability of Integrated Goods and Service Tax exemption provided at serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017, as amended by Corrigendum Notification dated July 22, 2017 - Validity of order that upholds the orders of assessment of Bills of Entry, as a result of which all the appeals have been dismissed by the Commissioner (Appeals) - HELD THAT:- There is no dispute that it is serial no. 2 of the Exemption Notification that is applicable to aircrafts/ parts re-imported into India after repairs. What would, therefore, be payable in terms of serial no. 2 would be the duty of customs on the fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges, both ways. The Exemption Notification does not define the phrase duty of customs. However, section 2(15) of the Customs Act defines “duty” to mean duty of customs leviable under the Customs Act - A bare perusal of section 12(1) of the Customs Act shows that duties of customs shall be levied at such rates as are specified under the Tariff Act or any other law for the time being in force, on goods imported into, or exported from India. The contention of learned Authorized Representatives of the Department is that section 12(1) of the Customs Act leaves no manner of doubt that duties of customs are levied not only under the provisions of the Customs Act and the Tariff Act but also under ‘any other law for the time being in force’. Thus, the integrated tax levaible on imported goods by the Integrated Tax Act would also be a duty of customs and, therefore, the Appellant was correctly denied exemption from integrated tax leviable under section 3(7) of the Tariff Act. The levy of additional duty under section 3 of the Tariff Act, which is in addition to the duty of customs under section 2 of the Tariff Act, would not be duty of customs for the purpose of Notifications issued under the Customs Act. Though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act. It also needs to be noted that the term “integrated tax” has not been defined either under the Customs Act or the Customs Tariff Act or under the Exemption Notification. As integrated tax is not levied under section 12 of the Customs Act, it cannot be called “duty of customs”. The charging section for integrated tax, in terms of which it is levied, is section 5 of the Integrated Tax Act and not section 3(7) of the Tariff Act. Section 3 (7) of the Tariff Act only provides for the manner of collection of the said integrated tax to be done by the Customs Authorities in case of import of goods - This is what was observed by the Madras High Court in M/S. VEDANTA LIMITED VERSUS UNION OF INDIA, THE DIRECTORATE GENERAL OF FOREIGN TRADE, THE DEPARTMENT OF REVENUE INTELLIGENCE AND THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [2019 (1) TMI 85 - MADRAS HIGH COURT]. It would also be appropriate to refer to the judgment of Bombay High Court in DEVIDAYAL ELECTRONICS & WIRES LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [1981 (1) TMI 78 - HIGH COURT OF JUDICATURE AT BOMBAY] - The Bombay High Court held that since the Notification used the word “factory” and also the word “industrial unit” in the same Notification, it has to be assumed that the said two words were intended to bear different meanings. The Court, therefore, held that the words “industrial unit” must mean something other than “factory”. It can be concluded that the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted. The Appellant is thus entitled to exemption from payment of integrated tax under the Exemption Notification on reimport of repaired parts/ aircrafts into India - appeals are, accordingly, allowed.
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