TMI Blog2021 (2) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... ASTAVA, MEMBER (TECHNICAL) Present for the Appellant: Shri P.S.Pruthi, Consultant Present for the Respondent: Shri M.S. Dhindsa, AR ORDER This is the third round of litigation. 2. The facts of the case are that the appellants were engaged in the manufacture of M.S. Ingots, who imported 357.445 MT of Heavy Melting Scarp (HMS scrap) vide bill of entry dated 12.3.1994 and 8.2.1994 duty free in terms of Notification No.203/92 against value based advance licence. The appellants were allowed duty free import of non-alloy re-rollable scrap and not of M.S.Scrap. At the time of clearance of the goods, this mistake was neither detected by the Customs Officer while allowing duty free import of M.S. Scrap nor by the appellant firm. As the appellant could not fulfill condition of the Notification No.203/92 alleging that the appellant has failed to discharge their export obligation in respect of the import of M.S.Scrap and they had availed benefit of Modvat on inputs used in exported goods whereas the said notification specifically barred availment of Modvat on inputs. The matter was adjudicated, the demanded of customs duty and additional Customs duty was confirmed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be issued for violation of conditions of Notification No.203/92 which is admittedly not applicable? And no other grounds of demand are stated in SCN. (2) Whether demand is not time barred as all relevant records, particularly the licence, were produced before Customs who also erred in assessing the import of Heavy Melting Scarp under Notification No.203/92 which was clearly held by CESTAT to be inapplicable? (3) Whether late submission of end-use certificate is acceptable in view of CESTAT judgments that have allowed late submission in such circumstances and under same Notification also? (4) Whether requirement of Bond at a later stage is not redundant when the end use certificate confirms the use of goods in terms of condition of Notification and as per legislative intent? (5) Whether CVD should be demanded now when it is adjustable against admissible modvat credit keeping in view Revenue neutrality as upheld by the Supreme Court judgments. 4. He further submits that the Revenue was very much in the knowledge of the relevant fact that the Licence issued by DGFT permits the appellant to import re-rollable scrap to the appellant imported duty free Heavy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ELT 577 (SC). He also referred to the decision of the Hon ble Apex Court in the case Dilip Kumar Co-2018 (361) ELT 577 (SC) which was referred during the course of argument have no application to the facts of this case as there is no ambiguity in the condition of the notification. 7. He further submits that as the appellant was entitled to take modvat credit if CVD which would have been paid by the, therefore, this is revenue neutrality. Therefore, the demand of CVD is to be set aside. In view of this, the impugned order is to be set aside and appeal be allowed by giving the benefit of exemption Notification No.83/90-Cus. 8. On the other hand, the arguments advanced by the Ld. Consultant, Ld. AR submits that the exemption notification is to be construed strictly and the show cause notice has been rightly issued to the appellant as the appellant surrendered advance licence as the appellant failed to complete his export obligation. Therefore, the Revenue in its right perspective to raise the demand as it is well settled law that any benefit of exemption notification and following of its conditions has to be construed strictly. To support his contention, he relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation, he submits that it is case of import under Advance Licence for which the importer had executed a bond with the Revenue for complying with the conditions of duty free import and the bills of entry were assessed provisionally for this reason. Therefore, the extended period of limitation is applicable to the facts of this case. 14. Heard the parties and considered the submissions. 15. We have gone through the records placed before us and found that in earlier round of litigation while remanding the matter back to the adjudicating authority, this Tribunal passed the following order:- We have carefully considered the submissions made from both sides. It is not in dispute that what was permitted under the DEEC licence was import of re-rollable scrap and what was imported is HMS. Under these circumstances, it will not be proper to extend the benefit of DEEC benefits for the said goods and also enforce the condition imposed under the concerned notification. Therefore, we find that the request of the Ld. Advocate for permitting them to pay the applicable duty on the HMS after extending the notifications which were in force merits consideration. However, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice issued to them is barred by limitation. 18. Ld. Consultant further claimed the benefit of Notification No.83/90-Cus. The said notification is having the following conditions:- (a) the imported goods shall be used in the manufacture of the goods which have been cleared on payment of duty within six months (b) if the imported goods have not been used in the manufacture of goods which have been cleared on payment of duty then the extension of time is required to be obtained from the Assistant Commissioner and (c) to execute a bond to that effect if the end use certificate is not produced and the appellant duty applicable at the time importation on the said goods. 19. The claim of the appellant is that they have produced end use certificate though late and claimed the benefit of the said notification. Therefore, in the facts and circumstances of the case, it is to be examined whether the appellant has complied with the conations under Notification No.83/90-Cus or not? 20. The substantial condition of the notification is that the imported goods are to be used in the manufacture of ingots which have been cleared on payment of duty. The other condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Dilip Kumar Co. (supra), the said decision is not applicable to the facts of this case as in the said case, Hon ble Apex Court has held that in case of interpretation of notification if there is ambiguity then the benefit is to be given in favour of the Revenue. Admittedly, there is no ambiguity in the terms and conditions of the notification, in the case in hand, therefore, the decision in case of Dilip Kumar Co. (supra), is not applicable to the facts of this case. 26. The appellant has claimed the benefit of CVD which was entitled to them as modvat credit. We find that in the case of Mafatlal Industries Limited vs. CCE, Daman-2009 (241) ELT 153 (Tri.