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2016 (9) TMI 568 - CESTAT MUMBAI

2016 (9) TMI 568 - CESTAT MUMBAI - TMI - Demand of SAD - Section 28(1) of the Customs Act, 1962 - demand of interest - Section 28AB of the Customs Act, 1962 - imposition of penalty - Section 112(a) of the Customs Act, 1962 - trading - imported Polyester Filament Yarn - imported Polyester Chips - exemption of SAD - Notification No. 22/99-Cus dated 28.02.99 - contravention of condition provided under Sr. 5 of the table annexed to the Notification No. 22/99-Cus. - whether the appellant is entitled .....

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rtain transactions and such exemptions for specified cases would not make the place ďan area where no duty is chargeable on sale and purchase of goods - Even though the sales tax was not charged from area from where the goods sold, such area shall not become non taxable territory to apply the proviso of Sr. 5 of the Notification No. 22/99-Cus - appellant entitled to claim exemption under notification no. 22/99-Cus - appeal allowed - decided in favor of appellant. - C/985/04 - A/88805/16/CB - Dat .....

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, demanded interest under Section 28AB of the Customs Act, 1962 and also imposed penalty of ₹ 15,00,000/- in terms of Section 112(a) of the Customs Act, 1962. 2. The fact of the case is that appellant are engaged in the trading of imported Polyester Filament Yarn and Polyester Chips etc. During the year 1999 they imported 28 consignments of Polyester Chips and cleared by availing exemption of SAD in terms of Notification No. 22/99-Cus dated 28.02.99. The appellant sold those goods to M/s. .....

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ea where no tax is chargeable on the sale or purchase of goods. As seen from the copies of the Bills of Entry recovered from the importers a stamp was affixed on the face of the Bills of Entry stating that exemption from payment of SAD in terms of Serial No. 5 of the table annexed to the Notification No. 22/99- Cus DATED 28.02.99 has been claimed. It was also found that the importers also filed declarations alongwith the Bills of Entry referred above on their letter heads as specified in the sai .....

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Ld. Commissioner confirmed the demand alongwith interest and also imposed penalty. Ld. Commissioner in his order confirmed the demand solely on the ground that goods so imported by the appellant were sold to M/s. JBF Industries Ltd under exemption from payment of sales tax, therefore there is contravention of condition provided under Sr. 5 of the table annexed to the Notification No. 22/99-Cus. Aggrieved by the Order-in-Original, the present appeal. 3. Shri. Gajendra Jain, Ld. Counsel with Shri. .....

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the goods from Silvassa area which is not a non taxable or exempted territory from payment of Sales Tax. The appellant sold the goods to M/s. JBF Industries Ltd against form ST XI issued by buyer. This itself shows that there is no exemption in particular area but exemption is only available if the buyer provides the form ST XI. The buyer, M/s. JBF Industries Ltd was allowed to purchase the goods without sales tax only when the same is used in the manufacture of their final product. He submits t .....

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no 7 of Notification dated 30.11.1983 issued in the 1978 Regulations, it covers plastic goods therefore w.e.f. 30.11.1983 plastic goods are subjected to sales tax @ 12 %. Under Section 7(3)(II) of Regulation 1978, it provides for deduction of sales to a registered dealer of goods other than those taxable at a particular point of sale, specified in the registration certificate of the purchasing dealer as being intended for use by them within Dadra & Nagar Haveli as raw material for sales. The .....

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rea from where the goods were sold by appellant is not exempted area. As per the proviso given in Sr. 5 of the table of the Notification No. 22/99-Cus the exemption from SAD is not available to the goods which are sold from an area where no sales tax is chargeable on sale or purchase of the goods. Since an area i.e. Dadra and Nagar Haveli is not an exempted area from the payment of sales tax, the proviso does not apply therefore appellant has correctly availed exemption under Notification No. 22 .....

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ner of Customs, Mumbai[2004(178) ELT 955(Tri. Del.)] He further submits that demand is barred by limitation for the reason that the import was made in 1999 whereas the show cause notice was issued on 10/9/2003. In the Order-in-Original it was held that appellant had willfully mis-stated in the bills of entry that the goods would be sold from an area where no tax is chargeable on sale of purchase of the goods. Therefore larger period under proviso Section 28(1) can be invoked. He submits that as .....

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14(300) ELT 213(Guj)] (b) Commissioner of C. Ex. Cus & S.T. Vapi Vs. Charak Pharma P. Ltd[2012(278) ELT 319(Guj)] 4. Shri. D.K. Sinha, Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that there is no dispute that the appellant have sold the goods without charging sales tax. The condition of the notification under proviso to Sr. 5 of the table annexed to the notification No. 22/99-Cus provides that exemption shall not be a .....

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ification No. 22/99-Cus dated 28.2.1999 from payment of Special Additional Duty in term of Sr. No. 5 of the table annexed to the above referred Notification. The Adjudicating authority denied the exemption and confirmed the demand on the ground that appellant sold the goods to M/s. JBF Industries Ltd without charging sales tax therefore exemption is not available. For better understanding relevant entry of the Notification is reproduced below: Effective rate of special Additional Customs duty fo .....

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column (2) of the said Table and falling within the First Schedule to the said Customs Tariff Act: Provided that in respect of the goods specified against S. Nos. 2, 3 and 4 of the said Table, Nil rate shall be subject to the conditions, if any, subject to which the goods are exempt either partially or wholly from the duty of customs leviable thereon which is specified in the First Schedule to the said Customs Tariff Act. TABLE S. No. Description of goods Rate of special additional duty (1) (2) .....

