TMI Blog2014 (1) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... he customs duty liability on the goods imported for the ultimate purpose of export on value addition. Merely because the conditions provided for adjustment of credit in the DEPB scrips, it cannot be stated that either there was no exemption from payment of customs duty or that the Central Government was levying and collecting customs duty from the importers in form of adjustment of credit in the DEPB scrips.Thus through such adjustments on the DEPB scrips at the time of further imports, customs duty component is sought to be neutralised. Circular dated 8-7-2004, the Ministry of Finance, in a question whether goods that are fully exempt from excise/customs duty or are cleared without payment of such duty would be subject to education cess, clarified that the education cess is leviable at the rate of 2% of the aggregate of the duties of excise/customs levied and collected. If goods are fully exempted from excise duty or customs duty or are chargeable to nil rate of duty or are cleared without payment of duty under specified procedure such as clearance bond, there is no collection of duty and, therefore, no education cess would be leviable on such clearances- . Duty demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Tribunal has erred in rejecting appeal of the revenue by relying upon decision of the Tribunal in the case of CC, Mumbai v. Reliance Industries Ltd. - 2005 (188) E.L.T. 449 (Tri.-Mumbai)? (c) Whether Education Cess is leviable on import made under DEPB Scheme as per Finance Act No. 2 of 2004 read with Board s Circular No. 5/2005, dated 31-1-2005? 6. Though three different questions have been framed, central issue is single, namely, whether on imports made by an importer which otherwise qualify for exemption from payment of customs duty and additional duty under Exemption Notification No. 32/2005, would still be liable to pay Education Cess on such basic duty of customs and additional duty on the ground that such duty-free imports were being made under DEPB scheme. The case of the Revenue before the Tribunal was that in view of the Circular of C.B.E. C., dated 31-1-2005, such imports when made under DEPB scheme, though may enjoy exemption from payment of Customs and additional duty if the conditions of Exemption Notification No. 32/2005 are satisfied, nevertheless, the importers would have to pay the Education Cess on the customs duty and additional du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t time, for the goods other than edible oil, such exemption was total. For edible oil, such exemption was to the extent of 50% of the customs duty and additional duty payable. In essence, therefore, for imports made under the DEPB scheme, of course, subject to the conditions specified in the exemption notification, the customs duty was exempt. Merely because the conditions provided for adjustment of credit in the DEPB scrips, it cannot be stated that either there was no exemption from payment of customs duty or that the Central Government was levying and collecting customs duty from the importers in form of adjustment of credit in the DEPB scrips. We may recall that such credits are given at specified rates on the basis of SION norms primarily taking into account deemed import contents of an export product and the basic customs duty payable on such deemed imports. Thus through such adjustments on the DEPB scrips at the time of further imports, customs duty component is sought to be neutralised. The view expressed by the Tribunal in the case of Reliance Industries Ltd. (supra) appeals to us. In the said decision, the Tribunal taking note of the provisions contained in Sections 81 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to concur with such a view. Firstly, in the said decision, the question of levy of Education Cess was not involved. More particularly in our view, the exemption Notification No. 45/2002 is issued under the exercise of powers under Section 25 of the Customs Act, 1962. Such notification grants total exemption from payment of customs duty and additional duty on all goods other than edible oils which are imported under DEPB scheme. It is, of course, subject to conditions specified in the notification itself. Such conditions require adjustment of the credit in the DEPB scrip against the customs duty liability. However, such adjustment is only procedural in nature. As noted earlier, para 7.14 of the Export-Import Policy clearly provided that the exporter who does not desire to go through the licensing route would have an optional facility of being governed under the DEPB scheme. 25. We may note that in cases of Advance Licence Schemes under which imports are being made and which are exempt from customs duty under various notifications issued by the Central Government under Section 25 of the Customs Act, 1962, no Education Cess is demanded by the respondents. In fact, the impugned noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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