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2017 (4) TMI 988 - CESTAT MUMBAI

2017 (4) TMI 988 - CESTAT MUMBAI - TMI - 100% EOU - Benefit of N/N. 82/92-CE - case of Revenue is that assessee is entitled for exemption only from Basic Customs Duty and not from CVD and SAD, it was also alleged in the show cause notice that the appellant is not entitled for exemption for the reason that proper procedure for the clearance of goods against ARO has not been followed by the appellants - Held that: - it can be seen that the appellants have substantially complied with the procedure .....

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r issued under Para 7.4 of Export-Import Policy should be treated as eligible for exemption from additional duty of customs also - appeal allowed - decided in favor of assessee. - E/141 to 143/06 - A/86298-86300/17/EB - Dated:- 8-3-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri A.B. Nawal, Cost Accountant for Appellant Shri S.V. Nair, Assistant Commissioner (A.R) for respondent Per : Ramesh Nair The fact of the case is that the appellants are a 100% Export Orie .....

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n without payment of appropriate duty. Enquiry revealed that the clearances were purportedly effected against an ARO No.6/2000 dt. 29.12.99 issued by the Office of Director General of Foreign Trade, New Delhi to M/s. Daewoo Motors Pvt. Ltd., New Delhi against a duty free import licence No.P/L/0095651 dt. 7.9.1998. In respect of the above aforesaid supplies the appellants have cleared the goods against advance release order in terms of Para 7.15 of the EXIM Policy without payment of duties such a .....

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s against ARO has not been followed by the appellants. The adjudicating authority on the same contention confirmed the demand for the extended period, also imposed penalty of equal amount under Section 11AC, demanded the interest under Section 11AB and also imposed personal penalties of ₹ 15 lakhs on Shri Tajinder Singh Bhathal, Managing Director of the appellant company and ₹ 10 lakhs on Shri A.N. Mukherjee Dy. Manager, Excise of the appellant company under Rule 209A of the Central .....

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ri.-Delhi), the said decision has been upheld by the Hon'ble Supreme Court reported as 2005 (187) ELT Al 52 S.C. As per the said judgment the Hon'ble Tribunal after examining the Export Import Policy related to the subject of clearance of goods by 100% EOU against advance licence/advance release order and interpreting the various provisions came to the conclusion that as per the harmonious reading of the notification, the goods are eligible for exemption from additional duty of Customs. .....

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entral Excise Authorities, the removal of goods under AR3A, intimation to the jurisdictional departmental officer, submission of the documents such as invoices along with AR3A duly countersigned by the recipient of excise authorities etc. With compliance of the said prescribed procedure, it cannot be said that the appellant have not followed the procedure therefore on this count also the Commissioner should not have denied the exemption. He further submits that since the appellants have followed .....

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w Delhi 2005 (188) E.L.T. 251 (S.C.) 3. Shri S.V. Nair, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the notification No.82/92-CE provides exemption only from payment of Basic Customs Duty and there is no explicit mention therein about exemption from additional duty of Customs, therefore the exemption from payment of CVD and SAD is not available under the Notification No.82/92-CE. He further submits that the a .....

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ully considered the submissions made by both the sides, we find that the Ld. Commissioner denied the exemption notification No.82/92-CE from payment of CVD & SAD on the ground that the notification does not explicitly grant exemption from CVD and SAD, it provides exemption only from Basic Customs Duty. This very issue has been considered by this Tribunal in the case of Lipy Lisy Pharmaceuticals Pvt. Ltd. (supra) wherein this Tribunal has passed the following order. "3. We have perused t .....

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port-Import Policy 1997-02 relates to (Duty Exemption Scheme). General provisions in Para 7 relating to issue and terms of advance licence, the benefit under those licences and the provisions or issue of Advance Release Orders are read hereunder: "Duty Exemption Scheme 7.1 The Duty Exemption Scheme consists of Duty Free Licence and Duty Entitlement Pass Book (DEPB). Duty Free Licence 7.2. 'Duty Free Licence' includes Advance Licence, Advance Intermediate Licence and Special Imprest .....

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yment of additional customs duty equal to the excise duty at the time of import. The said additional customs duty shall be adjusted in the following manner: (a) If the importer uses the inputs for production of export goods, which are otherwise liable to a duty of excise and eligible for Modvat, he may avail of Modvat Credit in respect of the additional customs duty so paid, immediately upon the said inputs entering his factory; (b) If the importer uses the inputs for production of export goods, .....

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sale in the DTA of goods which are not excusable or not dutiable or not eligible for Modvat benefit, he shall not be eligible to any rebate or adjustment of the additional customs duty so paid. 7.4 (i) Notwithstanding anything contained above, exemption from payment of additional customs duty and Anti-dumping duty shall be allowed in respect of Advance Licences, issued with actual user condition to: (a) Manufacturer exporter; (emphasis supplied) (b) Merchant exporter where the merchant exporter .....

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d shall be subject to the fulfilment of a time bound export obligation and value addition as may be specified. Advance Release Orders 7.15 A duty free licence holder intending to source the inputs from indigenous sources/ canalising agencies/EOU/EPZ/EHTO/STP units in lieu of direct imports has the option to source them against Advance Release Orders denominated in foreign exchange/ Indian rupees. In such a case, the licence shall be invalidated for direct import and a permission in the form of A .....

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he licences are different. Notification No.30/97-Cus relates to licences issued under Para 7.4 and these imports are exempt from additional duty of Customs too. Advance Release Orders issued under Para 7.15 may be in respect of advance licences Issued in terms of Para 7.3 or 7.4. The advance licences held by Lupin Laboratories Pvt. Ltd. admittedly was issued under Para 7.4. As a result, the materials imported under that advance licence was eligible for exemption from additional duty of customs a .....

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t Policy does not grant exemption from additional duty of customs. Revenue, therefore, contends that the exemption Notification must be construed strictly and duty collected on all supplies effected against Advance Release Orders irrespective of whether the Advance Release Order related to advance licences issued under Para 7.3 or 7.4 of Export-Import Policy. As against this, the appellant contends that since the Customs Notification (30/97) and Excise Notification (82/92) have been issued to co .....

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y interpretation so as to levy additional customs duty only creates obstacles to an advance licence holder in the sourcing of import, without in any way benefiting the treasury. 5. We find merit in the contention of the assessee appellant. Its buyer was an advance licence holding export manufacturer. Advance Release Orders were issued to him so as to enable him to procure from Indian producers as well. Since the advance licence was issued under Para 7.4 any import under that licence was eligible .....

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herefore, of the opinion that the provisions of Notification No.30/97 and 82/92 should be read harmoniously and supplies against Advance Release Order issued under Para 7.4 of Export-Import Policy should be treated as eligible for exemption from additional duty of customs also. A contrary construction would disrupt the supplies under advance licence scheme, would create difficulties for advance licence holders and domestic producers by creating a bias in favour of imports. Such an interpretation .....

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also exempted. The aforesaid decision has been upheld by the Supreme Court. As regard the allegations of the Ld. Commissioner that the appellant have not followed the prescribed procedure for removal of goods under ARO we observe that the appellant have substantially complied with the procedure. The event given in the appeal memo is reproduced below: Date Event 01.02.2000 Sealed Envelope received from Central Excise Authorities, Noida sending the Original copy of ARO issued by Office of DGFT, Ne .....

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