TMI Blog2006 (11) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... nd TMBA were not actually manufactured in their factory. He further stated that the company sold the said goods imported by them, as such without doing any processing, in the very same drums in which the raw materials were received, after replacing the outer labels..." A.2The appellants had affixed a label on the drums of the Ascorbic Acid (bottom page 245 of Vol. II) to comply with the labeling requirements specified in Rule 96 of the Drugs and Cosmetics Rules, 1945 (pages 531-535 of Vol. III). A.3On the TMBA and Anilino compound also cleared from the factory, the appellants affixed their own labels similar to the one affixed on Ascorbic Acid. The activity of relabelling amounts to manufacture in terms of EXIM policy. B.1Even if all the contentions of the department is assumed to be correct, no duty is payable since the activity of relabeling amounts to 'manufacture'. B.2The EOU scheme is integrally connected to the EXIM Policy framed by the DGFT, Ministry of Commerce. In fact, customs and excise provisions are made to implement the scheme made out in EXIM Policy. Therefore, definition of 'manufacture' as contained in the Exim Policy-1997-02, is useful which is extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbic Acid IP, BP, USP Bags : LDPE - natural white (inner) black (outer) Size : 26" x 42" Thickness : 0.25 mm Weight : 90 gram Fibre Drum : 14" x 18" or 16"x20" Fibre Drum : Outside varnished with paper pasted on to and bottom HDPE Drum : 14.5" x 22.5" Seal : Wire seal with Tonira's logo on lead seal C.2Even otherwise, page 474, - 492 of Vol. III are copies of packing lists accompanying the imported Ascorbic Acid. Bottom pages 247 - 248 of Vol. III are invoice for purchase of packing material showing size of fibre drum which is used for packing of finished product. C.3The appellants had produced 12 photographs numbered from A to K before the Hon'ble CESTAT, to highlight the difference between the import packing and the export packing. C.4Batch no. 64 of Ascorbic Acid was in process when the department visited the factory on 4-1-2001. Page no. 434 of Vol. III is a document giving details of drums containing lying in packing department for the purpose of final packing. The panchas have signed this document. In other words, there is contempo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken advantage by the Revenue, since the Revenue is bound by CBEC Circular No. 576/13/2001-CX dated 16-5-2001 in the context of Note 5 to Chapter 30 holding that the Revenue is bound by this Circular and the Revenue is barred from arguing contrary to the Circular. Life of the imported Ascorbic Acid is 24 month whereas the life of Ascorbic Acid cleared from the factory is 48 months. This is sufficient to prove that some processing was indeed carried out by the appellants. G.1The appellants imported Ascorbic Acid - FCC grade IV having life of 24 months. Page 496 - Vol. III is an illustrative test certificate issued by the Chinese exporter for Ascorbic Acid - FCC grade IV. The certificate enlists a table. Just before the table, the following expression appears: "Test date: July, 2001 Expiration date: July 2003". Further, at the bottom of the certificate, the following expression appears : "Mfg. Dt. July, 2001 ; Expiry dt: July 2003". G.2Undisputedly, the appellants have sold IP grade of Ascorbic Acid. Pages 438-439 of Vol.-III is illustrative copy of purchase order placed by major customer namely M/s. Natural Products, Baroda. The Purchase order mentions that the Ascorbic Acid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 568 (T) Also refer to Sec. 149 of the Customs Act which prohibits amendment of Bill of Entry after the imported goods have been allowed to be cleared for home consumption. Manufacturing process was indeed carried out on imported Ascorbic Acid - FCC grade IV and 345 TMBA. 1.1The appellants rely upon ground set out in para A. 1 to A. 12 of the appeal memo wherein positive evidences have been set out in detail which conclusively prove that the appellants had indeed engaged itself in the manufacture of (i) Ascorbic acid - IP grade; and (ii) 345 TMBA (bromo free) and Anilino. 1.2The appellants also rely upon FDA audits carried out from time to time. FDA audit reports for the period 1997 to 2002 have been attached as Annexure 54 at page 447 - 463 in Vol. III. 1.3 Hence the allegations of non-manufacture are baseless. In the present case, rate of duty prevailing at the time of payment of duty is relevant in view of section 15(1)(c). At the time of payment of duty, rate of Anti-dumping duty is nil in view of Section 9A(2A). J.1The imported raw materials were warehoused. Clause (a) of Section 15(1) of the Customs Act, 1962 is not applicable. Clause (b) of Section 15(1) is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CVD and SAD, the show cause notice has taken into account Anti-Dumping Duty also as part of the value. This is patently incorrect. K.2Anti-Dumping Duty is neither a duty of customs levied under Section 12 of the Customs Act, 1962 nor a duty levied under Section 3 of the Customs Tariff Act. Hence, Anti-Dumping Duty will not form part of Value for levy of SAD under Section 3A. K.3Section 3(2) of the Customs Tariff Act, 1975 relates to calculation of value or levy of Countervailing Duty (CVD) as it stood prior to 1-3-2002, reads as under : "(2) For the purpose of calculating under this section, the additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of- (i) the value of the imported article determined under sub-section (1) of the said section 14 or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under Section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not form part of the value. K.7Section 3A(2) of the Customs Tariff Act, 1975 as it stood prior to amendment by Finance Act, 2003 with effect from 1-3-2002 reads as under : "(2) For the purpose of calculating under this section special