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TMI Blog2011 (4) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... e state of Orissa. At the time of importation, while claiming exemption from SAD M/s.I.O.C. had given an undertaking to the effect that All goods falling within the said First Schedule, which are imported for sale as such, other than by way of high seas sale, and the importer at the time of importation or at the time of clearances of warehoused goods for home consumption under the provisions of section 68 of the Customs Act, 1962 (No.52 of 1962), as the case may be, makes a specific declaration to that effect in the bill of entry in the manner specified below: Provided that the exemption contained herein shall not apply if the imported sells the said imported goods from a place located in an area where no tax is chargeable on sale or purchase of goods. Declaration I/We hereby declare that the goods of description ..imported under Bill of Entry No .dated ..are for sales purpose only. I/we declare that the sale of said goods will not be effected from a place located in an area where no tax is chargeable on sale or purchase of goods. In case the said goods are disposed of in any manner in contravention of the conditions specified in notification No.34/98-Customs, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly the demand would come down from Rs.4,34,99,743/-(Rupees Four Crore Thirty Four Lakh Ninety Nine Thousand Seven Hundred and Forty Three only) to Rs.3,33,32,757/-(Rupees Three Crore Thirty Three Lakhs Thirty Two Thousand Seven Hundred and Fifty Seven only). Learned Commissioner has not given any finding on this aspect of duty computation even though they had made a submission before the learned Commissioner. They further point out that Special Additional Duty being a new levy, there was no judicial pronouncement on the subject matter before 2001 and they were under the bona fide belief that they were not liable to pay any Special Additional Duty of customs. They also submit that in the absence of specific provision for imposition of penalty for non-payment of Special Additional Duty of customs, imposing penalty under Section 114A of the Customs Act, 1962 is not legally sustainable and they place reliance on the judgement of the Hon ble Apex Court in the case of Collector of C.Ex., Ahmedabad vs. Orient Fabrics Pvt.Ltd. 2003 (158) ELT 545 (SC) and also on the judgement of this Tribunal in the case of Tarsem Singh Multani & Sons vs. Commissioner of Cus., Amritsar 2001 (134) ELT 753 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiko Brushware (India) (supra) is in jeopardy and has no precedential value. He also relies on the judgement of Hon ble Supreme Court in the case of UOI vs. West Coast Paper Mills Ltd. 2004 (164) ELT 375 (SC) in support of this contention. He would therefore submit that in the light of the above judicial pronouncements, M/s.I.O.C. are not eligible for the exemption under Notification No.34/98 or subsequent Notification inasmuch as they have sold imported kerosene in the State of Orissa where the said product has been exempted from sales tax. 6. As regards the grounds of limitation urged by the Appellant, Learned Jt.CDR would submit that the Appellant had given a clear undertaking stating that they would not sell the imported product, namely, kerosene in an area where sales tax or purchase tax is not chargeable and in case they do so they would suo motu pay the Special Additional Duty of customs on which they have claimed the exemption. This declaration is clear and categorical. Having given categorical undertaking to the department and subsequently violated the terms and conditions of the said undertaking, they cannot plead any ignorance and bona fide belief and therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in an order does not vitiate the order. So long as the department has the power and so long as the assessee is put on notice, it is his contention that the demand is sustainable even for the period beyond five years as provided for under Section 28 of the Customs Act, 1962. 7. We have carefully considered the rival submissions. As regards the main issue that is, whether the importer M/s.I.O.C. is eligible for benefit of Notification No.34/98, our views are as follows: 7.1 Special Additional Duty of customs was imposed for the first time in the Budget 1998 with a view to off set the burden of sales tax borne by the indigenous producers of goods vis-`-vis imported goods. The object and purpose of this levy is to keep on equal footing both the imported goods and indigenous goods in matters of taxation so that the imported goods do not get an undue advantage over the indigenously produced goods. That is why the Notification provided for a condition that where the goods are exempted from sales tax or purchase tax, the benefit of exemption from Special Additional Duty of customs will not be available. The expression used chargeable cannot be interpreted in such a way so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s.I.O.C. cannot claim benefit under Notification No.34/98 or its successor Notifications. Accordingly we hold that the demand for Special Additional Duty of customs confirmed in the order dated 05.12.2005 of the Commissioner of Customs is correct in law subject to the observations made hereinafter. 7.2 The Appellant has raised a valid point regarding computation of Special Additional Duty of customs. Since Special Additional Duty of customs operates like sales tax on imported gods, it will be computed not only on the imported valued (CIF) but also on the other duties of customs leviable on the imported goods. The other customs duty leviable are Basic Customs Duty, Special Duty of Customs, CV Duty i.e. on the total value inclusive of these duties as provided for in sub-section (2) of Section 3A. If any of the above duties are exempt, the value in respect thereof would be nil and levy of SAD cannot be made on a notional value including such duties as pointed out by the Appellant. In the instant case, at the relevant time there was exemption from Basic Customs Duty on kerosene and consequently there was an exemption of Special Duty of Customs also. Since the duty on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty or making the relevant provisions of the Customs Act applicable to the levy under Section 3A or Section 3(5) of Customs Tariff Act, 1975, penalty could not have been inposed under Section 114A of the Customs Act. He placed reliance on the judgement of the Tribunal in the case of Tarsem Singh Multani & Sons vs. Commissioner of Cus., Amritsar 2001 (134) ELT 753 (Tri.-Del.) and also on the judgemet of the Hon ble Apex Court in the case of Collector of C.Ex., Ahmedabad vs. Orient Fabrics Pvt.Ltd. 2003 (158) ELT 545 (SC) in support of his contentions. We find force in this argument. Accordingly following the ratio of these judgements we hold that the penalty imposed under Section 114A of the Customs Act, 1962 in the instant case is not legally sustainable and accordingly we set aside the imposition of penalty in the instant case. 7.5 In sum, we hold that the Appellant M/s.I.O.C. Ltd. are not eligible for duty exemption from Special Additional Duty of Customs on Kerosene imported by them under Notification No.34/98-CUS dt.13.06.1998 or under successor Notifications in respect of Kerosene sold in the State of Orissa without payment of sales tax. Since the exemption has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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