M S Prashray Overseas Pvt Ltd v. Cc Chennai

Per R. Periasami The appeal is filed against OIA dt. 18.2.2013 passed by Commissioner (Appeals), Chennai.

2. The brief facts of the case that appellants are trading in unbranded jewellery and imported the goods as "Assorted Plain & Studded Gold Jewellery Stud with Synthetic Stones" classifiable under CTH 71131930 vide Bill of Entry No.6358966 dt. 26.3.2012 claiming assessment of CVD @ 6% under Notification No.19/2012-CE dt. 17.3.2012. The Bill of Entry was assessed under Notification No.2/2011-CE dt. 1.3.2011 which was amended by aforesaid Notification No.19/2012-CE dt. 17.3.2012 enhancing the rate of excise duty @ 5% ad valorem to 6%. Appellant claimed the relevant benefit of notification and paid duty and cleared the goods. Subsequently, the appellant preferred appeal against Bill of Entry claiming CVD under Notification 12/2012-CE dt. 17.3.2012 chargeable @ 1%. The Commissioner (Appeals) after following the principles of natural justice passed the impugned order denying the notification No.12/2012 claimed by the appellant and upheld the OIO. Hence the present appeal.

3. It is seen that appellant sought for early hearing of appeal and the same was dismissed vide Misc.Order No.42647/2013 dt. 7.11.2013. Against MISC order of this Tribunal, the appellant preferred C.M.A before the Hon'ble High Court of Madras and the Hon'ble High Court in their order dt. 25.2.2014 in C.M.A. No.243/2014 directed the Tribunal to dispose of appeal on merits within a period of 4 months from the date of appointment of second Member of the Tribunal. With due compliance of Hon'ble High Court order, appeal was listed for hearing on 1.7.2014 where the advocate sought for time. Subsequently, again it was listed on 23.10.2014, 4.2.2015, 22.4.2015, 13.7.2015 and 28.9.2015. In all these occasions, the advocate repeatedly sought for adjournment. Finally the matter was listed today.

4. Heard both sides. Ld. Advocate submits that appellants imported jewellery and submits that articles of jewellery is charged under two different notifications. One is 2/2011-CE dt.1.3.2011 (as amended) chargeable to 6% without any condition whereas the Notification No.12/2012 dt.17.3.2012 at Sl.No.199 of the Table wherein CVD on articles of jewellery chargeable @ 1% with a condition that as per the condition No.25, no cenvat credit under Rule 3 or Rule 13 of CCR 2004 has been taken. Further, he submits that they are not a manufacturer. Therefore, availing cenvat credit does not arise. They are traders of jewellery. Therefore, they are eligible for Sl.No.199 of Notification No.12/2012. In support of his claim he relied Supreme Court's judgement in the case of SRF Ltd. Vs CC Chennai - 2015-TIOL-74-SC-CUS and also relied this Tribunal order in the case of CC Chennai Vs Enterprises International Ltd. & Others - 2015-TIOL-1887-CESTAT-MAD. where this Tribunal has dismissed the batch of Revenue appeals.

5. On the other hand, Ld. A.R for the Revenue submits that they themselves claimed Notification No.2/2011 (as amended) for payment of CVD @ 6% and the same was accepted by the department and appellants never disputed either assessment or rate of duty nor paid the duty under protest whereas they claimed CVD @ 1% under notification No.12/2012 only before Commissioner (Appeals). The appellant's reliance on Supreme Court decision in the case of SRF Ltd. (supra) he submits that the revenue has filed a review petition before the Hon'ble Supreme Court which is pending. He submits that appellant has not paid duty under protest and also not complied with the condition No.25 and they are not eligible for CVD @ 1%. The Bill of Entry was self-assessed by the appellant themselves. He relied the following citations :-

(i) CC ICD New Delhi Vs Dr. Roshan Lal Agarwal & Sons Pvt. Ltd. 2014-TIOL-1963-CESTAT-DEL

(ii) Fresenius Kabi India P. Ltd. Vs CC (Imports), Nhava Sheva - 2014 (300) ELT 309 (Tri.-Mumbai)

