No Additional Customs Duty on High Speed Diesel Importers under DEEC Scheme: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench recently granted relief to a High Speed Diesel Importer, affirming that no additional customs duty may be levied if they are functioning under the Duty Entitlement Exemption Certificate (DEEC) scheme.

The Customs Appeal before CESTAT was filed by Flexi Tuff International Limited, a manufacturer and exporter of plastic bags and sacks as under Chapter Heading 39 of the Schedule to Central Excise Tariff Act, 1985.

Flexi Tuff was granted advance license by the Joint Director General of Foreign Trade, Bhopal under Notification No. 43/2002-Cus dated 19.04.2002 as amended, enabling them to import raw materials such as High-Density Polyethylene (HDPE) and Low-Density Polyethylene (LDPE) granules, Master Batch and High Speed Diesel (HSD) among other items, with customs duty exemptions.

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Notification No.43/2022-Cus dated 19.04.2002 provides exemptions on customs duty, additional duty, safeguard duty and anti-dumping duty on materials imported into India against an advance license issued in terms of sub-paras (a) and (b) of paragraph 4.1.1 of the Export and Import Policy.

A R Kanani, Superintendent (AR) appearing for the Revenue contended that the levy of additional customs duty of Rs.1 per litre on HSD oil, effectuated from 01.03.1999 through Section 116 of the Finance Act, 1999 disentitles the Appellant to avail the exemptions under Notification No.43/2022-Cus.

Mahesh Raichandani, appearing for the appellant contended that the matter leaned in their favour by means of the Tribunal’s decision in Atlantic Shipping Pvt. Limited v. Commissioner of Customs (2019).

The Single-Bench of Technical Member, C L Mahar observed that the matter is no longer res-integra, citing Atlantic Shipping and the Supreme Court decision in Commnr. Of Customs (Port), Chennai vs M/S Toyota Kirloskar Motor Pvt. Ltd (2007) to conclude that exemptions under the Customs Act lay applicable to additional duties.

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Referring Toyota Kirloskar Motors, the Bench further emphasized that Section 116(3) of the Finance Act, 1999 expressly allows the exemptions on customs duties to extend to additional duties that may be leviable.

The Tribunal set aside the impugned order passed by the Commissioner of Customs - Kandla, and ruled in favor of Flexi Tuff, reaffirming that exemptions granted under Notification No. 43/2002-Cus shall include additional customs duties levied by Section 116 of the Finance Act, 1999.

To Read the full text of the Order CLICK HERE

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