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cified herein shall not apply if the importer 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 also declare that 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 dis .....

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available when the goods are imported for sales as such. As per the proviso NIL rate of duty shall not apply if the importers sale the said imported goods from a place located in an area where no tax is chargeable on sale or purchase of the goods. From this proviso it is unambiguous that exemption shall not be applicable for sale or purchase of the goods if it is taken place from a place located in an area where no tax is chargeable. This clearly shows that it is not goods which is significant .....

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erritory where in normal sale purchase, the tax is leviable but for particular sale based on certain condition if the sale tax is not chargeable that exemption is different from the first area based exemption. We find that the present case clearly falls under the Second category of exemption and not falls under area based exemption. The sales tax exemption in the present case is by way of deduction in the turnover in the hands of the seller for the reason that sales tax is not chargeable on the .....

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ly in respect of goods which are for the purpose of use in the manufacture of final product. That means if the goods is purchased for re-trading, exemption from sales tax is not available to the buyer and in such case seller has to charge sales tax unavoidably. On going through the judgment in case of G.H. Shaikh(supra), we find that in said judgment the fact that buyer is located in an area where no tax is chargeable on sale or purchase of the goods, however as regard the area of the sale there .....

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e impugned order is clearly contrary to the terms of the Notification. Accordingly, we are in agreement with the learned Counsel for the appellant that the duty demand has been made on erroneous understanding of the legal position. We are not able to accept the contention raised by the learned SDR as it is common that exemptions have been given under the Sales tax Act in respect of certain transactions and such exemptions for specified cases would not make the place an area where no duty is char .....

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rom area from where the goods sold shall not become non taxable territory to apply the proviso of Sr. 5 of the Notification No. 22/99-Cus. In the case of Jindal Photo Films Ltd.(supra) facts and the issue was absolutely identical as the sale purchase took place in the same area i.e. Dadra and Nagar Haveli, Tribunal has allowed the exemption, the relevant portion of the order is reproduced below: 10. Regarding the second finding recorded by the Commissioner with reference to the proviso to the en .....

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additional duty. - (1) Any article which is imported into India shall in addition be liable to a duty (hereinafter referred to in this Section as the special additional duty), which shall be levied at a rate to be specified by the Central Government by notification in the Official Gazette, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India: Provided that until such rate is specified by the Central .....

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ticle is not so sold or purchased which shall be leviable on the class of description of articles to which the imported article belongs. (Emphasis supplied) Either of the two Notifications reads as below :- In exercise of the powers conferred by sub-section (1) of Section 3A of the Customs Tariff Act, 1975 (51 of 1975), the Central Government having regard to the maximum sales tax, local tax or any other charges for the time being leviable on the like goods in their sale or purchase in India, he .....

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s borne by manufacturers who procure like goods indigenously on payment of such taxes and charges and that (ii) the rate of SAD is prescribed having regard to the maximum sales tax, local tax or other charges for the time being leviable on a like article on its sale or purchase in India. The proviso to the entry at S. No. 12/S. No. 5 in the Table to Notification No. 56/98-Cus./No. 22/99 - Cus., which reads : Provided that the rate specified herein shall not apply if the importer sells the said i .....

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, admittedly, the non-taxable goods are only those goods specified in the Second Schedule to the DNH Sales Tax Regulations, 1978. This is obvious from sub-section (1) of Regulation 10 of DNH Sales Tax Regulations, 1978, which says that no tax shall be payable under this Regulation on the sale of goods specified in the Second Schedule subject to the conditions and exceptions, if any, set out therein. For a registered dealer like CPFL, the charging provisions under the DNHST Regulations are Regula .....

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prescribes the rates of sales tax in respect of (a) goods specified in the First Schedule, (b) goods specified in the Third Schedule and (c) any other goods, not being goods specified in the Second Schedule. Regulation 7(3) defines the expression taxable turnover . According to this definition, taxable turnover during any period shall not include the turnover, during that period, of sales (not being the sales of goods which are specified by the Administrator under Regulation 8 as goods taxable a .....

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filled up and signed by the registered dealer, to whom the goods are sold, in such form and containing such particulars as may be prescribed. The prescribed form for this declaration is ST-XI. In the instant case, it is not in dispute that the JPFL who purchased the goods in question from CPFL used the goods as raw material for manufacture of taxable goods viz. finished products of photographic films & papers. Further, it appears from the assessment order that, in respect of those quantitie .....

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e appellants have argued that the goods in question were chargeable to local sales tax. The Revenue has argued that, where the declaration, in ST-XI Form, of the buyer is produced before the assessing authority by the seller, the turnover of sales of the subject goods is deductible from the gross turnover of sales for the purpose of determining the taxable turnover under Section 7(3) and, therefore, the goods cannot be held to be chargeable to tax. We are unable to accept this argument. The dedu .....

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t of Customs duty on certain goods made the goods non-dutiable. His Lordship held : An exemption granted under Section 25(1) of the Customs Act does not have the effect of taking the goods out of the class of dutiable goods or placing them beyond the reach of Section 12. An exemption only suspends or eclipses chargeability which can be revived the moment the exemption is withdrawn. This ruling of the ld. Single Judge was affirmed by a Division Bench of the Court vide [1999 (110) E.L.T. 474 (Ker. .....

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