4. After hearing both sides, we find that the issue falls on a narrow compass involving CVD payable on the imported goods whether chargeable @ 6% under Notification No.19/2012-CE dt. 17.3.2012 or @ 1% in terms of Notfn 12/2012-CE d. 17.3.2012. For better appreciation of facts, it would be appropriate to extract the relevant entries in the notifications as under :- Notification: 2/2011-CE dt 1.3.2011 as amended by Notfn 19/12-CE dt. 17.3.2012 and Notfn 20/2012-CE dt. 19.3.2012 Effective rate of duty of 5% on specified goods In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling under Chapter, heading, sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), specified in corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon under the said Central Excise Act, as is in excess of the amount calculated at the rate of 6% ad valorem : TABLE S.No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of the excisable goods (1) (2) (3) 48 7113 Articles of jewellery Notification: 12/2012-C.E. dated 17-Mar-2012 Exemption and effective rates of duty for specified goods of Chapters 1 to 98 Jumbo Exemption Notification Nos. 3/2005-C.E., 3/2006-C.E., 4/2006-C.E., 5/2006-C.E., 6/2006-C.E. and 10/2006-C.E. replaced In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) and in supersession of (i) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 3/2005-Central Excise, dated the 24th February, 2005, hereby exempts the excisable goods of the description specified in column (3) of the Table below read with relevant List appended hereto and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions annexed to this notification, if any, specified in the corresponding entry in column (5) of the Table aforesaid : .... ..... ..... TABLE Sl.No. Chapter or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition 199 7113

I) Articles of jewellery;

(II) Articles of silver jewellery 25 ANNEXURE Condition No. Conditions 25 If no credit under Rule 3 or Rule 13 of the CENVAT Credit Rules, 2004, has been taken in respect of the inputs or input services used in the manufacture of these goods.

5. On perusal of the records, we find that this is a case where the appellants have initially claimed the notification No.2/2011-CX at Sl.No.48 and Bill of Entry at the time of import and the same was assessed accordingly and the appellant has paid duty as CVD @ 6%. We find that appellants never sought for any assessment order after filing the Bill of Entry. Instead appellant filed appeal against Bill of Entry claiming CVD exempted under different Notification 12/2012 before Commissioner (Appeals) and the Commissioner (Appeals) denied the benefit by holding CVD exempted by Nofn.12/2012 which is a conditional notification and the conditions have not been fulfilled by the appellant at the time of import. In this regard, reliance is placed on the Supreme Court decision in the case of SRF Ltd. Vs CC Chennai and ITC Ltd. Vs CC New Delhi 2015-TIOL-74-SC-CUS. By relying Hon'ble Supreme Court's judgement (supra), this Tribunal in a batch of appeals in the case of CC Chennai Vs Enterprises International Ltd. (supra) on an identical issue of CVD exemption allowed and rejected the Revenue appeals and upheld the impugned orders. The relevant paragraphs of the Tribunal's order are reproduced below :- "13. On the question of admissibility of CVD exemption, we find the notification No.30/2004-CE dt. 9.7.2004 at Sl.No.5 of table exempts excise duty on silk yarn and silk fabrics falling under Chapter 54.01 to 54.07. The proviso to the notification stipulates a condition that "nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CCR 2002." This very issue was discussed in the case of Prashray Overseas Pvt. Ltd. [2009 (235) ELT 300 (Tri.-Chennai) = 2008-TIOL-2349-CESTAT-MAD. The relevant paragraph-3 of the order is reproduced as under :- "3. We find that no Central Excise duty is payable on raw silk produced in India. Yarn manufactured from such silk is also exempt under Notification No.30/2004 as no credit availed input is used to manufacture silk yarn. Therefore indigenous silk fabrics manufactured from indigenous silk yarn are exempt from Central Excise duty. Another stream in which silk fabrics get manufactured in India is using imported silk yarn. Neither party disputes that imported silk yarn was exempt from CVD during the material period in terms of Notification No. 20/06-Cus dated 1-3-2003. We find that the levy of CVD on imports is regulated by the following provisions of the Customs Tariff Act, 1975. "3. Levy of additional duty equal to excise duty. - Any article which is imported into India shall, in addition, be liable to a (1) duty (hereafter to this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article." CVD is therefore payable on imported silk fabrics at the rate central excise duty is leviable for the time being on such silk fabrics produced or manufactured in India. Additional duty is imposed on imported goods to counter balance the central excise duty leviable on like articles made indigenously, this being a measure intended to safeguard the interests of the manufacturers in India. As no duty was payable on silk yarn either indigenous or imported, indigenous silk fabrics were not subject to central excise duty during the material period in terms of Notification No. 30/04-C.E. (supra). Therefore imported silk fabrics imported during the material period need not beat any CVD. The impugned imports are eligible for the exemption contained in Notification No. 30/04. This was also the ratio of our final order Nos. 941, 942/2008 dated 28-8-2008 [2008 (232) E.L.T. 63 (Tribunal)] = 2008-TIOL-2369-CESTAT-MAD in respect of the same appellants for 44 consignments imported earlier. The appeal is allowed."

