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2015 (3) TMI 690 - SUPREME COURT

2015 (3) TMI 690 - SUPREME COURT - 2015 (318) E.L.T. 3 (SC), 2015 (7) SCC 429 - Eligibility for concessional rate of additional duty - Notification No. 64/93-CE - Refund filed on import of Honda Accord car which was manufactured abroad - In this refund claim the assessee sought refund of 10% of total CVD - Held that:- levy under Section 3 of the Tariff Act is in the nature of a countervailing duty and is with a view to levy additional duty on an import to counter balance the excise duty payable .....

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ount of excise duty was leviable thereon.

Since we are dealing with exemption notification issued under Rule 8 of the Rules, which was the position in Thermax Private Limited (1992 (8) TMI 156 - SUPREME COURT OF INDIA) as well, for the purpose of extending benefit of concession contained in Notification No. 64/93-CE, the principle in Thermax Private Limited (1992 (8) TMI 156 - SUPREME COURT OF INDIA) would clearly become applicable. We may point out that a specific query was put to th .....

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ery. It is obvious that the purpose of exemption Notification No. 64/93-CE was to extend benefits to the importers of saloon cars to use the said cars for tourist taxis. Going by the spirit and the objective behind this Notification, the irresistible conclusion would be to apply the principle of Thermax Private Limited (1992 (8) TMI 156 - SUPREME COURT OF INDIA) in the present case as well. - assessee shall be entitled to refund of 10% CVD paid by him - Decided in favour of assessee. - Civil App .....

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t the same issue was considered by the Delhi Bench as well as West Regional Bench at Mumbai of the Customs, Excise and Signature Not Verified Gold (Control) Appellate Tribunal (for short, 'CEGAT') and they have given conflicting opinions. Insofar as Mumbai Bench of CEGAT is concerned, it has decided the issue in favour of the assessee. However, the Delhi Bench, while taking a contrary view, which is in favour of the Revenue, has not agreed with the Mumbai Bench of CEGAT for the reasons m .....

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f the aforesaid Notification. In this refund claim the assessee sought refund of 10% of total CVD. The refund claim of the assessee was rejected. Questioning the veracity of this decision of the Assistant Commissioner of Customs, Refund Department, Mumbai, as well as Delhi, the assessee approached the Commissioner (Appeals) at both the places. The Commissioner (Appeals) in Mumbai allowed the appeal of the assessee and granted the benefit of the aforesaid Notification with a direction to the lowe .....

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of the Commissioner was challenged by the assessee before CEGAT. The Delhi Bench of CEGAT, however, dismissed the appeal of the assessee vide orders dated January 08, 2001. Against these orders it is the assessee which has filed the appeals. 4) These are the reasons to hear all the appeals analogously as the question of law raised by the Revenue as well as the assessee is common. 5) Before we advert to the view taken by the two respective Benches of CEGAT, it would be apposite to take stock of f .....

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below for the better appreciation of the dispute: "No.64/93-C.E., dated 28.2.1993 as amended by No. 11/94-C.E. dated 1.3.1994: In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise and Salt Act, 1944 (1 of 1944), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under heading No.87.03 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) from so much of the duty of .....

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ted at the rate of 40% ad valorem; (ii) the manufacturer furnishes to the Assistant Collector of Central Excise a certificate from an officer authorised by the concerned State Transport Authority in this behalf to the effect that such saloon car has been for use solely as a taxi, within three months of the date of clearance of the said saloon car from the factory of manufacture or such extended period as the said Assistant Collector may allow; (iii) the manufacturer had not collected from the pe .....

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le to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the 'Tariff Act'), which is in excess of the amount calculated @ 40% ad valorem. Under Heading 87.03, various kinds of goods are mentioned. However, proviso to this Notification gives exemption of duty of 10% CVD in respect of particular goods, namely, saloon cars, if such saloon cars are used solely as taxis. It is subject to four conditions mentioned in the proviso. 8) Pertinently, this proviso mentions t .....

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se of this proviso, the importer, like the assessee, is to be deemed as the manufacturer of the said saloon car. This is the short issue that needs determination. 9) Before adverting to the respective arguments of the learned counsel for the Revenue as well as the assessee, we deem it proper to state the reasons given by the two Benches of CEGAT, rendering opposite decisions. In fact, as we take notice of these orders, it would become apparent as to how the two Benches have perceived the languag .....

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Apex Court in the case of Hyderabad Industries Ltd. & Anr. v. Union of India & Ors. (1999) 5 SCC 15 and Collector of Central Excise, Jaipur v. J.K. Synthetics (2000) 10 SCC 393 , treating the importer as the manufacturer of such goods for the purpose of giving benefit of such Notification. Reliance was also placed on the judgment of this case in Thermax Private Limited v. Collector of Customs (Bombay), New Customs House (1992) 4 SCC 440 . The Mumbai Bench of CEGAT relied upon and extrac .....