additional duty on any imported article, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 or section 3 of this Act, be the aggregate of - (i) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs; and (iii) additional duty of customs chargeable on that article under section 3 of this Act." K.8Section 3A(2) as amended by Finance Act, 2003 reads as under : "(2) For the purpose of calculating under this section additional duty on any imported artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of customs will be included. Other duties such as anti-dumping duty, safeguard duty, etc. shall not be taken into account. This amendment will effect from 1-3-2002." K.10The above Budget circular expressly clarifies that the amendment made in Finance Act, 2003 is purely clarificatory/declaratory/explanatory or otherwise obvious/applicable legal position. Hence, the amendment would apply for past period also right from 1998 when section 3A was introduced. Therefore, Anti-dumping Duty cannot be part of the value for levy of SAD. K.11The above Budget circular expressly clarifies that the amendment made in Finance Act, 2003 is purely clarificatory/declaratory/explanatory or otherwise obvious/applicable legal position. Hence, the amendment would apply for past period also right from 1998 when Section 3A was introduced. Therefore, Anti-dumping duty cannot be part of the value for levy of SAD. K.12The unamended Section 3(2) has been extracted in para G.3 supra. The unamended Section 3A(2) has been extracted in para G.7 supra. The Sections are pari materia as far as present context is concerned. Therefore, the clarification in the Budget of 2002 vide para G.5 supra that Antidump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .17For example, if a duty is levied under Section 8A, that will be an increase in the import duty leviable under Section 12. That will be "as an addition to duty of Customs". It would also be "chargeable in the same manner as a duty of customs". In fact, since the duty under Section 8A is an addition to the duty leviable under Section 12, there is no sub-section in Section 8A borrowing provisions of the Customs Act on the line similar to Section 3(5) or Section 3A(4) or Section 8C(4) or Section 9A(8). Section 8A does not think it necessary to borrow the provision of Customs Act, 1962 for levy and collection of duty levied under Section 8A as the duty levied under Section 8A would be as an addition to the duty of customs. K.18Anti-Dumping Duty is not as an addition to the duty of customs. It is not as an addition to duty of customs. It is also chargeable in the same manner as a duty of customs. In fact, a separate and express provision in the form of Section 9A(8) was indeed necessary to borrow some of the machinery provisions of Customs Act, 1962. Therefore, anti-dumping duty is not covered by second leg of Section 3A(2)(ii). K.19It may be noted that though Section 3A is a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggest that for levy of; CVD, dumped Import price should not be relevant but only the aggregate of dumped price plus Anti-Dumping Duty is relevant. Hence it is submitted that the fulcrum of Jayaswals Neco's case supra is not accurate on this point. K.24In view of the above, the demand of CVD and SAD on Anti-Dumping Duty which is equal to Rs. 94,67,767 + Rs. 12,39,020 = Rs. 1,07,06,787 is not maintainable. Demand of Anti-dumping Duty on Ascorbic Acid is bad in law since the demand is based on temporary statute namely Notification No. 104/2000-Cus. dated 21-7-2000 which has expired without any saving clause. L.1By the impugned order issued on 18-2-2005, anti-dumping Duty has been demanded on the import of 1,48,000 Kg. of Ascorbic Acid imported during the period July 2000 to November 2001. L.2Ascorbic Acid is a category of Vitamin-C used in food preparations as food additives. Following are the relevant dates and events in respect of import of Ascorbic acid : Date Event 21-7-2000 Notification No. 104/2000-Cus. dated 21-7-2000 was introduced imposing Anti-dumping Duty on Vitamin C, falling under CSH 2936.27 originating from China and Japan. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch any person may be detained [which is a pre-requisite for Article 22(4)(b)], it fixes, by extending the duration of the 1950-Act, till 31-3-1952, an overall time limit beyond which preventive detention cannot be continued. The Supreme Court held that detention under the temporary statute after the expiry is illegal. The relevant portion of the judgment is reproduced below : "......The general rule in regard to a temporary statute is that, in the absence of special provision to the contrary, proceeding which are being taken against a person under it will ipso facto terminate as soon as the statute expires (Craies on Statutes, 4th Edn., p. 347). Preventive detention which would but for the Act authorizing it, be a continuing wrong, cannot, therefore, be continued beyond the expiry of the Act itself......." L.7The following portion of the judgment by the Constitutional Bench in Kolhapur Canesugar Works Ltd. v. Union of India - 2000 (119) E.L.T. 257 (S.C.) is also relevant : "29.In the case of S. Krishnan v. State of Madras - AIR 1951 SC 301 this Court held that the general rule in regard to a temporary statute is that in the absence of special provision to the contrary, procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Supreme Court held that the position was no different where the rate of tax is specified under a notification. Also, Section 5 of the Orissa Sales Tax Act itself referred to the rate as specified by notification issued from time to time. L.9Though Anti-Dumping Notification no. 104/2000-Cus. is issued under Section 9A(1), it is a notification which itself levies and imposed Anti-Dumping Duty and is thus self-contained/self operating code. Once such notification has an in-built expiry date with no saving clause and it expires by the efflux of time specified in the