14. We find that Revenue relied on the Supreme Court's decision in the case of Motiram Tolaram Vs UOI (supra) and the Tribunal's Larger Bench decision in Priyesh Chemicals & Metals (supra). In this regard the Hon'ble Supreme Court in their recent order in the case of SRF Ltd. Vs CC Chennai (supra) held that the appellants are entitled to exemption from payment of CVD under Notification No.6/2002 and allowed the civil appeal. The relevant paras 3 to 8 of the said Supreme Court's order is reproduced as under :- "3. Entry/ Serial No. 122 in the Notification No. 6/2002 reads as under - S. No. Chapter or heading No. or sub-heading No. Description of goods Rate under the First Schedule Rate under the Second Schedule Condition No. 122 5402.10 Nylon filament yarn or polypropylenemultifilament yarn of 210 deniers with tolerance of 6 per cent. Nil - 20 5402.41 5402.49 5402.51 5402.59 5402.61 or 5402.69 4. As per the aforesaid entry, the rate of duty is nil. Condition No. 20 of thisNotification, which was relied upon by the authorities below in denying the exemption from payment of CVD, is to the following effect: "20. If no credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002, has been taken in respect of the inputs or capital goods used in the manufacture of these goods."

5. The aforesaid condition is to the effect that the importer should not have availed credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002, in respect of the capital goods used for the manufacture of these goods.

6. In the present case, admitted position is that no such CENVAT credit is availed by the appellant. However, the reason for denying the benefit of the aforesaid Notification is that in the case of the appellant, no such credit is admissible under the CENVAT Rules. On this basis, the CEGAT has come to the conclusion that when the credit under the CENVAT Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India [1987 (32) ELT 262], wherein the Bombay High Court had held that "it is impossible to imagine a case where in respect of raw nephtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid." Thus, the CEGAT found 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.

7. We are of the opinion that the aforesaid reasoning is no longer good law after the judgment of this court in Thermax Private Limited v. Collector of Customs (Bombay), New Customs House [1992 (4) SCC 440] = 2002-TIOL-683-SC-CUS-LB which was affirmed by the Constitution Bench in the case of Hyderabad Industries Limited v. Union of India [1999 (5) SCC 15] = 2002-TIOL-369-SC-CUS-CB. In a recent judgment pronounced by this very Bench in the case of AIDEK Tourism Services Private Limited v. Commissioner of Customs, New Delhi (Civil Appeal No. 2616 of 2001) = 2015-TIOL-23-SC-CUS, 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 situation where a like article is not so produced or manufactured'. The use of the word so' implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India. The words if produced or manufactured in India' do not mean that the like article should be actually produced or manufactured in India. As per the explanation if an imported article is one which has been manufactured or produced, then it must be presumed, for the purpose of Section 3(1), that such an article can likewise be manufactured or produced in India. For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon." (Emphasis supplied)

8. We are of the opinion that on the facts of these cases, these appeals are squarely covered by the aforesaid judgments. We accordingly hold that appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/02. The appeals are allowed and the demand of CVD raised by the respondents-authorities is set aside." The ratio of the Apex Court's decision is squarely applicable to the present case where CVD exemption was denied under Notfn 30/2004 where the proviso to the notification stipulated the condition that the exemption is not applicable if credit of duty on inputs or capital goods has been taken under CCR.

