Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise Customs ... vs Samyu Glass Pvt. Ltd on 12 April, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court I Application Nos. E/COD/21159/2015, E/Stay/21160/2015 in Appeal No. E/21996/2015 (Arising out of Order-in-Appeal No.VIZ-EXCUS-003-APP-016-15-16 dt. 02.06.2015 passed by Commissioner (Vizag Appeal-II), Customs, Central Excise and Service Tax,Guntur) Commissioner of Central Excise Customs & Service Tax, Nellore ..Appellant(s) Vs. Samyu Glass Pvt. Ltd. ..Respondent(s)
Appearance Sh. Guna Ranjan, Superintendent (AR) for the Appellant.
Sh. Suresh Astekar, Advocate for the Respondent.
Coram:
Honble Mr. JUSTICE (DR.) SATISH CHANDRA, PRESIDENT Honble Mr. MADHU MOHAN DAMODHAR, MEMBER(TECHNICAL) Date of Hearing: 21.02.2017 Date of Pronouncement :
FINAL ORDER No._______________________ [Order per: Madhu Mohan Damodhar] For the reasons stated in the application, the delay of 20 days in filing the appeal is condoned. MA (COD) is allowed. Since the appeal itself is taken up for hearing and decision, stay application filed by appellant-Revenue for staying operation of the impugned order is disposed of.
2. The facts of the case are that respondent-assessee are engaged in the manufacture and export of 'Hollow Glass Ware' (Bottles/Jars etc.) under 100% EOU scheme. They obtained Central Excise Registration and were selling their products into DTA on payment of full rate of duties as per the provisions of Foreign Trade Policy. Subsequently, the respondent opted out of the EOU scheme and obtained EPCG license and started paying central excise duty on the DTA clearances @ 12.36% as done by any other DTA unit. However, the lower authorities ordered that the respondent was liable to pay central excise duty in terms of the proviso to Section 3 (1) of the Central Excise Act. Accordingly, respondent-assessee made the payment of differential duty by calculating the total Central Excise duty @ 23.89% and paid the balance differential duty @ 11.53% on the clearances made during the aforesaid period under protest. Thereafter, the respondent preferred a refund application on 21-05-2014 claiming an amount of Rs.1,09,66,150/- stating that they have paid the above amounts under protest and that they had collected duty only at the rate of 12.36% from their customers and the balance duty was paid by themselves without collecting the same from their customers. Therefore, the price of the goods already sold by the respondent without collecting the Central Excise duty to that extent was to be treated as cum-duty price in terms of Explanation to Section 4 (1) of the Central Excise Act, 1944. After due process of law, the refund sanctioning authority rejected the refund claim on the ground that the concept of cum-duty is not applicable to the DTA clearances made by EOUs. In appeal, Commissioner (Appeals) vide the impugned order filed by assessee inter alia held that cum duty benefit was very much available to them and that one year period of filing refund is not applicable as the assessee has paid the differential duty under protest.
3. Aggrieved, Revenue has filed this appeal.
4. When the matter came up for hearing, on behalf of appellant-Revenue, Ld. A.R. Shri Guna Ranjan reiterated the grounds of appeal. The main grounds of appeal of the department can be summarized as under :
(a) In terms of proviso to Section 3 (1) of the Central Excise Act, 1944, the clearances into the DTA have to be subjected to aggregate duties of customs and the valuation for the purpose of assessment of customs duty has to be determined in terms of Customs Act, 1962.
(b) Going by the provisions of Section 14 of Customs Act, 1962, the transaction value shall form the basis for assessing the duty, i.e. the sale consideration shall be the basis for calculating the duty. Further, in terms of proviso to Section 14 (1) supra, it can be seen that the transaction value does not include customs duty. Hence it is evident that there is no scope to calculate the Customs duty by considering the sale price as cum-duty value. The aggregate duties of customs are therefore liable to be calculated on the transaction value directly and not by back working method by considering the same as cum-duty value.
(c) In this connection, Hon'ble Tribunal in the case of EON Polymers Ltd. Vs CCE, Jaipur-I reported in 2010 (258) ELT 225 (Tri.-Del.) held that in respect of EOUs, value is to be determined under Section 14 of the Customs Act, 1962 and not under Section 4 of the Central Excise Act, 1944 and that the benefit of cum-duty price not available.