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nting the benefit of levying CVD @ 40% in terms of the Notification and the ratio of the said judgments could not be stretched to hold that the importer is to be treated as a manufacturer for the purpose of Notification No. 64/93-CE, which extends further concession of 10% only to the manufacturers. 11) From the aforesaid, it is clear that the entire case hinges upon the ratio laid down in Thermax Private Limited (supra) and followed in Hyderabad Industries Ltd. (supra) as well as in J.K. Synthe .....

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alue of the imported goods plus a surcharge of 25 per cent thereon. The rate of additional duty had to be determined on the basis of Item 29-A(3) of the Central Excise Tariff and the basic excise duty payable thereon was at 80 per cent of the value of the goods under the above item read with Notification No. 42 of 1984/C.E. dated March 1, 1984. However, Notifications (No. 93 of 1976/CE and 63 of 1985/CE) provided a further concession of 25 per cent ad valorem provided conditions set out therein .....

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deals with remission of excise duty on goods used for special industrial purposes. Rule 192 in the said Chapter provides that benefit under this Chapter would be claimed by a manufacturer. The primary reason for rejection of concessional duty, therefore, was that the assessee in the said case as importer of goods was not a manufacturer. In this context, the issue arose as to whether assessee could be treated as a manufacturer for the purpose of availing the concession under the Rules. The Court .....

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eafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article. Explanation. - In this section, the expression 'the excise duty for the time being leviable on a .....

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y equal to the excise duty that is payable on a like article if produced or manufactured in India. However, it is a matter of common knowledge that Notifications of exemptions have been issued by the Excise Department from time to time under Rule 8(1) of the Rules, in the case of imported goods, for determining the leviability of additional duty under Section 3(1) of the Act. In that case, Notification No. 93/1976 was issued under Rule 8 of the aforesaid Rules, which provides for a concession of .....

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y. While holding that for the purpose of getting benefit of remission of CVD under the concession notification, the importer shall be treated as manufacturer. The Court gave the following rationale for holding so: "10...The benefit of Chapter X will no doubt generally be claimed by a manufacturer in which event he will have to make the application, get the licence and give the assurances, bond or guarantee required by the Rules but it can also be claimed by other persons. The language of th .....

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of use specified in the concessions notified could be of any kind and, even in the notifications under our consideration, there are many and varied. In respect of items falling under serial Nos. 3 and 8, in particular, the actual users may be private individuals or authorities and need not necessarily be manufacturers using the goods in question in an "industrial process" in a narrow sense of that term. For instance, any computer room, hospital or factory purchasing parts of refrigerat .....

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concessional rate of duty (or at nil rate if there is an exemption) if the purchaser from him who puts the goods to the specified use (whether a manufacturer or not) fulfils the requirements of Rule 192. Since the concession under Rule 192 turns only on the nature and use to which the goods ar eput by the user or purchaser thereof and on whether he has gone through the procedure outlined in Chapter X, it would not be correct to deny it to a supplier of such goods on the ground that he is an impo .....

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s is entitled to the remission, the importer will be entitled to say that the CVD should only be the amount of concessional duty and, if he has paid more, will be entitled to ask for a refund. In our opinion, the Tribunal was in error in holding that the assessees could not get a refund because the procedure of Chapter X of the Rules is inapplicable to importers as such. (emphasis supplied)" 15) The ratio of the aforesaid judgment in Thermax Private Limited (supra) was relied upon by this C .....

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planation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under Section 3(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 tht the article is produced or manufactured in India. The second limb to the explanation deals with the situation where 'a like article is not so produced or manufactured'. The use of .....

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rpose of Section 3(1), that such an article can likewise be manufactured or produced in India. For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon. .....

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; and the explanation thereto. In this regard it observed as follows: (At Para 11 of the Report) "The words "if produced or manufactured in India" do not mean that the like article should be actually produced or manufactured in India. As per the explanation if an imported article is one which has been manufactured or produced then it must be presumed, for the purpose of Section 3(1), that such an article can likewise be manufactured or produced in India. For the purpose of attract .....

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riff Act: "specifically mandates that the CVD will be equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called upon to pay in that event". To our mind the genesis of Section 3(1) of the Customs Tariff Act has been brought out in the aforesaid .....

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510 and Collector of Customs (Preventive) v. Malwa Industries Ltd. (2009) 12 SCC 735 In fact, in Lohia Sheets and Malwa Industries cases (supra), this Court was considering exemption notifications envisaging use of certain material within a "factory" and still held that an importer would be entitled to the benefit of the exemption notifications in view of Section 3 of the Tariff Act and the decisions in Hyderabad Industries and Thermal cases. As such, it is now settled that the rate o .....

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h of this Court had raised certain doubts on the correctness of the principle contained in Thermax Private Limited (supra) as well as in J.K. Synthetics (supra) and referred the matter to a larger Bench. Reference order is reported as (2005) 8 SCC 164. The Constitution Bench decided the said case, which is reported as (2011) 1 SCC 236. From the reading of para 39 to 41 of the said judgment it becomes clear that though these cases were held not applicable to the fact situation and were distinguis .....

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