15. Further, we find the Hon'ble apex court in the case of AIDEX Tourism Services Pvt. Ltd. Vs CC (supra) has not only considered the cases of Thermax Private Ltd. and Hyderabad Industries Ltd. but also discussed the Apex Court's decision in the case of Motiram Tolaram Vs UOI (supra). The relevant para is extracted herein under :- "................ This position has been reiterated in Motiram Tolaram v. Union of India - (1999) 6 SCC 375 = 1999 (112) E.L.T. 749 (S.C.) = 2002-TIOL-856-SC-CUS, CCE v. J.K. Synthetics (2000) 10 SCC 393 = 2000 (120) E.L.T. 54 (S.C.), Lohia Sheet Products v. Commissioner Of Customs, New Delhi - (2008) 11 SCC 510 = 2008 (224) E.L.T. 349 (S.C.) = 2008-TIOL-38-SC-CUS and Collector Of Customs (Preventive), Amritsar v. Malwa Industries Limited - (2009) 12 SCC 735 = 2009 (235) E.L.T. 214 (S.C.) = 2009-TIOL-17-SC-CX In fact, in Lohia Sheets and Malwa Industries cases (supra), this Court was considering exemption notifications envisaging use of certain material within a "factory" and still held that an importer would be entitled to the benefit of the exemption notifications in view of Section 3 of the Tariff Act and the decisions in Hyderabad Industries and Thermal cases. As such, it is now settled that the rate of duty would be only that which an Indian manufacturer would pay under the Excise Act on a like Article. Therefore, the importer would be entitled to payment of concessional/reduced or nil rate of countervailing duty if any notification is issued providing exemption/remission of Excise duty for a like article if produced/manufactured in India.

16. We may mention that in the case of Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal & Ors. - (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.) = 2010-TIOL-95-SC-CX-CB, a three Judge Bench of this Court had raised certain doubts on the correctness of the principle contained in Thermax Private Limited (supra) as well as in J.K. Synthetics (supra) and referred the matter to a larger Bench. Reference order is reported as (2005) 8 SCC 164 = 2005 (188) E.L.T. 353 (S.C.) = 2005-TIOL-126-SC-CX. The Constitution Bench decided the said case, which is reported as (2011) 1 SCC 236. From the reading of para 39 to 41 of the said judgment it becomes clear that though these cases were held not applicable to the fact situation and were distinguished, the Court did not say that the aforesaid judgments were incorrectly decided. In fact, by distinguishing the ratio of the said cases, the Constitution Bench impliedly gave its imprimatur to the principle laid down in the aforesaid judgments."

16. In view of the above ruling by Apex Court, we are unable to accept the Revenue's plea that the Apex Court decision of SRF Ltd. and M/s.Motiram Tolaram are in direct conflict. Hon'ble Supreme Court has clearly considered all the previous decisions of Apex Court including the decision in the case of Motoram Tolaram Vs UOI (supra). Therefore, the revenue relying on the above case law and also the LB decision in the case of M/s.Priyesh Chemicals & Metals (supra) are not relevant. In view of the latest decision of Apex court in SRF case & AIDEK Tourism Services Pvt. Ltd., the issue of CVD exemption under Notfn. 30/2004 on imported goods has attained finality. This Tribunal Bench decisions in the case of M/s.Prashray Overseas Pvt. Ltd. Vs CC Chennai stands confirmed by the Hon'ble Supreme Court in the above decision. ... ... ...

18. By respectfully following the ratio of the Apex Court decisions (supra), we hold that the respondents are eligible for CVD exemption under Notification 30/2004-CE dt. 9.7.2004. In view of the foregoing discussions, we hold that there is no infirmity in the orders of LAA and the same are upheld and all the Revenue's appeals are rejected. The cross objections filed by respondent get disposed. Copy of order be forwarded to the Chairman, CBEC and D.G. System, New Delhi." The apex court decision (supra) and this Bench decision (supra) are squarely applicable to the present case. The Revenue contended that review petition is pending before the Hon'ble Supreme Court against the apex court order of S.R.F. Ltd.(supra). As there is no stay granted by the apex court against Supreme Court order, the ratio of the Apex Court decision applicable to this case. The appellants have claimed CVD exemption under Notfn 12/12 before the Commissioner (Appeals), when there are two notifications are available on the rate of CVD, it is open to the appellant to claim the exemption which is beneficial to them. If they have not claimed before assessing officer, there is no bar in claiming before appellate authority. Accordingly, they have rightly claimed before appellate authority as Bill of Entry itself is an assessment order. By respectfully following the apex court decision and this Tribunal's decision (supra), we hold that appellants are eligible for CVD @ 1% under Notification No.12/2012-CE dt. 17.3.2012 as at Sl.No.199 of the Table. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief. (Dictated and pronounced in open court) (P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER gs 2