notification, it is as if the notification has never been issued except in respect of things passed and closed. Pending proceedings seeking to impose duty based on such Notification would automatically die. So also, no fresh proceedings can be initiated for imposing duty pursuant to that expiry notification. The true principle in this regard is already set out in para L.6 supra. Section 159A is not applicable for various reasons. LA.1Section 159A is pari materia to Section 6 of the General Clauses Act, 1897. For the reasons submitted supra, Section 159A is also not applicable to the present case. - Even otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, the test reports of FDA approved lab namely M/s. Choksi Laboratory (at bottom pages 107-111 of Vol. I) clearly state that the samples were received in sealed condition and that the test have been carried out as per IP standard. The test reports also state the standard levels of various ingredients and the actual levels of those ingredients in the samples. Apart from other ingredients and the actual levels of those ingredients in the samples. Apart from other ingredients, the appellants rely on the content levels of oxalic acid in the RG-1 sample vis-a-vis FG-1 sample. The oxalic acid contents in the RG-1 sample is not as per IP grade whereas oxalic acid levels in the FG-l sample confirms the IP grade. M.5The impugned order relies upon irrelevant evidence viz., the CIPL, Ghaziabad test reports and totally ignores relevant evidence viz., the Choksi Lab report. Such an order is vitiated and hence liable to be set aside on this ground itself because it is well settled that where a fact finding authority acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of that authority was affected by the irrelevant material used by it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t signed the BMR. Only his name is mentioned on BMR by the Production Executive. O.2The actual procedure being follower is as follows. The QA Chemist is the officer who is nominated under the FDA rules to issue, keep and maintain the BMRS. The QA Chemist issues blank BMR which is the first step for starting any batch. On the BMR, the QA chemist mentions the batch size and the quantity of various raw materials required for manufacturing that batch. Thereafter the Production Executive along with the Shift Chemist go to the stores along with the BMR. The Production Executive prepares the Raw material Issue Slip based on BMR and handover such Slip to the Stores Officer. The Stores Officer issues the raw material mentioned in the Slip to the Production Executive and signs the Slip. Such Slip is retained by the Stores Officer for his accounting purpose. The Production Executive does not give the BMR to the Stores Officer at all. The Production Executive mentions the name of the Stores Officer who issued the Raw Material. The Production Executive hands over the Raw Material to the Shift Chemist. After the batch is completely manufactured, the completed BMR is again handed over to the QA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be any noting on DSR. Besides, DSR is relevant for multi-stage product like Athnolol, famatodine, Benzbromarone, etc. and not relevant for single stage product like Ascorbic Acid - IP or TMBA. Hence DSR is not at all relevant to conclude as to whether any manufacturing was carried out or not. P.4The actual document which records the manufacturing process is the Batch Manufacturing Record (BMR, for short). Refer page 526-528 of Vol. III for an illustrative BMR. This fact has been confirmed by statement of Mr. M.J. Patel, Works Manager who stated that BMR is used for recording production. Statement dated 4-1-2001 of Mr. C.M. Pandya - Production Manager. Q.1The statement of Mr. Pandya that Daily shift Register records charging the Raw Material is factually incorrect. Even for products where no demand has been raised and which have been undisputedly manufactured, the DSR does not record the charging of raw material. As explained in para H.3 H.4 supra, DSR does not record charging of Raw Materials. Q.2In view of the above, the subsequent portion of the statement that "batch process records of all products are fabricated" is also incorrect. There is no connection between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Hence, there is no question of testing Ascorbic Acid while in process. Therefore, Mr. J.M. Patel stated in his statement dated 26-12-2001 that he has not tested Ascorbic Acid while in process. S.2On receipt of the raw material, the appellants take a sample and test it. Thereafter a Goods Receipt Note (GRN, for short) is prepared and this GRN give reference to the sample test. Refer GRN no. 231 dated 22-7-2000 at page 541 of Vol. III for receipt of 7000 Kg. of TMBA. This GRN refers to test sample certificate no. RM/QA/231/2000-01 dated 25-7-2000. Page 543 of Vol. III is copy of test sample certificate no. RM/QA/231/2000-01 dated 25-7-2000. This certificate, at sr. no. 5, states that it contains bromo compound. S.3The manufacture of TMBA itself contains bromine compound. This bromine compound must be removed to manufacture final drug "TRIMETHOPRIM". It is also strictly prohibited as per pharmacopoeial specification. The entire quantity of imported TMBA was sold to manufacturers of TRIMETHOPRIM drug. S.4Hence the input TMBA was subjected to de-bromination process. Hence the statement of Mr. J.M. Patel is not correct and contrary to documentary evidence. Statement dated 3-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiation of investigation. V.3The appellants processed about 30 MT of Ascorbic Acid - FCC grade IV up to time of visit of the Central Excise Officer in their factory (January, 2001). Rest of the material (about 118 MTs) has been imported and used subsequent to the investigations initiated by the department as is evident from the copies of B/E's itself. It is astonishing to note that the department has presumed 'no manufacture' even