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TMI Blog2023 (3) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 on the additional duty of Customs. In these appeals this denial of the benefit of this notification is the only issue under challenge. 2. The details of the 17 appeals are as follows: S. No. Appeal Appellant Respondent Impugned order 1 C/52158/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 23.8.2016 2 C/52159/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 23.8.2016 3 C/52160/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 23.8.2016 4 C/52161/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 23.8.2016 5 C/52162/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 23.8.2016 6 C/52163/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 23.8.2016 7 C/52164/2016 SOIR INTERNATIONAL COMMISSIONER OF CUSTOMS, PATPAR GANJ Order in Appeal DII/ICD/325-332 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so has the power to issue exemption notifications exempting duties of Central Excise under section 5A of the Central Excise Act, 1944. Thus, CVD can be exempted by a Customs Notification and can also be exempted by a Central Excise notification because whatever is exempted as Central Excise duty automatically gets exempted as CVD. The exemption notifications can be full or partial, and could be unconditional or conditional. If the exemption notification is conditional, the conditions must be fulfilled to be entitled to the exemption notification. 5. The disputed exemption notification is 30/2004-CE dated 9.7.2004 was available subject to the condition that the goods were manufactured without availing the benefit of CENVAT credit on inputs. It read as follows: Textiles and Textile Articles - Effective rate of duty to specified goods of Chapters 50 to 63 In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and in supersession of the notification of the Government of India in the Ministry of Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment yarns, monofilaments, filament tows or staple fibres or manufacture of textured yarn (including draw twisted and draw wound yarn) of heading Nos. 54.02, 54.03, 55.01, 55.02, 55.03 or 55.04. Explanation. - For the purposes of this exemption, "manufacture of filament yarns, monofilaments, filament tows or staple fibres" means manufacture of filaments or staple fibres of organic polymers produced by processes, either : (a) by polymerization of organic monomers, such as polyamides, polyesters, polyurethanes, or polyvinyl derivatives; or (b) by chemical transformation of natural organic polymers (for example cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates. 9. 55.08, 55.09, 55.10, 55.11, 55.12, 55.13, 55.14 All goods 10. 55.06, 55.07 Staple fibres procured from outside and subjected to carding, combing or any other process required for spinning, by a manufacturer who does not have the facilities in his factory (including plant and equipment) for producing goods of heading Nos. 55.01, 55.02, 55.03 and 55.04. 11. 56 (except 5601.10, 5607.10, 5608.11) All goods 12. 5702.19, 5703.90 All goods 13. 58 (except 5804.90, 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary, Part II, Section 3, Sub-section (i), vide number G.S.R. 421(E), dated the 9th July, 2004, namely :- In the said notification, in the opening paragraph, after the proviso, the following Explanation shall be inserted, namely :- "Explanation. - For the purposes of this notification, appropriate duty or appropriate additional duty includes nil duty or concessional duty, whether or not read with any relevant exemption notification for the time being in force.". 8. As far as the goods manufactured in India are concerned, the legal position is clear that prior to the amendment dated 17.7.2015, the exemption was available if no CENVAT credit was availed and after this date, duty should also have been paid (and such duty could be nil rate of duty) on the inputs and no CENVAT credit should have been availed. 9. The question which arises is will the benefit of this notification be available for the CVD on imported goods. With respect to the notification as it was before 17.7.2015, the requirement was only that no CENVAT credit should have been availed on the inputs used in the manufacture of the goods. In case of goods which are imported, since they are manufactured outside India i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K Tourism Services Private Limited v. Commissioner of Customs, New Delhi' [Civil Appeal No. 2616 of 2001 - 2015 (318) E.L.T. 3 (S.C.)], the principle which was laid down in Thermax Private Limited and Hyderabad Industries Limited was summarised in the following manner :- "15. The ratio of the aforesaid judgment in Thermax Private Limited (supra) was relied upon by this Court in Hyderabad Industries Ltd. (supra) while interpreting Section 3(1) of the Tariff Act itself; albeit in somewhat different context. However, the manner in which the issue was dealt with lends support to the case of the assessee herein. In that case, the Court noted that Section 3(1) of the Tariff Act provides for levy of an additional duty. The duty is, in other words, in addition to the Customs duty leviable under Section 12 of the Customs Act read with Section 2 of the Tariff Act. The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under Section 3(1) would be the Excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation deals with the situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the appellants made the following submissions. (a) As far as the period prior to 17.7.2015 is concerned, it has been held by the Supreme Court in SRF Ltd. that the benefit of the exemption notification 30/2004-CE will be available for the CVD payable on imported goods. (b) After