5. On behalf of respondent- assessee ld. Counsel Shri Suresh Astekar reiterated the correctness of the impugned order and also submitted a synopsis which can be summarized as under :-
(i) The Revenue has contended in the present appeal that as per the proviso to Section 3 (1) of the Central Excise Act, the clearances made by an EOU into the DTA have to be subjected to the aggregate duties of customs and the valuation for the purpose of assessment of customs duty has to be determined in terms of the Customs Act, 1962.
(ii) Above contention of the Revenue is clearly contrary to the provisions of Section 3 (1) of the Central Excise Act, 1944, which clearly provides that the duty to be paid by an EOU on its DTA clearances, is Central Excise Duty and not Customs duty as contended by the Revenue.
(iii) Decision of the Tribunal in the case of Eon Polymers (supra) is not at all applicable to the present case inasmuch as the said case related to clandestine removal and in that context the Tribunal noted that the facts of the case were similar to the case of Sarla Polyester Ltd. Vs CCE Surat-II 2008 (222) ELT 376 (Tri.-Ahmd.) which also related to clandestine removal by EOU and wherein the Tribunal held that the cum-duty value was not applicable to clandestinely removed goods.
6. Heard both sides and have gone through the facts of the case.
6.1 Main contention of the appellant-Revenue is that the prices indicated in the invoices of the respondent-assessee are required to be considered as transaction value, hence lower duty adopted therein is incorrect. Since break up of taxes is indicated separately in such invoices, the cum duty price cannot be extended in such cases. Arguments have also been put forth that since assesses have not been able to establish that goods were cleared under protest, their claim will be hit by limitation.
6.2 It is not in dispute that DTA clearances were made in terms of proviso to Section 3 (1) of the Central Excise Act, 1944, according to which the duty payable on such DTA clearances would be the aggregate of the duties of customs which would be leviable under the Customs Act, 1962. Viewed in this light, we do not find any infirmity in the above conclusions arrived at by lower appellate authority. Proviso to Section 3 (1) of Central Excise Act provides measure of Central Excise duty leviable on DTA clearance by EOU notwithstanding the manner of its calculation. The fact that duty is to be calculated on value determined under Customs Act, 1962, cannot alter the character of the proviso to Section 3 (1) of Central Excise Act.
6.3 We also find that lower appellate authority has correctly relied upon the ratio of Tribunals Larger Bench decision in Kumar Arch Tech Pvt. Ltd. Vs CCE Jaipur-II 2013 (290) ELT 372 (Tri.-LB), the relevant para-8 of which order is worthy of reproduction :
"9. We also find it difficult to accept the other plea of the appellant that proviso to Section 3(1) is a legal fiction under which the goods manufactured by a 100% EOU and cleared into DTA are to be treated as goods imported into India. On perusal of the proviso, we find that what this proviso provides is a measure of central excise duty leviable on the DTA clearance of 100% EOU and this measure is the aggregate of the duties of customs on the import of like goods into India and if the rate of duty is ad valorem, duty is to be calculated on the value determined under the provisions of Customs Act, 1962 and Customs Tariff Act, 1975. In fact a Larger Bench of the Tribunal in the case of Vikram Ispat reported in 2000 (120) E.L.T. 800 (Tribunal-LB) has held that the duty chargeable on the DTA clearance of a 100% EOU is a central excise duty and the method adopted by the law makers in recovering this duty cannot alter its character and what the proviso to Section 3(1) of Central Excise Act, provides is only the measure of the central excise duty leviable on the DTA clearances of a 100% EOU. Therefore, in our view, it would not be correct to treat the clearance of the goods manufactured by 100% EOU into DTA as deemed imports into India."
The above Kumar Arch Tech decision has been relied/followed in a number of judgments namely 2015 (316) ELT 498 (Tri.-Ahmd.), 2015 (327) ELT 514 (Tri.-Ahmd.), 2015 (328) ELT 620 (Tri.-Del.) and 2016 (338) ELT 435 (Tri.-Ahmd.).