in respect of the goods imported subsequent to the investigations. Statements made by the functionaries in the unit of the appellants about the 'no manufacture' of ascorbic acid may be relevant for the past clearances but cannot be made statements. The appellants had imported one consignment of 3,4,5 TMBA and nine consignments of ascorbic acid after the visit of the central excise officers in their factory. Details of such imported materials were furnished by the appellants vide letter dated 19-9-2002 to the DGCEI (Annexure-34, bottom page 55-56 of Vol. I) i.e., much later than the visit of the central excise officers in the factory. In the show cause notice no duty was demanded in respect of one consignment of TMBA imported after the visit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going para relating to demand of customs duties. It has been submitted that no duty demand can be made under proviso to Section 28 of the Customs Act in view of the factual and legal background of the case. Accordingly, no penalty under Section 114A of the Customs Act is imposable. Therefore, the imposition of penalty under Section 114A of the Act is liable to be set aside. X.2Penalty on an EOU is not imposable for one more reason. In terms of the Bond executed by the EOU, it undertakes to be liable to pay duty and interest in case the imported materials are not used for the intended purpose. Notification No. 53/97 also provides that the unit shall be liable to pay duty in case the materials are not used for intended purposes. Therefore, in the case of EOU only duty demand can be made even if the materials are not used for intended purpose. No Penalty under the Central Excise Act. Y.1It is submitted that penalty under Section 11AC can be imposed only when there is a demand determined under proviso to Section 11A of the Central Excise Act. It has been submitted in detail that no excise duty is payable by the Appellants. Accordingly, no penalty under Section 11AC or Rule 25 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (at Pg 106 to 110 bottom Numbers) and incompetency of CIPL, Ghaziabad to conduct such test is untenable because of following reasons - (I) Samples were drawn on 4-1-2001. CIPL Lab Test Reports are dated 29-11-01. CIPLL Test Reports were on of Relied upon documents in Annexure to the SCN dtd. 26-8-2003 (See pg 53 of Appeal Memo Book). However, the CHOKSHI LAB'S REPORTS are dtd. 29-3-2004. Therefore, the Chokshi Lab Report is more than 6 months after the issuance of SCN, when the appellants were aware of the contents of CIPL Test Reports. (II) It has been admitted that at no point of time the appellant has requested for RETEST as envisaged under Rule 56(4) of Central Excise Rules, 1944 or Section 17 of Customs Act, 1962. When NO RETEST is requested, the Test Report of Govt. Alab becomes final, Private Laboratory Test Report of Chokshi Lab dtd. 29-3-2004 is an afterthought. (III) Supreme Court in Bombay Oil Industry - 1995 (77) E.L.T. 32 (S.C.) [Annexure-A] has held that if no retest has been requested by the assessee under Rule 56(4) of CE Rules, 1944 or u/s 17 of Customs Act, 1962, then it becomes final and binding on the importer and the same is not challengable in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity or processing was done on Ascorbic Acid and TMBA. He sated that these goods were sold after replacing the labels on Raw Material drums. (iii) Statement of Shri Shailesh J. Shah, Plant Incharge, Tonira (Para 6 of page 4 5 of SCN), dated 4-1-2001. Regarding Ascorbic Acid and TMBA he stated he does not know whether these are manufactured in TP2 Plant (he is Plant Incharge). That he has signed Batch Sheets only as per directions of Shri Modi. That he does not know the manufacturing process of two products. (iv) Statement of Shri C.M. Pandya, Production Manager of Tonira dtd. 4-1- 2001 (page 5 Para 7 of SCN) - He stated that batch process records are fabricated and it is only on the basis of daily shift report one can ascertain that a product is manufactured in their factory. He agreed that there is no entry in daily shift Register regarding any process done for the manufacture of Ascorbic Acid and TMBA. (v) Statement of Madhubahi J. Patel, Works Manager of M/s. Tonira Pharma dtd. 5-1-2001. (Para 8 page 6 of SCN) - He stated that there was no production of these two final products. He also stated that the two materials were cleared after relabelling in DTA/Loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of their contention appellant has shown Pvt. Courier challans. However they failed to show the receipt of any such letter at the office of DGAE or the Commissioner. It is common knowledge that no courier company delivers a letter without taking acknowledgement along with stamp and phone number of receiver. Here the appellant has failed to show that any such letter of retraction was received by the authorities. (iii) Importantly, the alleged retractions were on 8th and 9th January, 2001, however, statements of J.M. Patel, Q.A. Chemist dtd. 26-12-2001 and 3-5-2002 M.C. Shriraman, Director (Tech) on 22-4-2002, Mahesh N. Shah, Managing Director dtd. 6-5-2002 and Sanjay Shah on 3-10-2002 are all subsequent to 9-1-2001 and have not been retracted. (iv) Mahesh N. Shah, Managing Director on 6-5-2002 during his statement has seen/read/understood all the statements and signed them. He does not dispute these statements or says that these were retracted. On the other hand he says Lalit Modi was responsible for these two products. Therefore, the retractions are belated, afterthought and would net vitiates the statements. These statements prove that no manufacturing process was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consumption norm of various inputs (kindly see pages 215 to 226 bottom of page numbering). (ii) Drug Controller gave them permission to manufacture Ascorbic Acid as per multistep manufacturing process (pages 238 to 240 bottom no.) through EDTA Route. This manufacturing process was approved by the Development Commissioner also. The assessee during personal hearing contended that they have relabelled and repacked the material. It is submitted that what was received in factory was in 25 Kg pack drums and what was cleared was also same 25 kg pack drums. Shri Lalit Modi and others in their statements have stated that only paper labels were changed. The photographs of empty drums shown by the appellants were taken in February 2006 does not in any way prove that repacking was ever done. The contention raised after 5 years is clearly a case of constructing a foot to fit a shoe. (iii) It is submitted that from Definition of Manufacture as per EXIM Policy -........ include processes, such as refrigeration, repacking, polishing, labeling and segregation," it is clear that labeling is mentioned but process of relabelling is absent. Use of words 'such as' also would not cover/bring in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Apollo Hospital Enterprises v. UOI, 2001 (133) E.L.T. 58 (Mad), wherein relying on - (i) Mediwell Hospital, 1997 (89) E.L.T. 425 (S.C.), (ii) State of Orissa v. Titaghar Paper Mills, (1985) Supp SCC 280 (SC), and (iii) State of Rajasthan v. Mangilal Pindwal, 1996 (5) SCC 60 (SC), it was held that repeal of a statute does not affect the previous operation of the law which has been repealed during the period it was operative prior to the date of such repeal. Paragraphs 32 to 37 of Apollo Hospital, 2001 (133) E.L.T. 58 (Mad) are extracted below :- "The effect of repeal of the notification : 32.It is contention of the learned Counsel for the petitioners that the Notification 64/88, where the benefit of exemption of the Customs Duty was granted to the hospital like the petitioners and the obligation of the free treatment and reservation of bed had been imposed on the petitioners, had been rescinded by the subsequent Notification No. 99/94, dated 1-3-1994 which is follows : Notification................................ No. 99/94-Customs New Delhi, dated the 1st March,1994 10 Phalguna, 1915 (Saka) G.S.R. (E) - In exercise of the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion dated May 23, 1977. The High Court held that to hold that the liability which had accrued under the notifications dated May 23, 1977. The High Court held that to hold that the liability was so wiped out would amount to giving a retrospective effect to the notification dated December 29, 1977, and as the Legislature had not conferred upon the State Government the power to issue notification having retrospective effect, to so hold would be to render the said notification void. The High Court referred to a number of decisions on the question of the power to make subordinate legislation having retrospective effect. We find it unnecessary for the purpose of deciding this point to refer to any of the authorities cited by the High Court. Both the notification dated December 29, 1977, are in express terms made with effect from January 1, 1978. They do not at all purport to have any retrospective effect and, therefore they could not affect the operation of the earlier notifications dated May 23, 1977, until they came into force on January 1, 1978. Further, both Section 3B and Section 5(1) in express terms confer power upon the State Government to issue notification "from time to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any liability accrued under the previous notifications. If this contention of the respondents were to be accepted, the result would be starting. It would mean, for example, that when a notification has been issued under Section 5(1) prescribing a rate of tax, and that notification is later superseded by another notification further enhancing the rate of tax, all tax liability under the earlier notification is wiped out and no tax can be collected by the State Government in respect of any transactions effected during the period when the earlier notification was in force." 36.In State of Rajasthan v. Mangilal Pindwal - (1996) 5 SCC 60 the Supreme Court has held as follows : "As pointed out by this Court, the process of a substitution of statutory provisions consists of two steps; first, the old rule is made to cease to exist and, next the new rule is brought into existence in its place. (See: Koteewar Vittal Karrnath v. K. Rangappa Baliga Co. - (1969) 1 SCC 255: (1969) 3 SCR 40 SCR at p. 480. In other words, the substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. As regards repeal of a statute the law is thus st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. As such, we reduce the penalty to 10% of duty amount. 5.As regards the customs duty demand, we find that there are two products involved: Ascorbic Acid and TMBA. We take up the case of Ascorbic Acid first. It is the charge of the department that the appellants have imported ascorbic acid of IP grade and removed the same for home consumption without undertaking any manufacturing activity. The total duty demand on ascorbic acid is Rs.7,49,07,092/-. The main argument on behalf of the appellants is that they imported ascorbic acid of FCC grade-IV and converted the same to ascorbic acid of IP grade and also sold these in relabeled containers. Hence, it is argued by them that no duty is payable on the imported ascorbic acid. The appellants have also claimed that no anti-dumping duty is chargeable on the same on the ground that the relevant notification imposing anti-dumping duty had lapsed and was not in force at the time of issue of show cause notice as well as the confirmation of demand. 