CESTAT Denies Exemption under Subsequent Notification Filed Post B/E Date, upholds Duty Liability [Read Order]

The Customs, Excise andService Tax Appellate Tribunal (CESTAT), New Delhi has dismissed the appeal filed by the Tribunal held that the exemption cannot be claimed under the subsequent notification if the same was not in existence on the date of filing of the Bills of Entry.

The appellant Vardhman Textiles Ltd. had filed five self-assessed Bills of Entry in the month of April 2022 for the import of raw cotton. The import was done under the valid advance authorizations. Later on, Notification No. 21/2022-Cus dated April 13, 2022 was issued which provided a nil rate of duty on the import of cotton goods with effect from April 14, 2022.

The appellant made an application for reassessment and cancellation of certain B/Es. Subsequently, the appellant made an application for substitution of B/Es for home consumption to warehousing. These applications were rejected by the Department and upheld by the Commissioner (Appeals).

The appellant claimed that since the clearance had not been made and the “out-of-charge” orders were issued after the notification was issued, the benefit should be extended. It was claimed that the taxable event occurs only when the Commissioner (Appeals) clears the goods and that the assessee is entitled to choose the exemption that is more beneficial to him.

However, the Revenue claimed that since the date to be reckoned for the purpose of assessing duty is the date of filing the Bills of Entry under Section 15 of the Customs Act, and since the notification was not issued on that date, the exemption cannot be granted.

The Tribunal comprising Binu Tamta (Judicial Member) and Hemambika R. Priya (TechnicalMember) observed that the law clearly mandates the date of filing of the B/E as the relevant date for determining the applicable rate of duty. It rejected the contention regarding the date of clearance and held that exemption notifications not in existence at the time of filing cannot be applied retrospectively.

Further, the Bench held that substitution of B/Es under Section 46(5) is discretionary and cannot be permitted when it prejudices revenue interests or is intended solely to avail a subsequent exemption.

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