the amendment on 17.7.2015, the additional condition was that appropriate amount of Central Excise duty should have been paid on inputs. The explanation inserted on 21.07.2015 further clarifies that the rate of duty could be NIL. (c) Thus, as far as imported goods are concerned, since the inputs were manufactured outside India, no central excise duty was payable and it was not paid. Even payment of duty at NIL rate also satisfies this condition and therefore, the benefit of the exemption even after amendment, is available on CVD on imported goods. (d) They rely on the following orders of the Tribunal to assert that the benefit of the exemption notification is available to imported goods even if no central excise duty is payable on the inputs used in the manufacture of the goods. (i) Commissioner of Customs (Port) vs M/s. Enterprise International Ltd. decided by F. No. 76658-76659/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 44 (Mad.)] and M/s. HLG Trading vs UOI [2016 (331) E.L.T. 561 (Mad.)] which dealt with the availability of the exemption notification after 17.7.2015 for the CVD on imported goods which squarely cover the issue in favour of the Revenue. (h) Since this is the order of the High Court, it prevails over the contrary decision of this Tribunal. 14. We have considered the submissions on both sides and perused the records. The short question to be decided is whether or not the appellants would be entitled to the benefit of the exemption notification 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 read with the explanation dated 21.7.2015. 15. Before 17.7.2015, the only condition in the exemption notification was that no CENVAT credit should have been availed on the inputs used in manufacture of the goods. It is obvious that the CENVAT credit will not be available at all if the goods are manufactured outside India and therefore, it is impossible to have availed CENVAT credit on the goods manufactured outside India. Therefore, it is fair to assume that no CENVAT credit was availed on the inputs used in the manufactured of imported goods. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not available. Evidently, the condition of the goods being manufactured out of duty paid inputs is impossible or at least extremely unlikely to be fulfilled in imported goods. It is not even disputed that this condition was not fulfilled. The submission is that this condition should not apply to imported goods. We cannot agree with this submission. The notification does not draw a distinction or make an exception to imported goods. 20. Although notifications must be literally interpreted, even if the notification is viewed from the point of view of equity, it is an established and accepted practice in international trade that exports are zero rated, i.e., if any taxes are paid on final products which are exported or on the inputs used for their manufacture, they are reimbursed to the exporter in some form or the other by the government of the exporting country. Thus, it is not unreasonable to assume that any inputs which have gone into the manufacture of the imported goods have not suffered any taxes in the exporting country. Goods manufactured in India, on the other hand, to avail the benefit of this notification have to be manufactured out of duty paid inputs. Thus, if the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpreted so, the condition itself become otiose. The condition envisages circumstances in which duty is paid on the inputs and circumstances in which the duty is not paid on the inputs and it clearly excludes the latter from the scope of the exemption. However, it may happen that duty is paid on the inputs and on some or all the inputs the rate of duty itself is NIL. In such a case, if duty is not paid on such inputs because the rate of duty is NIL, it does not result in deprivation of the benefit of the exemption notification which is the correct interpretation of the explanation. 25. In the case of SRF Ltd., as is evident from the extracts reproduced above, the notification had only one condition that no CENVAT credit should have been availed. It was not in dispute that no CENVAT credit was availed in that case but the Tribunal denied the benefit of the exemption notification because the CENVAT credit could not have been availed. The tribunal held that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied. This decision was overturned by the Supreme Court. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be available to any of the importers, since he could have never paid any duty of excise on the inputs used in their manufacture by the foreign manufacturer. This proposition is based upon the premise that the object of such Notifications is only to grant exemption to those final products, on which, some duty has been paid (in India) at the stage of inputs. In other words, Notifications of this nature, are not merely conditional, but also restrictive in nature, as they confer benefit not upon all manufacturers of exempted goods, even if they are domestic manufacturers, but only upon those, who use inputs that had suffered duty. (iii) In cases where the exemption Notification stipulates only one condition namely that no Cenvat credit ought to have been availed on the inputs, the benefit of the Notification will be available only to those, who satisfy two conditions namely that the inputs used by them suffered a duty and that they did not seek Cenvat credit. Since an importer can never satisfy the first condition, the second condition becomes inapplicable to him and he cannot be heard to contend that the inapplicability of the condition by itself would make him eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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