6.After considering all the arguments advanced by both sides, we are of the view that the adjudicating Commissioner has rightly placed reliance upon the test report from the CIPL, Ghaziabad, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the very purpose of its imposition as a trade remedies measure designed to curb dumping of imported goods, which is a measure permitted under the WTO Rules. Anti-dumping notifications are always issued for a specified period unless they are reviewed and continued for a subsequent period. The arguments advanced by the appellants would result in collection of anti-dumping duty from honest tax payers who paid the duty on time and those importers who evade the payment of anti-dumping duty would escape from paying the same just because evasion is detected afterwards and the show cause notice and the adjudication order are issued subsequently after lapse of the anti-dumping duty notification. Such an outcome collecting tax from honest tax payers and allowing the evaders to escape the tax cannot be a just and fair outcome and therefore the interpretation sought to be placed by the appellants on the effect of lapsing of an anti-dumping notification cannot be approved. 9.In view of our findings as above, we uphold the customs duty demand including the demand of anti-dumping duty on ascorbic acid imported by the appellants amounting to Rs. 7,49,07,092/-. However, as regards the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have carefully perused the order recorded by the learned Member (Technical) and while agreeing with his finding regarding levy of customs duty and excise duty, I regret that I am unable to persuade myself to agree to the finding regarding levy of anti-dumping duty and hence I am recording my separate order on this aspect. 16.Levy of anti-dumping duty has been confirmed on 1,48,000 kgs of ascorbic acid imported during the period from July 2000 to November 2001. On 21-7-2000, Notification 104/2000-Cus. was issued imposing anti-damping duty on Vitamin C falling under Customs Tariff Heading 2936.27 originating from China and Japan (ascorbic acid is a category of Vitamin C used in food preparations as food additives). This notification was effective up to 15th April, 2003 on which date the notification expired. On 24-10-2003, Notification 159/2003-Cus. was issued imposing definitive anti-dumping duty on all imports of Vitamin C originating from China. Section 9A(1) of the Customs Tariff Act, 1975 empowers the Central Government to impose anti-dumping duty on any article exported from any country or territory to India, by notification in the Official Gazette. The relevant notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not a self-contained code levying taxes but only specify the rate stipulated by the main charging section, viz. Section 5 of the Orissa Sales Tax Act. Although notification 104/2000-Cus. has been issued under the provisions of Section 9A(1), it is the notification which both levies and imposes anti-dumping duty and is thus a self-contained code and since it has a built-in expiry date with no saving clause and expires by efflux of time specified therein, pending proceedings seeking to demand duty based on such notification, would automatically come to an end. Section 159A of the Customs Act which is pari materia to Section 6 of the General Clauses Act, 1897 will not apply so as to save the levy of anti-dumping duty under the notification for the reason that Section 6 would not apply. Further, this section would not apply to anti-dumping duty levied by a notification issued under the Customs Tariff Act as it applies only to any rule, regulation, notification or order made or issued under the Customs Act, 1962. Therefore, die demand of anti-dumping duty of Rs. 1,80,80,457/- on ascorbic acid imported up to 11-5-2001 and Rs. 60,03,000/- on 3,4,5 TMBA imported between February and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessable value for levy of CVD and SAD cannot be sustained and is required to be set aside. Sd/- (Jyoti Balasundaram) Vice-President Dated : 28-6-2006 DIFFERENCE OF OPINION 20.The following difference of opinion is hereby referred to Hon'ble President Third Member for his decision : (1) Whether the demand of anti-dumping duty for the period prior to and subsequent to 11-5-2001 is required to be sustained, as held by the learned Member (Technical), or to be set aside as held by the learned Vice-President ? (2) Whether the anti-dumping duty forms part of the assessable value of goods for the purpose of levy of CVD and SAD, as held by the learned Member (Technical), or anti-dumping duty will not form part of the assessable value for this purpose, as held by the learned Vice-President. Sd/- (Chittaranjan Satapathy) Member (Technical) Dated : 6-7-2006 Sd/- (Jyoti Balasundaram) Vice-President Dated : 28-6-2006 21.[Per : Justice R.K. Abichandani, President (for the Bench)]. - Due to difference of opinion between Hon'ble the Vice- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenolol and fanotidine in the DTA by wrongly availing the benefit of Notification No. 8/97 dated 1-3-1997, should not be demanded and recovered from them under Section 11A of the Central Excise Act, 1944. Annexure 'B1' of the show cause notice was a statement showing the details of imports of ascorbic acid by the appellant under various bills of entry indicating basic customs duty, surcharge, anti-dumping duty, CVD and SAD, the total of these customs duties being Rs. 7,49,07,092/-. Similarly, Annexure 'B2' was the statement showing the details of import of 3/4/6 trimethoxy benzaldehyde by the appellant under various bills of entry showing the basic customs duty, surcharge, anti-dumping duty CVD and SAD and the total of these customs duties was Rs. 1,36,34,430/-. 