TMI Blog2013 (6) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... uch process of cutting and slitting, merely because tariff head is changed, that would not ipso facto make the imported goods a new article with distinct name or character. It certainly does not loose its correlation with the goods imported when sold in the domestic market. - decided in favor of assessee. - Tax Appeal No. 1 of 2013,Tax Appeal No. 2 of 2013,Tax Appeal No. 5 of 2013 - - - Dated:- 11-2-2013 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : MR RJ Oza For the Respondents : MR Hardik P Modh JUDGEMNT (Per : Honourable Ms Justice Sonia Gokani) 1. This group of appeals is preferred under Section 130 of the Customs Act, 1962 (hereinafter referred to as the Customs Act ). As all the appeals involve common questions of law, they are being decided by a common judgment and for the purpose of better comprehension of issues, facts emerging in Tax Appeal No.1 of 2012 are considered, treating the said case as a lead matter. 2. Revenue is in appeal challenging the judgment and order of the Customs Excise Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as the Tribunal ). M/s. Posco India Delhi Steel Processing Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Whether in the facts and circumstances of the case, sale of the imported goods by the respondent after undertaking cutting and slitting of coils in varied thickness, length and width of the goods would vitiate the condition of subsequent sale prescribed in exemption notification No.102/2007Customs dated 14.09.2007? (b) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in deciding issue in appeal by placing sole reliance on decision of Tribunal in case of Vijrom Chem Pvt. Ltd. v. Commr. of Cus., Banglore reported in 2006(199) ELT 751(Tri.Bang.) and observing that the respondent is eligible to avail benefit under exemption notification No.102/2007Customs dated 14.09.2007? (c) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law by not considering the issue of interpretation of exemption notification by applying ratio laid down by the Apex Court in the case of Novopan India Ltd. v. CCE Cus;, Hyderabad reported in 1994(73) ELT 769(SC)? (d) Whether the impugned order of the Tribunal, which is passed without referring to and giving its finding on all submissions and pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems and import of HR/CR coils as also with electrical steels of different descriptions. On import of coils, SAD is to be paid, which includes additional duty and customs duty. If such goods are sold in the Indian market, exemption could be availed of by the respondent subject to fulfilling certain conditions prescribed under the Notification. What is required is that the imported goods must not loose its original identity. In other words, between the goods imported and goods sold correlation shall have to be established to enable the respondent to seek exemption by way of refund. It appears that the activity undertaken by the respondent is of cutting of imported steel vertically and horizontally before slitting. Thus, the only process is of cutting and slitting of the imported goods. Therefore, whether such cutting and slitting would amount to manufacturing and whether the same would keep the identity of the goods in tact, entitling benefit of notification and the refund to the respondent is the question that was examined at length by the Tribunal. 11. It can be noted that the Tribunal interpreted Notification No.102 of 2007 and held that the Notifications are required to be int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n market, the goods imported were changing their original form and the goods imported and sold in the market need to be the same. This Court, after a detailed examination of the issue, held in favour of the importer assessee that such process of cutting the timber into small pieces or sawing, would not amount to manufacturing process. It would be profitable to reproduce the relevant observations:- 24. Having thus heard learned advocates for the parties and having perused the documents on record, short question that calls for our consideration is whether the respondents fulfilled all the conditions of exemption notification dated 14.9.2007 or not. As already noted by a notification dated 1.3.2006, Central Government levied SCVD on all imported goods covered under different Chapters, headings and subheadings of the Customs Tariff Act at the rate of 4% ad valorem. Subsequently, however by issuing Exemption Notification dated 14.9.2007, it was decided that in certain cases such SCVD would be refunded to the importers. Such conditions were that when such goods were imported into India for subsequent sale, the whole of the additional duty of customs leviable thereon, would be refunded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as applicable, was also paid. 28. The question of fulfilling the condition of sale of the imported goods in the local market in the same condition, at the time of its import has to be seen in the light of the two crucial factors. 29. Firstly as held by the Karnataka High Court, the process of cutting timber into small pieces or sawing does not amount to manufacturing process. As already noted, in the case of Y. Moideen Kunhi and others vs. Collector of Central Excise, Bangalore and others (supra), Karnataka High Court concluded that in order to attract levy as "excisable goods" under the Central Excises Act, the goods must satisfy that they are a result of a manufacture. Applying various tests of the terms manufacture, the Court observed that timber even when sawn and converted into logs of smaller sizes, does not undergo any manufacturing process. 30. In the case of State of Maharashtra vs. M/s.Shiv Datt and Sons and other (supra), the Apex Court observed that definition of the term "manufacture" should not be widely interpreted. In the case on hand, the Apex Court held the dealer entitled to concession on resale of recharge batteries holding that the process of recharging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imber suitable for use in house construction". A beam is thus timber sawn in a particular way. 