TMI Blog2018 (5) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... o malafide intention can be attributed to the Appellant-assessees - demand is time barred. Enhancement of Penalty u/s 114A - Held that: - since the demand itself is set aside, the Revenue’s appeal, which is for penalty which is consequent to the demand, will not sustain - penalty set aside. Appeal allowed - decided in favor of appellant. - Appeal No. C/563-565,173/2009 - ORDER NO. A/86362-86365/2018 - Dated:- 11-5-2018 - Hon ble Mr. Ramesh Nair, Member (Judicial) And Hon ble Mr. Raju, Member (Technical) Shri Prasad Paranjape, Advocate, for assessees Shri Ahibaran, Additional Commissioner (AR), for respondent ORDER Per : Ramesh Nair Brief facts of the case are that the appellant-assessees M/s Sterling Commercial Ltd. are engaged in trading of Polyester Filament Yarn and chips etc. They had imported POY/PFY and claimed exemption from Special Additional Duty (SAD) of 4% under Notification No. 56/98 Cus dt. 01.08.98 and Notification No. 22/99 Cus dt. 28.02.99 by furnishing necessary declaration that the goods would not be sold from a place located in area where no tax is chargeable on sale or purchase of goods . They were issued show cause notice tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (178) ELT 955 (TRI), G.H. Shaikh 2003 (154) ELT 540 (TRI), Moser Bear India Ltd. 2009 (240) ELT 25 (Tri LB) and Hon ble Apex Court s order in case of Rukmani Pakkwell Traders 2004 (165) ELT 481 (SC), Continental Foundation Jt. Venture 2007 (216) ELT 177 (SC), Gopal Zarda Udyog 2005 (188) ELT 251 (SC) and Seiko Brushware India 2015 (323) ELT 641 (SC). 4. Shri Ahibaran, ld. Additional Commissioner, AR appearing for the Revenue reiterates the findings of the impugned order. He submitted that the purpose of allowing exemption of SAD is to avoid double taxation on account of SAD charged in terms of Custom Tariff Act, 1975 and sales tax charged by the State Governments. The subject notification will not apply if the importer sells the goods from the place located in area where no tax is chargeable on sale or purchase of goods. In the instant case as no sales tax was charged because of any reason by virtue of goods sold in the concerned State/ UT such goods cannot be considered as eligible for the said notifications. The sales tax was not paid because the sales took place in a particular State/ UT and therefore it would be treated that no tax was charged on sale or purchase of said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions the Appellant-assessee can sell the goods without payment of sales tax. An exemption from sales tax thus would not make the place of Dadra as the area where no sales tax is chargeable on sale or purchase of goods. We find that the same analogy was adopted by the Tribunal in case of Jindal Photofilms Ltd. 2004 (178) ELT 955 (TRI) wherein it was held as under : 11. The Notifications were issued under sub-section (1) of Section 3A of the Customs Tariff Act and their provisions should be understood in the light of provisions of the parent statutory provision viz. sub-section (1) of Section 3A ibid, which reads as below : - SECTION 3A. Special 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 Government, the special addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a synonym for leviable . If tax is leviable on any goods, the goods are said to be taxable also. In the instant case, 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 subsection (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 Regulations 4 6 thereof. Regulation 4 provides that every dealer whose gross turnover exceeds the taxable quantum in the previous year shall be liable to pay tax on all sales, provided that a dealer who deals exclusively in one or more classes of goods specified in the Second Schedule shall not be liable to pay any tax under the said Regulation. Regulation 6 is another charging provision which imposes liability of tax on a dealer registered under the Central Sales Tax Act, 1956. Regulation 7(1) prescribes the rates of sales tax in respect of (a) goods specified in the First Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of the sales turnover of the goods in question from gross turnover for the purpose of determination of taxable turnover is in the nature of an exemption. Any exemption from payment of tax on any goods which are otherwise taxable cannot be held to have the effect of rendering the goods non-taxable. We are supported on this point by the judgment of the Kerala High Court in Aluminium Industries (supra). A ld. Single Judge of the High Court considered the question whether exemption from payment 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.)]. The decision of this Tribunal in the case of G.H. Shaikh v. CCE, Pune [2003 (154) E.L.T. 540], cited by ld. Counsel, is also relevant to this context. Dealing with the entry at Sr. No. 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Moser Baer supra is not applicable to the facts of the present case as the notifications involved in present case and the Moser Baer case were differently worded, therefore the Larger Bench is distinguishable. 8. In view of our above observation we hold that the impugned demand against the Appellant is not sustainable. Further we also find that since the issue involved is of interpretation and has been subject of matter of dispute in many cases which were settled by the Tribunal in cases supra, therefore no malafide intention can be attributed to the Appellant-assessees. Thus we are of the view that the demand is also time barred. 9. We set aside the impugned order and allow the appeals filed by all the Appellant-assessees with consequential reliefs, if any. 10. As regards the Revenue s appeal against the common impugned order, which seeks enhancement of the penalty imposed under Section 114A from ₹ 20 lakhs to equal to the duty amount, we find that since the demand itself is set aside, the Revenue s appeal, which is for penalty which is consequent to the demand, will not sustain. Accordingly, the Revenue s appeal is dismissed. ( Pronounced in court on 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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