Customs, Excise and Gold Tribunal - Bangalore
Vijirom Chem Pvt. Ltd. vs The Commissioner Of Customs on 18 August, 2005
ORDER S.L. Peeran, Member (J)
1. This appeal arises from OIO No. 04/2002 dated 25.01.2002 confirming demands of Special Additional Duty(SAD) on the import of Aromatic Chemicals in respect of 14 Bills of Entries noted in the order. They claimed benefit of Customs Notification No. 56/98-Cus dated 01.08.1998 which grants exemption from payment of SAD which has been denied in the impugned order and hence this appeal.
2. It is the contention of the appellants that the Notification clearly exempts the levy of SAD on goods, which are imported for sale as such and on the appellant making a specific declaration to that effect in the Bill of Entry in the manner specified in Sl. No. 12 of the said Notification. The declaration states that "sale of said goods will not be effected from a place located in an area where no tax is chargeable on sale or purchase of goods. In case the said goods are disposed of in any manner in contravention of the conditions specified in Notification No. 56/98-Cus dated the 1st August, 1098, without prejudice to any other action that may be taken under any law for the time being in force, I/We undertake to pay the special Additioanl duty of Customs of Rs. ... which is leviable on these goods, but for exemption contained in the said Notification". The plea of the appellant is that the department has invoked the Chapter Note in the Excise Tariff Act to hold that the appellants are repacking for retail purpose and hence it amounts to not having sold the item 'as such' and that they are not entitled for the benefit of the Notification. They contend further that SAD is levied to safeguard the interest of those domestic manufacturers who pay the Sales Tax. They contend that they have paid the Sales Tax and, therefore, the question of levying SAD is not justified. In this regard, the Counsel took us through the Finance Bill where the intention to levy SAD to safeguard the domestic purchasers paying Sales Tax is noted. It is their submission that the demands are also time barred as they had declared all the details and the Show Cause Notice dated 25.8.1999 has been issued after six months for a period 14.11.1998 to 20.03.1999. It is contended that the Department was aware of all the facts about the appellant filing the declaration for non-payment of SAD and, therefore, the larger period was not invokable. It is further submitted that Finance Bill, 2005 was enacted on 13.05.2005 which has omitted Section 3A of the Customs Tariff Act to levy SAD on the imported goods. Therefore, the proceedings initiated for levy of SAD under the omitted Section 3A of the Customs Tariff Act does not get saved under Section 6 of the General Clauses Act. It is their further submission that the goods have been sold as such without being subjected to any process and hence they are exempted from payment of SAD under the said Notification. It is submitted that there is no definition of the word 'As such' in the Customs Tariff Act and, therefore, it is necessary to interpret the expression having regard to the purpose for which SAD was levied. As the Finance Minister in his Budget Speech of the year 1998-1999 has stated that SAD was introduced basically in lieu of Sales Tax, they contend that as they had paid the sales tax, the question of levying SAD on the imported goods does not arise in terms of the Notification in question.
3. The learned SDR opposes the prayer and contends that as the assessee had repacked the goods for retail sale, therefore, it follows that they have not followed the rule as such and therefore, the invocation of Chapter Note in Chapter 29 is attracted and it amounts to a process of manufacture and the goods are not exempted under the said Notification.
4. On a careful consideration of the submissions made, we are not agreeable with the findings recorded by the Commissioner. The Notification grants exemption to all goods, which are falling within the schedule, which are imported for sale 'as such', but the importer is required to give a declaration in terms already extracted above. As the preamble of the Notification itself indicates that this SAD is being levied on specified goods having regard to the maximum sales tax, local tax or any other charges for the time being leviable on the like goods on their sale or purchase in India, therefore, the rates of SAD are specified in the Notification. However, it exempts, if the imported goods are sold as such and when the sales tax is paid. In this case, sales tax is being paid by the assessee, which is not in dispute and, therefore, the levy of SAD does not arise as the purpose of imposing SAD, was to make it par with the sales tax paid by the local manufacturer. The authorities have proceeded to invoke Chapter Note under Section 28 to hold that the imported goods are not sold as 'as such', but there is a process of manufacture in repacking the goods for retail sale. On a careful consideration, we notice that this legal fiction on 'manufacture' incorporated in the Chapter Note of the Excise Tariff cannot be invoked to interpret a Notification under the Customs Tariff Act. The goods have not undergone any change by any process and they remained the same even on repacking. The term 'as such' referred to in the Notification is to mean that the goods should not undergo any process of change. This change has not taken place admittedly on being repacking. Therefore, invocation of Chapter Note of Chapter 29 to hold that the goods have not been sold 'as such' is not correct in the light of the interpretation placed by us. The goods have remained the same and they have sold, 'as such' and paid the sales tax. Therefore, the view taken by the department that the goods are not sold 'as such' on being repacked is not a correct one as there is no such definition given to the term 'as such' in the Notification. So long as the same goods are sold as such either in the same condition or in the repacked condition, the benefit cannot be denied to them. Moreover, the purpose of levy of SAD is to make it par with the local sales on payment of sales tax. As the sales tax has been levied in the present case, the question of again levying SAD does not arise. Furthermore, we notice that the High Court of Karnataka, in the case of Lipton India Ltd. v. State of Karnataka [1994] 095 STC 0225W (Kar.) was considering the question as to whether the process of blending, mixing and repacking the tea would convert the tea into a distinct commercial commodity. The assessee contended that they were paying Central Excise Duty on the repacked tea and, therefore, the repacked commodity was commercially different from the unpacked tea. The High Court rejected the above contention and held that tea continues to retain its identity even after the process of blending and repacking and that the definition in Central Excise Law cannot be used to interpret the Sales Tax Law. In the light of this ratio, we hold that the invocation of Chapter Note of Chapter 29 to hold that the goods are different on repacking is not a correct view taken by the Commissioner. The goods remained "as such" even on repacking as they had not undergone any change. Further, we agree with the contention of the appellant that the demands are time barred. As they had already filed all the details and there is no suppression of facts in the matter, it was for the department to call for further details if they had any doubt. In the result, the impugned order is set aside and the appeal is allowed.
(Operative portion of this order was pronounced in open court on coclusion of hearing)