'Rafter' as shown by the Shorter Oxford English Dictionary is nothing but " one of the beams which give shape and form to a roof, and bear the outer covering of slates, tiles, thatch, etc". The Concise Oxford Dictionary and Webster's New International Dictionary define 'rafter' in very much the same way; the first defines it as " one of the sloping beams forming framework of a rood" and the second as " one of the often sloping beams that support a roof". Rafter would also, therefore, be timber or log put to a particular use. A 'plank' is defined in Shorter Oxford English Dictionary as " a long flat piece of smoothed timber, thicker than a board, specially a length of timber sawn to a thickness of from two to six inches, a width of nine inches or more, and eight feet or upwards in length". According to the Concise Oxford Dictionary it is a "long wide piece of timber, a few inches thick" and according to Webster's Third New International Dictionary, it is " a heavy thick board that in technical specifications usually has a thickness of 2 to 4 inches and a width of at least 8 inches". The ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the counsel for the respondents, they were, under the law, obliged to reduce the length of the timber before its transport. RTO authorities would not permit transportation of the timber which is longer than 40 feet. 34. It is an undisputed position that the respondents imported the goods after paying SCVD. At the time of its sale in the local market, they also paid local taxes such as sales tax or the Value Added Tax as may be applicable. Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer than 40 feet. If only for cutting length of the logs, which were in excess of 40 feet, sawing operations were carried out and after some cleaning and scaring was done, timber logs of smaller pieces were sold, we do not see how respondents can be stated to have breached any of the conditions of the exemption notification dated 14.9.2007. 35. Under the circumstances, we do not find any error in the view of the Tribunal. Appeals are, therefore, dismissed. 13. This judgment was challenged before the Apex Court by way of Special Leave to Appeal ( Civil ) No. 19780 to 19818 of 2011. The Apex Court admitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all, inter alia, provide copies of the following documents alongwith the refund claim: (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the importer goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value tax, as the case may be, by the importer, on sale of such imported goods. 3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled. 14. On plain reading of the Notification, it can be said that certain obligations are required to be fulfilled by the importer of paying the duties including additional duty on customs. At the time of importation of the goods and at the time of sale of such goods in the invoice itself, it is required to be indicated that no credit of additional duty of customs under subSection( 5) of Section 3 of the Customs Tariff Act, 1975 would be admissible. Importer is also required to claim the refund with the jurisdictional Customs Officer for the additional duty of customs paid and he shall also claim refund on the sale of said goods, app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of goods come into being, the purchase of original goods made by the assessee cannot be said to be purchase during the course of export. The Court in this context held thus :- 5. It is in the context of these provisions of the Karnataka Act that we have to consider whether shrimps, prawns and lobsters, when subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing, retain their original character and identity or become another distinct commodity. The test which has to be applied for the purpose of determining whether a commodity subjected to processing retains its original character and identity is as to whether the processed commodity is regarded in the trade by those who deal in it as distinct in identity from the original commodity or it is regarded, commercially and in the trade, the same as the original commodity. It is necessary to point out that it is not every processing that brings about, change in the character and identity of a commodity. The nature and extent of processing may vary from one case to another and indeed there may be several stages of processing and perhaps different kinds of processing at each stage. With each p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the section note nor in the chapter note, refining as a process was indicated as amounting to manufacture. In the circumstances, it was held that refining of edible vegetable oil did not amount to "manufacture". In our view, the ratio of the said judgment is squarely applicable to the facts of the present case. As stated above, the characteristics of the tissue paper in the jumbo roll are not different from the characteristics of the tissue paper in the toilet rolls, table napkins, facial tissues etc. Moreover, cutting/slitting of tissue paper is not indicated in the section note or in the chapter note as amounting to "manufacture" and, therefore, section 2(f) of the Act was also not applicable to the facts of this case. 17. In the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad, reported in 1995 (76) ELT 241, this Court held that section 3 of the Act levies duty on all excisable goods mentioned in the schedule provided they are produced and manufactured. Therefore, where the goods are specified in the schedule, they are excisable goods but whether such goods can be subjected to duty would depend on whether they were produced or manufactured by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of budgetary session of presenting the budget for the assessment year 199899 deserves consideration at this stage: 120. I have received representations from a cross section of the industry about the regime of import duties. Many Hon ble Members have also written to me expressing their concern on the general health of the domestic industry. The demands are diverse and asymmetrical in most cases. This is for obvious reasons. While the users of imported raw materials and other inputs or the consumers of finished imported goods would benefit from further reduction in import duties, the domestic producers have made a convincing case for urgent relief to the domestic industry. 121. I have given my earnest consideration to these concerns and the competing claims. I am persuaded about a clear disability that our commodity taxation inflicts on the indigenous goods visavis the imported goods. While the former are subjected to sales tax and other local taxes and levies, the import sector, escapes them by their very nature. In order to provide a level playing field to the domestic industry, I propose to impose an additional non modvatable levy of 8% on the imports which is approximate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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