While considering a bunch of appeals, the Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that exemption for Countervailing duty (CVD) on imported goods under excise notification after an amendment is allowable only on satisfaction of both conditions.
The appellants imported goods and self-assessed duty under section 17(1) and filed Bills of Entry which were re-assessed by the proper officers under section 17 (4) enhancing the duty. The appellants appealed to the Commissioner (Appeals) who, by the impugned orders, in each of the cases, partially allowed the appeals but denied the benefit of Central Excise Notification 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.
The goods imported into India are chargeable to Customs duty under section 12 of the Customs Act, 1962 which is commonly referred to as Basic Customs Duty and additional duty of customs commonly referred to as countervailing duty levied under Section 3 of the Customs Tariff Act, 1975. BCD is chargeable as per the schedule to the Customs Tariff Act, 1975 while CVD is chargeable as per the schedule to the Central Excise Tariff Act, 1982 at the rates at which articles manufactured or produced in India will be charged to Central Excise duties.
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. The Court held that the appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002. The appeals are allowed and the demand of CVD raised by the respondents-authorities is set aside.
After the 17.7.2015 amendment, to avail the benefit of exemption notification, one more condition has to be fulfilled ie; the Central Excise duty should have been paid on the inputs used and no CENVAT credit should have been taken.
It was evident that it is impossible for a manufacturer located outside India to avail of CENVAT credit, it is equally impossible to pay central excise duty on the inputs which have gone into such manufacture. The appellant claimed that since the goods were imported, the benefit of this exemption notification must be available without fulfilling this condition.
A Coram comprising of Mr P V Subba Rao, Member (Technical) and Ms Binu Tamta, Member (Judicial) viewed that if the exemption notification is read as per the appellant’s submissions, it will put the domestic industry at a disadvantage and unduly favour the imported goods.
Further held that any exemption notification must be strictly interpreted as it is drafted and there cannot be any intendment while interpreting it. The person claiming the benefit of the notification will have to fulfil all the conditions in the notification. If the conditions are not fulfilled, the benefit is not available.
The CESTAT viewed that there are two conditions (1) no CENVAT credit should have been availed which is fulfilled and (2) that excise duty should have been paid on the inputs which have not been fulfilled. The CESTAT held that “the appellants were not entitled to the benefit of 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 for the CVD on the imported goods.”
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