Custom, Excise & Service Tax Tribunal
Volvo India Pvt Ltd vs Bangalore-Ltu on 2 June, 2023
E/1644/2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
1st Floor, WTC Building, FKCCI Complex, K. G. Road,
BANGLORE-560009
COURT-I
Central Excise Appeal No. 1644 of 2010
[Arising out of the Order-in-Original No. 41/2010-Commr. dated
20.05.2010 passed by the Commissioner of Central Excise and
Service Tax, (Large Tax Payers Unit), Bangalore.]
M/s. Volvo India Pvt. Ltd. ....Applicants
Yalachahally, Tavarekere Post,
Hosakote,
Bangalore - 562 122.
Vs.
The Commissioner of Central Excise and ....Respondents
Service Tax Large Tax Payers Unit Bangalore.
Appearance:
....For Mrs. Neetu James, Advocate Applicants Vs. Mr. H. Jayathirtha, .... For Superintendent (AR) Respondents CORAM:
Hon'ble Dr. D. M. MISRA, MEMBER (JUDICIAL) Hon'ble Mrs. R. BHAGYA DEVI, MEMBER (TECHNICAL) Date of Hearing: 02-06-2023 Date of Decision: 02-06-2023 FINAL ORDER No. 20552__of 2023 Per D. M. MISRA:
This appeal is filed against the Order-in-Appeal No.41/2010- Commr. Dated 20.05.2010 passed by the Commissioner of Central Excise and Service Tax, Large Tax Payers Unit, Bangalore.Page 1 of 9
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2. Briefly stated the facts of the case are that the appellants are engaged in manufacture of motor vehicles such as Tractors, Trailers, Tippers and parts thereof falling under Chapter Heading 87 of the First Schedule to the Central Excise Tariff Act, 1985. During the relevant period i.e., between 2004 and 2005, they had cleared 9 Nos. of tippers valued at Rs.3,92,30,538/- involving total duty liability of Rs.63,49,514/- to M/s. Ketan Construction Ltd., a contractor who were awarded road construction maintenance project financed by World Bank. The appellants cleared the said goods by availing the benefit of exemption Notification No.108/95-CE dated 28.8.95 without payment of duty. Pursuant to the Explanation-2 introduced vide Notification No.13/2008-CE dated 1.3.2008 amending the exemption Notification No.108/95-CE dated 28.8.95, it was alleged that the goods cleared to M/s. Ketan Construction Ltd., a contractor, are not eligible to the benefit of the said Notification as after completion of project, the Tippers were no more used in the said project. Accordingly, duty of Rs.63,49,514/- was demanded invoking extended period of limitation by issuing show-cause notice dated 9.9.2009. The said demand notice was confirmed by the Commissioner with interest and equal amount of penalty. Hence, the present appeal.
3. The learned advocate for the appellant submits that department proposed to deny the benefit of Notification No.108/95-CE dated 28.8.95 as amended on the ground that the benefit of the said Notification would be available only if the goods Page 2 of 9 E/1644/2010 are part of the project on permanent basis and would not be available if the said goods are withdrawn by the contractor on completion of the project and used for other projects. She has submitted that this issue has been considered by this Tribunal in the case of L & T Komatsu Ltd. Vs. CCE & ST, Bangalore-IV:
2016 (34) ELT 632 (Tri.-Bang.), latter confirmed by Hon'ble Supreme Court as reported at 2021 (376) ELT A105 (SC) and also by Chennai Bench of this Tribunal in the case of Schwing Stetter (I) Pvt. Ltd. Vs. CCE ?& ST, LTU, Chennai: 2018 (362) ELT 653 (Tri.-Chennai).
3.1 It is her contention that during the relevant period, the Explanation-2 which was inserted by Notification No.13/2008-CE dated 1.3.2008 was not in existence, hence its application to clearances retrospectively cannot be sustained as held by the Tribunal in the aforesaid judgments. The conditions prescribed in the said Notification had been fulfilled as the goods cleared by the appellant to the said contractor were used in the said project and Revenue has not disputed its use.
