TMI Blog2009 (5) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... be cleared. Subsequently, show cause notice dated 17-9-04 was issued by the Assistant Commissioner, answerable to him, proposing demand of Rs. 20,85,309/- of CVD not levied. The entire demanded amount was reportedly paid under protest in December 2004. Subsequently, an addendum dated 7-1-05 to the show cause notice dated 17-9-04 was issued by the Commissioner of Customs and Central Excise, Delhi IV, wherein it was alleged that the importer has not fulfilled the condition stipulated in the Notification 30/04-CX., dated 9-7-04 and therefore, they were not eligible for the benefit of the Notification. By the addendum it was also informed that the show cause notice was answerable to the Commissioner of Customs instead of the Assistant Commissioner. (c) Commissioner vide impugned order held that the exemption under notification 30/04 was applicable only to the goods manufactured in India on which Cenvat inputs and capital goods had not been taken; that it was not possible for any imported goods either to fulfil or not to fulfil the criterion of not availing Cenvat credit on inputs or capital goods. Accordingly, he confirmed the demand as proposed in the show cause notice and appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of excise by virtue of the above notification. Both parties agree that when silk yarn was imported during the material period no CVD was required to be paid in terms of Notification No. 20/2006-Cus., dated 1-3-2003. Accordingly it is argued that there is no question of any manufacturer of silk fabric in India availing Cenvat credit on his input viz. silk yarn. In this view of the matter, the demand of CVD on yarn and fabric is challenged. 4. We have found a formidable point in the submissions of the learned counsel. It has been established that, during the period of dispute, an Indian manufacturer of yarn or fabric would not have been required to claim Cenvat credit on his input. In other words, there was no question of such manufacturer availing input-duty credit, the input being not chargeable to duty of excise. In this view of the matter, the demand of CVD on the yarn and fabric imported by the appellants is not sustainable in law. The impugned order is set aside and this appeal is allowed . 4.3 Learned Advocate also submitted that an exemption notification should be interpreted to achieve the object of the exemption; that a liberal interpretation should be given as lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in other words, in addition to the customs duty leviable under Section 12 of the Customs Act read with Section 2 of the Customs Tariff Act. Secondly this duty is leviable at a rate equal to the excise duty for the time being leviable on a like article to the one which is imported if produced or manufactured in India. The explanation to this sub-section expands the meaning of the expression the excise duty for the time being leviable on a like article if produced or manufactured in India . The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under sub-section (1) would be the excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation is that the article is produced or manufactured in India. The second limb to the explanation deals with a situation where a like article is not so produced or manufactured The use of the word so implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced of manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nothing in Section 3 of the Act and in particular the explanation appended to Sub-section (1) thereof mandating actual production or manufacture in the said factory itself. There cannot be any doubt whatsoever that if excise duty is not leviable on manufacture of goods, the question of the importer paying any additional duty for import of like goods would not arise. 20. We, as noticed hereinbefore, have no quarrel with the proposition that exemption notification should be construed strictly which means that benefit thereof should not be granted to one, who is not entitled therefore. But it is also true that those who are entitled to the benefit cannot be deprived there from by taking recourse to the doctrine of narrow interpretation simplicitor, although the purpose and object thereof would be defeated thereby. (c) He also relies on the decision of the Hon ble Supreme Court in the case of Lohia Sheet Products v. C.C., New Delhi reported in 2008 (224) E.L.T. 349 (S.C.) where in, in respect of imported copper/brass scrap, benefit of exemption from countervailing duty by extending the benefit under the excise notification No. 8/96-C.E. dated 23-7-96 which granted exemption to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on these issues. The doubt arises when conditional Notification has been issued under the Excise Act and the rate of duty is to be determined for the purpose of Section 3(1) levy under the Customs Tariff Act. The Hon ble Supreme Court in the cases of M/s. Thermax Pvt. Ltd, M/s. Malwa Industries and M/s. Lohia Sheet Products cited Supra have extended the benefit of conditional Excise Notifications in the circumstances mentioned therein. 7.1 In the present case, there is no dispute about the classification of the imported goods under the excise tariff for the purpose of determining the additional customs duty payable for the imported goods under Section 3(1) of the Customs Tariff Act; there is also no dispute that the imported goods are covered by the description at Sl. No 1 of the Notification 30/04-CX., dated 9-7-04 issued under Section 5A of the Central Excise Act, the dispute is limited to as to whether the proviso to the notification is attracted or not. 7.2 The relevant portion of the Notification 30/04-CX dated 9-7-04 reads as under : GSR (E) - In exercise of the powers conferred by sub -section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn is imported no CVD is payable. Therefore, the claim that no Cenvat credit can be taken by the manufacturers in India, as the inputs do not suffer excise duty in the case of indigenous goods or CVD in the case imported goods is relevant and acceptable. 8.3 The Commissioner, in his impugned order has held that - It is impossible for any imported goods to fulfil or not to fulfil the criterion of not availing CENVAT of input or capital goods. Commissioner s finding is to the effect that it is neither possible to say that the condition is fulfilled nor to say that the condition is not fulfilled. This finding cannot be held to be correct in the light of our finding that the inputs do not suffer excise duty in the case of indigenous goods or CVD in the case imported goods. 8.4 Further, the Tribunal, in the case of Prashray Overseas Pvt. Ltd. v. C.C., Chennai cited supra has held - In other words, there was no question of such manufacturer availing input-duty credit, the input being not chargeable to duty of excise. In this view of the matter, the demand of CVD on the yarn and fabric imported by the appellants is not sustainable in law. 8.5 In the light of the above, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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