TMI Blog2018 (5) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... -Cus. From the judgment Gujarat Ambuja Exports Ltd. Vs. Union of India [2013 (6) TMI 536 - GUJARAT HIGH COURT], it can be seen that though in the case of DEPB scheme exemption is provided by debiting the duty in DEPB scrip, it is considered as exempted. The similar procedure is available in the Notification No. 53/2003-Cus, therefore the ratio is squarely covered in the present case for the purpose under Notification No. 20/2006-Cus. Accordingly the condition of the Notification No. 20/2006-Cus is fully complied with, therefore the special additional duty cannot be demanded from the appellant. Since we decide the exemption of special additional duty leviable under Section 3(5) of Customs Tariff Act only on the basis of N/N. 20/2006-Cus. We need not to address the exemption of such duty under N/N. 53/2003-Cus. - appeal allowed - decided in favor of appellant. - Appeal No. C/426 to 428/2010 - ORDER NO. A/86417-86419/2018 - Dated:- 18-5-2018 - Hon ble Shri Ramesh Nair, Member (Judicial) Hon ble Shri Raju, Member (Technical) Shri T. Viswanathan, Advocate for Appellant Shri Chatru Singh, Assistant Commissioner (A.R.) for Respondent ORDER Per : Ramesh Nair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al duty leviable under sub-section (1) of Section 3 of the said Customs Tariff Act and whole of the special additional duty of Customs leviable thereon under Section 3A of said Customs Tariff Act. Therefore the special additional duty of Customs leviable under sub-section (5) of Section 3 is clearly exempted under Notification No. 53/2003-Cus, therefore even the appellant was not required to debit the duty of special additional duty in the Duty Free Credit Entitlement scrip. Therefore on both the count demand is not sustainable. He placed reliance on the judgement of Delhi Tribunal in the case of Punj Lloyd Ltd. Vs. Commissioner of Customs, New Delhi - 2016 (340) ELT 267 (Tri.-Del.). 3. Shri Chatru Singh, Learned Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that during the relevant period there was no exemption available to the special additional duty leviable under Section 3(5) of the Customs Tariff Act under the Notification No. 53/2003-Cus. dated 01.04.2003. Therefore the debit made to the extent of the special additional duty in the Duty Free Credit Entitlement scrip which is incorrect and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (1) of section 3 of the said Customs Tariff Act; and (c) from the whole of the special additional duty of customs leviable thereon under section 3A of said Customs Tariff Act, subject to the following conditions, namely, (1) that the said certificate has been issued by the licensing authority to a status holder specified in para 3.7.2 of the Export and Import Policy; From the above preamble of the notification it can be seen that Notification No. 53/2003-Cus clearly provide the exemption from whole of the duty of Customs, whole of the additional duty leviable under sub-section (1) of Section 3 of the said Customs Tariff Act and whole of the special additional duty of Customs leviable thereon under Section 3A of said Customs Tariff Act. Therefore it cannot be said that the goods imported under Duty Free Credit Entitlement certificate is not exempted. Our above view is supported by Hon'ble High Court of Gujarat in the case of Gujarat Ambuja Exports Ltd. Vs. Union of India 2013 (288) ELT 49 (Guj.), wherein it was held as under:- 8. Having, thus, heard the learned counsel for the parties, we find that under exemption Notification No. 20/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported under DEPB scheme, we had occasion to examine the nature of DEPB scheme, as also the contention of the revenue that under such scheme, the customs duty is not waived. In the process, we had also examined the legality of a circular dated 31-1-2005 issued by the Government of India clarifying such position. We had come to the conclusion that the exemption notification operates in such a manner that on the imports made by an importer under DEPB scheme, there was either total or partial exemption from payment of customs duty. In the process, we had quashed the circular of the Government dated 31-1-2005. We notice this because in the impugned circular dated 5-6-2006, to clarify that the petitioners cannot claim exemption from payment of SAD, it is the earlier circular dated 31-1-2005 which has been referred to and relied upon. Essentially, assertions of the Revenue in both circulars, that is, earlier circular dated 31-1-2005 and the impugned circular dated 5-6-2006 are common. Our decision dated 21-6-2012 would, therefore, squarely apply in the present case. 13. In our judgment dated 21-6-2012, we had stated as under : 10. From the above provision, it can be seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct. This neutralization is provided for by credit to customs duty against export product. Under DEPB, an exporter may apply for credit as a percentage of the FOB value of exports made in freely convertible currency. Credit is available only against the export product and at rates specified by the DGFT for import of raw materials, components etc., DEPB credit under the Scheme has to be calculated by taking into account the deemed import content of the export product as per basic customs duty and special additional duty payable on such deemed exports. Therefore, in our view, DEPB/Duty drawback are incentives which flow from the schemes framed by Central Government or from Section 75 of the Customs Act, 1962, hence, incentives profits are not profits derived from the eligible business under Section 80-IB. They belong to the category of ancillary profits of such undertakings. 