3.2 Further, she has submitted that the demand is barred by limitation since the show-cause notice was issued on 9.9.2009 demanding duty for the period from 30.01.2004 to 07.03.2005. They have declared the clearances of the said goods in the ER1 returns by availing the benefit of exemption Notification and certificates issued by the Project Authority were filed with the department from time to time. The investigation was initiated only Page 3 of 9 E/1644/2010 after the amendment to the said Notification with effect from 1.3.2008, therefore, there is no suppression of fact. Hence, the extended period of limitation cannot be invoked. In support, she has referred to the judgment of Hon'ble Supreme Court in the case of J.K. Spinning and Weaving Mills Ltd. vs. UOI: 1987 (32) ELT 234 (SC) and Uniworth Textiles Ltd. vs. CCE: 2013 (288) ELT 161 (SC).
4. Learned Authorised Representative for the Revenue reiterated the findings of the learned Commissioner.
5. Heard both sides and perused the records.
6. The short issue involved in the present appeal is for determination is: whether the appellants are entitled to the benefit of Notification No.108/95-CE dated 28.8.95.
7. The Notification No.108/95-CE in dispute reads as follows:
"In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944, (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an international organisation for their official use or supplied to the projects financed by the said United Nations or an international organisation and approved by the Government of India, from the whole of -
(i) the duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944); and Page 4 of 9 E/1644/2010
(ii) the additional duty of excise leviable thereon under sub-section (1) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) :
Provided that before clearance of the said goods, the manufacturer produces before the Assistant Commissioner of Central Excise having jurisdiction over his factory, a certificate from the United Nations or an international organisation that the said goods are intended for official use by the said United Nations or the said international organisation or are to be supplied to a project financed by the said United Nations or the said international organisation and the said project has duly been approved by the Government of India.
Explanation. - For the purpose of this notification, "international organisation" means an international organisation to which the Central Government has declared, in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), that the provisions of the Schedule to the said Act shall apply."
8. In accordance with the said Notification, on the basis of the project certificate issued mentioning the name of the contractor M/s Ketan Constructions Ltd., undisputedly 9 Nos. of tippers were cleared by the Appellant to the said contractor to be used in a project funded by the World Bank. After completion of the said project, on enquiry from the contractor about the use of said Tippers in other such eligible project, when denied, demand notice was issued to the appellant on the basis of insertion of Explanation-2 to the Notification No.13/2008-CE dated 1.3.2008 which reads as under:
Explanation 2: For the removal of doubts, it is hereby clarified that the benefit under this Notification, in the case of goods supplied to the projects financed by the United Nationals or an International Organisation, is available when the goods brought into the project are not withdrawn by the supplier or contractor and the expression "goods are required for the execution of the project" shall be construed accordingly."Page 5 of 9
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9. The said Explanation-2 was inserted with effect from 1.3.2008. Revenue sought to apply the said Notification retrospectively and demanded duty from the appellants alleging that after completion of the project, if the 9 nos. tippers which were used in the completion of project, later if withdrawn, even after completion of the project, they would not be eligible to the benefit of the said Notification.
10. The issue of retrospective applicability of Explanation-2 to the Notification was considered by this Tribunal in the case of L & T Komatsu Ltd. (supra) in paragraph 5, which is as under:
"5. All the facts on record and the submissions of both the sides have been carefully considered.
5.1 From the facts, it is clear that there has been no suppression of facts on the part of the appellants when the new Notification No.13/2008-CE dated 1.3.2008 was issued. After the issue of amended Notification No.13/2008-CE dated 1.3.2008 appellants approached the Department of Central Excise and informed that "they have effected clearances only after securing an undertaking that the goods would be retained within the project and not diverted".
5.2 From the facts on record the Revenue has not been able to prove any suppression or intention to evade payment of duty on the part of the appellants. Therefore, extended period of limitation against the appellants is not legally maintainable.