23.The Commissioner of Central Excise and Customs, Surat-II confirmed the demand of customs duty amounting to Rs. 8,84,16,660/- and the excise duty of Rs. 14,13,208/- and imposed penalty of Rs. 8,84,16,660/- on the appellant under Section 114A, and other penalties as well as interest as indicated in the order. On the question whether or not anti-dumping duty was imposable or exempt under Notification No. 5/94-Cus. dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... domestic market was well founded. It was held that the appellants did not undertake any manufacturing process as projected before the Excise authorities, the Drug Control authorities and the Development Commissioner in-charge of EOU. 24.1As regards the imposition of anti-dumping duty, the learned Member (Technical), dealing with the contention that once the anti-dumping notification had lapsed, such duty cannot be demanded and recovered subsequently even for the earlier period, held that, if such an argument was accepted, it will amount to circumvention of the anti-dumping duty provisions and will defeat the very purpose of its imposition as a trade remedial measure designed to curb dumping of imported goods, which was a measure permitted under the WTO Rules. It was opined that anti-dumping duty notifications were always issued for a specified period unless they were reviewed and continued for a subsequent period. It was also held that collecting tax from honest tax payers and allowing evaders to escape the tax cannot be a just and fair outcome and therefore, the interpretation sought to be placed by the appellants on the effect of lapsing of an anti-dumping notification cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2000 (119) E.L.T. 257 (S.C.), in which it was held that an exception engrafted, in the provisions of Section 6(1) of the General Clauses Act, to the common law rule that, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed and the statute must be considered as a law that never existed. It was held that Section 159A of the Customs Act, which was pari materia to Section 6 of the General Clauses Act, 1897, did not apply so as to save the levy of anti-dumping duty after the expiry of the notification. Moreover, the said provision did not apply to anti-dumping duty levied by a notification issued under the Customs Tariff Act, as it applied only to any rule, regulation, notification or order made or issued under the Customs Act. The learned Vice-President, therefore opined that the demand of anti-dumping duty of Rs. 1,80,80,457/- on ascorbic acid imported up to 11-5-2001 and Rs. 60,03,000/- on 3/4/5 TMBA imported between February and September 2001 ( out of the total of Rs. 2,40,83,457/-) was required to be set aside. It was further opined that in any event no anti-dumping duty could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that once the notification expire, no proceeding could be commenced for collecting the anti-dumping duty thereafter because the duty ceases to be chargeable except for the past and closed transaction, "as though it never existed from the day it was issued". He contended that neither Section 6 of the General Clauses Act, which was inapplicable to notification, nor Section 9A of the Customs Act [(sic) Customs Tariff] could authorize recovery of the anti-dumping after the expiry of the notification on 15-4-2003 on the aspect of calculation CVD and SAD by including anti-dumping duty. It was submitted that the Government recognized this position and the doubts were clarified by the circular issued in 2002 with effect from 1-3-2002. It was further contended that whenever the Legislature intended that any additional duty should be treated as duty of customs, it used the expression "in addition to" but when the duty was to be treated as part of the customs duty, it had used the expression as "an addition to". Whenever the type of Customs duty sought to be levied was to be treated differently, provisions were made by borrowing the provisions of the Customs Act for recovery etc. It was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Uttar Pradesh v. Kasturilal Harlal reported in 1988 (Supp.) SCC 302 (5) Commissioner of Income Tax, Madras v. Indian Bank Ltd., AIR 1965 SC 1473 (6) Innamuri Gopalan and Others v. State of Andhra Pradesh and Anr., 1964 (2) SCR 888 (7) Sneh Enterprises v. CC reported in 2004 (178) E.L.T. 764 (T). 27.The learned authorized representative for the department supported the reasoning adopted by the Commissioner (Appeals) and contended that since the appellant had admittedly not fulfilled the conditions of manufacture and disposed of the imported goods "as such" in the DTA, it could not be treated as EOU for the purpose of benefit under sub-section (2A) of Section 9A of the Customs Tariff Act, because the post-importation condition was not fulfilled. He submitted that by virtue of Section 9A(8) all the relevant provisions of the Customs Act including Section 28 which had a bearing on non-levy, short levy etc. were incorporated and, therefore, even Section 159A of the Customs Act applied and the liability arising under the notification imposing anti-dumping duty continued even after the expiry of the notification in respect of the imports already made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Customs, Kandla v. Essar Oil Ltd., reported in 2004 (172) E.L.T. 433 (S.C.) 28.The Notification No. 105/2000-Cus. dated 21-7-2000 was issued under Section 9A(1) read with sub-sections (5) and (6) thereof and Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 by the Central Government after a mid-term review of the earlier notification dated 24-7-1998. In paragraph 2 of the said Notification it was stated that "the anti-dumping duty imposed under this notification shall be effective up to and inclusive 15th day of April 2003 unless the time limit is extended or the notification is revoked before such time the notification published in the Official Gazette". Admittedly, the said notification was not revoked prior to 15-3-2003 and, therefore, it remained effective up to and inclusive of 15th of April 2003 creating liability in respect of the imports made during the period of its operation. Admittedly, the imports made by the appellant were covered under the period of effectiveness of this levy of anti-dumping duty. 29.Anti-dumping duty is a duty which becomes p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 31-7-2003 and a notification imposing anti-dumping duty was issued on 21-10-2003. However, on these facts, when both the sides were asked