14. Section 25 of the Customs Act, 1962 empowers the Central Government to grant exemption from duty. Sub- section (1) of Section 25 in particular provides that if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set that for the exporters not desirous of going through the licensing route, an optional facility is given under DEPB. The object of DEPB scheme is to neutralize the incidence of customs duty on the import component of the export product. It further provides that such neutralization shall be provided by way of grant of duty credit against the export product. 18. From the nature of DEPB scheme noted above and the exemption from payment of customs duty on imports made under such scheme, it can be gathered that the very purpose of granting such exemption is to neutralize the customs duty, on the import component of the export product. In essence, the Government of India grants duty remission at prescribed rates on the imports made under such a scheme. 19. It can thus not be denied that for the imports made under the DEPB scheme, there is total or partial, as the case may be, exemption in payment of customs duty. At the relevant time, for the goods other than edible oil, such exemption was total. For edible oil, such exemption was to the extent of 50% of the customs duty and additional duty payable. In essence, therefore, for imports made under the DEPB scheme, of course, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of such clarification by the Government and in view of our conclusions hereinabove that against an import made under the DEPB scheme, of the goods which are fully exempt from payment of customs duty and therefore no customs duty is levied and collected, the education cess at the prescribed rate also cannot be levied. 23. We are not unmindful of the decision of Madras High Court in the case of Tanfac Industries Ltd. v. Asstt. Commr. of Cus., Cuddalore reported in 2009 (240) E.L.T. 341. In the said case, in the background of interest on warehoused goods where such demand of interest on goods cleared beyond 90 days arose, the Division Bench of the High Court came to the conclusion that on the imports under DEPB scheme, the importers pay duty not by cash but by way of credit and, therefore, the goods cleared under DEPB scheme cannot be treated as exempted goods. It can only be treated as duty-paid goods. 24. With respect, we are unable to concur with such a view. Firstly, in the said decision, the question of levy of education cess was not involved. More particularly in our view, the exemption notification No. 45/2002 is issued under the exercise of powers under Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This to our mind is a legal fallacy. 27. Under the circumstances, the impugned circular insofar as it pertains to DEPB scrip, is held to be invalid and contrary to Section 81 read with Section 84 of the Finance Act, 2004 and is hereby quashed and set aside. 28. The impugned duty demands, were even otherwise made without issuing any show-cause notice or adjudication. Even on such grounds, the notices are liable to be quashed. We hereby do so. 29. Before closing, however, we would like to clarify two aspects. Firstly, with respect to those items whose imports under DEPB scheme enjoy only partial exemption from payment of customs duty, it is an admitted position on part of the petitioner that education cess would be leviable on such portion of customs duty as is not exempt. The second aspect is that while admitting this petition, a Division Bench of this court had directed that the demands to impugned notices were raised without any adjudication. In the affidavit-in-reply filed by the respondents, it is stated that such notices have now been issued. It is open for the respondents to proceed further with the hearing of such notices and come to a conclusion in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms leviable thereon under sub- section (1) of Section 3 of the said Act, or on which no amount of the said additional duties of customs is payable for any reason. Nil We find that the only condition for exemption from SAD in Notification 20/2006-Cus. is that the goods should be exempt from payment of basic customs duty and countervailing duty [leviable under Section 3(1) of the Customs Tariff Act, 1975] the above quoted language of the exemption notification nowhere states that the exemption should be unconditional. It is a fact that vide Notification No. 54/2003-Cus., basic customs duty and countervailing duty [under Section 3(1) of the Customs Tariff Act, 1975] were exempted during the relevant period. [Indeed w.e.f. 19-12-2006 even SAD leviable under Section 3(5) of Customs Tariff Act, 1975 was also exempted under Notification No. 54/2003-Cus. but as the Bills of Entry in this case were of date prior to 19-12-2006, this is of no relevance for the present case]. However, the fact remains that during the relevant period the impugned goods were fully exempt from basic Customs duty as well as CVD [leviable under Section 3(1) of Customs Tar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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