5.3 Though Notification No.13/2008-CE dated 1.3.2008 has added Explanation 2 to the original Notification No.105/95-CE dated 28.8.1995, considering the Hon'ble Supreme Court's decision in the case of UOI vs. Martin Lottery Agencies Ltd: 2009 (14) STR 593 (SC) and CESTAT Ahmedabad's decision in the case of Sirala Exports Ltd. vs. CCE (supra), this amendment cannot be made effective retrospectively. In this regard, the decision of the Hon'ble Supreme Court in the case of UOI vs. Martin Lottery Agencies Ltd. (supra) is quoted below: Page 6 of 9
E/1644/2010 "35. Reverting to the decision of a Kerala High Court in CIT v. S.R. Patton [(1992) 193 ITR 49 (Ker.)] wherein Gujarat High Court's judgment was followed, this Court noticed that explanation was not held to be a declaratory one but thereby the scope of Section 9(1)(ii) of the Act was widened. The law in the aforementioned premise was laid down as under:
"17. As was affirmed by this Court in Goslino Mario (supra), a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. [See also:
Reliance Jute and Industries v. CIT [(1980) 1 SCC 139]. An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section (See: Sonia Bhatia v. State of U.P. [(1981) 2 SCC 585 at 598]. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force (See: Shyam Sunder v. Ram Kumar [(2001) 8 SCC 24 (para
44)]; Brij Mohan Laxman Das v. CIT [(1997) 1 SCC 352 at 354], CIT v. Podar Cement [(1997) 5 SCC 482 at 506]. But if it changes the law it is not presumed to be retrospective irrespective of the fact that the phrase used are 'it is declared' or 'for the removal of doubts'.
18. There was and is no ambiguity in the main provision of Section 9(1)(ii). It includes salaries in the total income of an assessee if the assessee has earned it in India. The word "earned" had been judicially defined in S.G. Pgnatale (supra) by the High Court of Gujarat, in our view, correctly, to mean as income "arising or accruing in India". The amendment to the section by way of an Explanation in 1983 effected a change in the scope of that judicial definition so as to include with effect from 1979, "income payable for service rendered in India".
19. When the Explanation seeks to give an artificial meaning 'earned in India' and bring about a change effectively in the existing law and in addition is stated to come into force with effect from a future date, there is no principle of interpretation which would justify reading the Explanation as operating retrospectively." (Emphasis supplied)
36. It is, therefore, evident that by reason of an explanation, a substantive law may also be Page 7 of 9 E/1644/2010 introduced. If a substantive law is introduced, it will have no retrospective effect."
5.3.1 Further we quote from CESTAT Ahmedabad's decision in the case of Silara Exports Ltd. (supra) as below:
"3. .........The notification as it existed prior to introduction of explanation was interpreted while considering and quashing the Circular No. 38/2000 by two High Courts. Therefore obvious conclusion that emerges is that even though the explanation starts with the clause "for the removal of doubts it is hereby clarified" it cannot have retrospective effect. (Emphasis supplied). In view of the fact that both the decisions of the High Courts cover the issue in this case, appeal is allowed."
5.4 Considering the findings that there has been no suppression on the part of the appellants and in view of the decisions of the judicial fora quoted above, we hold that amendment to the original Notification No.108/95-CE dated 28.8.1995 made by Notification No.13/2008-CE dated 1.3.2008 would have prospective operation and the demand against the appellants can be sustained only for one year period which is within the period of limitation and the penalty imposed by the impugned order deserves to be set aside.
11. On the issue of limitation, we find that the appellant availed the exemption under Notification No.108/95-CE dated 28.8.95 on the basis of Certificates issued by the Project Authority from time to time and the clearance of tippers by availing the benefit of Notification declared in their monthly ER-1 returns, hence no fact was suppressed from the knowledge of the department. It is held by the Hon'ble Supreme Court in J.K. SPINNING AND WEAVING MILLS LTD. AND ANOTHER Vs. UNION OF INDIA AND OTHERS 1987 (32) ELT 234 (SC) and followed in a series of judgments that extended period of limitation cannot be invoked in demanding duty on the basis of applying an amendment retrospectively, which is squarely applicable to the facts of the present case. Page 8 of 9
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12. In view of the above findings, the impugned order is not sustainable, consequently, the same is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Operative portion of the Order was pronounced in open court) (D. M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI MEMBER (TECHNICAL) rv Page 9 of 9