to produce any orders that may have been passed under the second proviso to sub-section (5) of Section 9A which would have had effect of continuing the anti-dumping duty for a further period of one year from 15-4-2003, they stated that no such orders were made. The learned authorized representative was asked to verify this fact and he also stated that no such orders appeared to have been made, as a result of which the imposition of duty under the said notification ceased from 15-4-2003 till it came to be re-imposed under the Notification dated 21-10-2003. On being asked, it was also stated by the learned authorized representative for the department that usually a separate order is made under the second proviso to sub-section (5) of Section 9A for continuing the anti-dumping duty after expiry of five years for a further period not exceeding one year and no such orders were forthcoming in the present case. The contention that after expiry of the notification imposing duty on 15-4-2003, no duty could thereafter be recovered even in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable under Section 9A as they apply in relation to duties leviable under the Customs Act, 1962. Section 28 of the Customs Act, provides for recovery mechanism when any duty had not been levied or had been short levied or erroneously refunded or when any interest payable had not been paid or part paid or erroneously refunded. Basic customs duties are leviable under Section 12 of the Customs Act at such rates as may be specified in the Customs Tariff Act, 1975. The Central Government has power to grant exemption from duty by issuing notification in the Official Gazette under Section 25 of the Customs Act. Even in such cases, questions about the liability to pay duty would arise when the exemption notifications are issued and withdrawn and such liability for non-levy, short-levy etc. could be enforced under Section 159A of the Act which specifically lays down that the obligation or liability accrued or incorporated, inter alia, under a notification is not affected after the notification is repealed, superseded or rescinded and that it could be enforced. Same will be the position even prior to 11-5-2003 when Section 159A was inserted because of the provisions of Section 114 of the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additional duty payable under Section 3 of the Tariff Act. The words "as an addition to" a duty of customs apply to a situation where duty of customs stands enhanced by such addition without changing the nature of such duty. The anti-dumping duty chargeable under Section 9A, though in the nature of customs duty is not the basic customs duty chargeable under Section 12 of the Customs Act. Therefore, it could not be considered "as an addition to" the basic duty of customs and would be chargeable "in addition to" any other duty of customs imposed under the Tariff Act, as specifically stated in sub-section (4) of Section 9A of the Act. In cases where any sum is chargeable "as an addition to" any duty of customs chargeable on that article under Section 12, then it would be included in the value of the imported article for calculating the additional duty. Therefore, since anti-dumping duty is not imposed as an addition to the existing customs duty under Section 12 of the Customs Act, but is imposed over and above such basic customs duty as is clarified by the expression "in addition to" occurring in sub-section (4) of Section 9A of the Tariff Act, it would not be includible in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no such orders were made. This situation whether attributable to non-applicability of mind of the concerned authorities to sub-section (2A) of Section 9A, which would protect, in absence of the notification being specifically made applicable, the defaulting 100% EOUs against imposition of anti-dumping duty even when they would not be entitled to the benefits of the Exim Policy by virtue of their defaults, or to the lacuna in the provision of sub-section (2A) of Section 9A, has resulted in an unintended benefit to a defaulting 100% EOU, of not paying anti-dumping duty despite the fact that this exemption reflected in sub-section (2A) of Section 9A of the Tariff Act was clearly relatable to the provisions of the Exim Policy, the benefit of which to the appellant stood forfeited by its not manufacturing any goods which it was obliged to do under the Exim Policy and fraudulently diverting imported articles in the DTA. 32.1However, for the period prior to 11-5-2001, the appellant-EOU was not entitled to the benefit of the provisions of sub-section (2A) of Section 9A because, the Notification No. 5/94-Cus. dated 18-1-1994, under which the appellant had claimed the benefit, contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand of anti-dumping for the period subsequent to 11-5-2001, is required to be set aside. (2) the anti-dumping duty does not form part of the assessable value of the goods for the purpose of levy of CVD and SAD. 34.The matter will now be placed before the division bench which has referred the above points, for passing an appropriate order. The reference stands disposed of accordingly. (Pronounced on 20-10-2006) Sd/- (Justice R.K. Abichandani) President MAJORITY ORDER 35.In the result the demands of Customs duty and Excise duty are upheld, penalties both under the Customs Act and Central Excise Rules are reduced to 10% of the duty amount confirmed, demand of anti-dumping duty for the period prior to 11-5-2001 is sustained, while such demand for the period subsequent thereto is set aside and anti-dumping duty is held not to form part of the assessable value of goods for the purpose of levy of CVD and SAD. The appeals are disposed of as above. Sd/- (K.K. Agarwal) Member (Technical) Dated : 31-10-2006 Sd/- (Jyoti Balasundaram) Vice-President Dated : 31-10-2006 (Pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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