6.4 We also find that reliance of department on the case law of EON Polymers Vs CCE Jaipur 2010 (258) ELT 225 (Tri.-Del.) is misplaced. The facts in that particular case related to clandestine removal and for that reason, Tribunal has held that cum duty value was not available to clandestinely removed goods. In the present case however, it is not the allegation that assessee has effected clearances clandestinely. On the other hand, assessee had effected the DTA clearances in a transparent manner, under cover of invoices indicating therein separately price charged and the taxes thereon. The only error committed by the respondent is that they paid duty at the rate of 12.36% on the DTA clearances which, much later, department directed them to pay at the rate of 23.89%. It is also not disputed that payment of duty, albeit at the lower and incorrect rate of 12.36%, was known to department since ER-2 returns were filed by the assessee throughout the period in question.
6.5 We also take note of the correspondence in OC No.32/2013 dt.14-03-2013 of the Range officer and reply dt. 22.3.2013 given by assessee, the latter intimating the department that they would pay excise duty at 23.896% although they were collecting the same only at 12.36% from their customers. From this it is evident that the assessee although discharged and collected lower than applicable duty liability, however they have cleared these goods under invoices and there was no fraudulent intention in such omission.
6.6 We find that Nagareeka Exports Pvt.Ltd. case [2003 (159) ELT 891 (Tri.-Mum.) has been relied upon in a subsequent decision of the Tribunal in the case of Asian Alloys Ltd. Vs CCE Delhi-III 2006 (203)ELT 252 (Tri.-Del.) where the Tribunal distinguished the clandestine removal from other types of DTA clearances. Even in the decision of Honble Supreme Court in the case of CCE Delhi Vs Maruti Udyog Ltd. - 2002 (141) ELT 3 (SC), which is relevant to this issue, the Apex Court inter alia held as under :
"5. A reading of? the aforesaid Section clearly indicates that the wholesale price which is charged is deemed to be the value for the purpose of levy of excise duty, but the element of excise duty, sales tax or other taxes which is included in the wholesale price is to be excluded in arriving at the excisable value. This Section has been so construed by this Court in Asstt. Collector of Central Excise and Others v. Bata India Ltd., 1996 (4) SCC 563, and it is thus clear that when cum-duty price is charged, then in arriving at the excisable value of the goods the element of duty which is payable has to be excluded. The Tribunal has, therefore, rightly proceeded on the basis that the amount realised by the respondent from the sale of scrap has to be regarded as a normal wholesale price and in determining the value on which excise duty is payable the element of excise duty which must be regarded as having been incorporated in the sale price, must be excluded. There is nothing to show that once the demand was raised by the Department, the respondent sought to recover the same from the purchaser of scrap. The facts indicate that after the sale transaction was completed, the purchaser was under no obligation to pay any extra amount to the seller, namely, the respondent. In such a transaction, it is the seller who takes on the obligation of paying all taxes on the goods sold and in such a case the said taxes on the goods sold are to be deducted under Section 4(4)(d)(ii) and this is precisely what has been directed by the Tribunal. There is also nothing to show that the sale price was not cum-duty."
6.7 What therefore comes to the fore is that Assessee made straight forward clearances from the EOU to DTA, though at lower rate of duty discharged thereon than what was applicable. It is not the case of the department that respondent-assessee had removed the goods clandestinely or that they had collected from or reimbursed by, the buyers, the amount of differential duty that was paid by them subsequently on being advised by department. Respondent-assessee has also not collected differential duty which they retained and paid up only on being advised by Department.
6.8 On the other hand, it is an admitted fact that assessee had not collected any duty amount of more than 12.36% from their buyers. In these circumstances, the price charged by the respondent-assessee will surely have to be adopted as a "cum duty price".
6.9 Viewed in this background, no infirmity is discernible in the finding of lower appellate authority that price charged by assessee will have to be considered as inclusive of duty (cum-duty price) since they have undisputedly charged and collected duty at a lower rate than the rate of duty subsequently paid.
7. In the light of the discussions supra, department appeal is found devoid of merit for which the same is dismissed.
(Order pronounced in court on ____________)
(MADHU MOHAN DAMODHAR) (JUSTICE (DR.) SATISH CHANDRA)
MEMBER (TECHNICAL) PRESIDENT
gs./Jaya
1
Application No. E/COD/21159/2015
E/Stay/21160/2015 &
Appeal No.E/21996/2015