-Ahmd.) upheld by the Apex Court reported as 2010 (255) ELT a-77 (SC) to argue that the credit would have been available if CVD had been levied. In the said case involving Central Excise duty, the appellants and buyer unit were both owned by the same assessee. In that background, the Tribunal held that the situation was revenue neutral. Admittedly, in the present case, whatever CVD has been paid by the appellant, the CVD entitled as modvat credit. The contention of the Ld. Consultant is also acceptable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted goods as required by the said notification. 5. For the ease of reference the text of Notification No 83/1990-Cus dated 20.03.1990 is reproduced in para 18 by Member (Judicial). 6. From the text of the notification as reproduced above it is quite evident that Notification No 83/1990-Cus dated 20.03.1990 is a conditional exemption notification and the benefit of the said notification is admissible subject to fulfilment of the conditions prescribed by the notification. In case of Mihir Textiles vs Collector of Customs, Mumbai [1997 (92) ELT 9 (SC)] Hon ble Supreme Court while holding that exemption benefit dependent upon satisfaction of certain conditions cannot be granted unless such conditions are complied with, even if such conditions are only directory laid down the law as follows: Learned counsel contended that the importer is not to be blamed for non-compliance with the conditions prescribed in the entry because all what should have been done by them and what remained to be done was only that part which the authorities had to do in the matter. Obviously the aforesaid contention has no legs to stand at least in one case wherein no application was made at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for obtaining the concessions should not have been taken so seriously and the Customs Authorities should have granted the reliefs as the appellants had performed their part complying with the conditions. Non-compliance of the conditions, according to the counsel, was only due to the lapses on the part of the authorities concerned. This contention was expatiated to the extent that the conditions prescribed in the proviso to entry No. 84.66 are merely directory and not mandatory. According to the counsel, the conditions prescribed, if interpreted strictly, would result in the denial of concessional reliefs which statute has conferred on the citizen. In support of that contention, counsel invited our attention to the decision of a Constitution Bench of this Court in State of U.P. vs. Manbodhan Lal Srivastava 1958 SCR 533, wherein their Lordships were considering the implication of non-compliance with the conditions provided in Article 320(3) of the Constitution on an order imposing punishment to a Government servant without reference to the Public Service Commission. While considering that question learned Judges made a reference to the Privy Council decision in Montreal Stre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India, 1962 Supp 3 SCR 481 = AIR 1963 SC 98. See also Kailash Nath v. State of U.P., AIR 1957 SC 790. The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit. 46. The above decision, which is also a decision of two Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports Case (supra) deduced as follows: Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally . 47. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand Case (supra). 48. The next authority, which needs to be referred is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), as already discussed, the question was whether a person claiming exemption is required to comply with the procedure strictly to avail the benefit. The question posed and decided was indeed different. The said decision, which we have already discussed supra, however, indicates that while construing an exemption notification, the Court has to distinguish the conditions which require strict compliance, the non-compliance of which would render the assessee ineligible to claim exemption and those which require substantial compliance to be entitled for exemption. We are pointing out this aspect to dispel any doubt about the legal position as explored in this decision. As already concluded in para 50 above, we may reiterate that we are only concerned in this case with a situation where there is ambiguity in an exemption notification or exemption clause, in which event the benefit of such ambiguity cannot be extended to the subject/assessee by applying the principle that an obscure and/or ambiguity or doubtful fiscal statute must receive a construction favouring the assessee. Both the situations are different and while considering an exemption notification, the distinction can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the concerned Assistant Commissioner of Customs assessing and permitting the clearance of the said goods can be said to be substantial compliance with the conditions of the notification No 83/1990-Cus. Hence the benefit of this notification cannot be extended to the appellants. 10. Now coming to the issue of revenue neutrality raised by the appellants now. In my view in these proceedings which are for consideration of the order passed in the remand proceedings with specific direction for consideration of claim to certain exemptions this issue could have been raised. Once Member (Judicial) has held that Tribunal has in earlier round decided issue for denial of exemption Notification No 203/92-Cus to the Appellants both on merits and on limitation, the issue in respect of demand made by the show cause notice has been foreclosed and could not have been raised in these proceedings. Secondly the revenue neutrality claimed by the Appellant s is not correct and contrary to the appeal filed by them. If the issue was revenue neutral than Appellant s would have paid the amounts due and taken the credit if admissible rather than pursuing and litigating the matter before various ..... X X X X Extracts X X X X X X X X Extracts X X X X
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