Custom, Excise & Service Tax Tribunal
Thapar Ispat Ltd vs Commissioner Of Customs, Ludhiana on 21 August, 2025
1 C/182/2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 182 of 2011
[Arising out of OIO No. 03/Cus/2011 dated 27.01.2011 passed by the
Commissioner of Customs, CR Building, Mall Road, Amritsar]
Thapar Ispat Limited Appellant
(47, Phase-VII, Focal Point, Ludhiana)
VERSUS
Commissioner of Customs (Preventive), Respondent
Amritsar [Now Commissioner of Customs, Ludhiana] (Customs House, G T Road, Sahnewal, Ludhiana) APPEARANCE:
Present for the Appellant: Shri P.S. Pruthi, Consultant Present for the Respondent: Shri M.S. Dhindsa, AR CORAM: HON'BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) INTERIM ORDER NO. 23/2020 dated 08.06.2020 FINAL ORDER NO. 61005/2025 DATE OF HEARING: 23.01.2020 DATE OF DECISION: 21.08.2025 PER: ASHOK JINDAL This is the third round of litigation.
2. The facts of the case are that the appellants were engaged in the manufacture of M.S. Ingots, who imported 357.445 MT of Heavy Melting Scarp (HMS scrap) vide bill of entry dated 12.3.1994 and 8.2.1994 duty free in terms of Notification No.203/92 against value based advance licence. The appellants were allowed duty free import of non-alloy re-rollable scrap and not of M.S.Scrap. At the time of clearance of the goods, this mistake was neither detected by the Customs Officer while allowing duty free import of M.S. Scrap nor by 2 C/182/2011 the appellant firm. As the appellant could not fulfill condition of the Notification No.203/92 alleging that the appellant has failed to discharge their export obligation in respect of the import of M.S.Scrap and they had availed benefit of Modvat on inputs used in exported goods whereas the said notification specifically barred availment of Modvat on inputs. The matter was adjudicated, the demanded of customs duty and additional Customs duty was confirmed and penalty of Rs.2 lakh and redemption fine was also imposed to the tune of Rs.3 lakh. The said order was challenged before this Tribunal and this Tribunal remanded the matter back to the adjudicating authority for considering the submissions of the appellant and again vide order dated 30.11.2005, the adjudicating authority denied the benefit of Notification No.83/90-Cus dated 20.3.1990 as amended by Notification No.116/93-Cus dated 4.5.1993, which prescribed the customs duty @ 12% ad valorem as they had fulfilled substantive conditions of the said notification i.e. that they had utilized imported HMS in their own factory for manufacture of M.S. Ingots which were cleared on payment of duty and that the Deputy Commissioner, Central Excise verified the consumption of HMS and issued end used certificate. The benefit of Notification 83/90-Cus was denied on the ground that once the appellant had claimed the benefit of Notification NO.203/92-Cus, they cannot be allowed to change the benefit of other notification and confirmed the demand of duty and imposed penalty and redemption fine on them. The said order was challenged before this Tribunal and this Tribunal vide final order dated 24.11.2008 again remanded the matte back to the Commissioner to give finding on the issue raised on earlier stages. Thereafter the 3 C/182/2011 impugned order has been passed by denying the benefit of Notification No.83/90-Cus as amended to the appellant on the ground that the appellant has failed to fulfill the two conditions of the notifications i.e. (1) utilization of imported scrap in the furnace was to be completed within 6 months of import whereas the appellant has got issued end use certificate dated 2..8.1996 and (2) the importer was required to give a declaration to the Customs under notification No.83/90-Cus that he binds himself to use the scrap as prescribed. Further, the issue of revenue neutrality was also denied as whatever CVD was to be paid, the same would be availed as Modvat on inputs but set aside redemption fine and penalty imposed on the appellant. Against the said order, the appellant is before us.
3. Ld. Consultant appearing on behalf of the appellant raised the following issues:-
(1) Whether SCN is ab-nitio untenable when it acknowledges that Licence permitted only import of re-rollable scrap but goods imported were Heavy Melting Scarp; therefore, demand could not be issued for violation of conditions of Notification No.203/92 which is admittedly not applicable? And no other grounds of demand are stated in SCN.
(2) Whether demand is not time barred as all relevant records, particularly the licence, were produced before Customs who also erred in assessing the import of Heavy Melting Scarp under Notification No.203/92 which was clearly held by CESTAT to be inapplicable?
4 C/182/2011 (3) Whether late submission of end-use certificate is acceptable in view of CESTAT judgments that have allowed late submission in such circumstances and under same Notification also? (4) Whether requirement of Bond at a later stage is not redundant when the end use certificate confirms the use of goods in terms of condition of Notification and as per legislative intent? (5) Whether CVD should be demanded now when it is adjustable against admissible modvat credit keeping in view Revenue neutrality as upheld by the Supreme Court judgments.
4. He further submits that the Revenue was very much in the knowledge of the relevant fact that the Licence issued by DGFT permits the appellant to import re-rollable scrap to the appellant imported duty free Heavy Melting scrap against, which is in violation of provisions of Notification No.203/92. Therefore, the conditions of Notification No.203/92 are not applicable to the facts of this case and the show cause notice has been issued to the appellant for violation of conditions of Notification No.203/92 on this ground which is beyond the scope of show cause notice and the same is to be set aside.
5. He further submits that as the import of the goods in terms of Notification No.203/92 was in the knowledge of the Revenue and also the benefit thereof was to given to the appellant. Therefore, the show cause notice issued to the appellant is barred by limitation. He also submits that end used certificate has been produced by the appellant which is substantive requirement of Notification No.83/90- Cus, therefore, the benefit of the said notification is required to be given to the appellant. The condition of the notification is that the 5 C/182/2011 end use certificate should be submitted within six months. If the same is not submitted within six months, the same is procedural lapses and on the basis of procedural lapses, the benefit of notification cannot be denied. Extension of time is to be granted by the Assistant Commissioner of Customs to the appellant for producing the end use certificate itself provided to condone the delay. To support his contention, the appellant is relying on the decision of this Tribunal in the case of CCE, Jaipur vs. Moonling Exim Pvt.Ltd.-2014 (300) ELT 91 (Tri.-Del.). He also relied on the decision of this Tribunal in the case of Kusum Alloys-2005 (192) ELT 492 (Tri.- Bang.).
6. He further submits that at the time of importation, the appellant was allowed to import the goods by filing the bond under Notification No.203/92-Cus which itself bound the appellant to pay due import duty on failure to fulfill the conditions of the notification. Therefore, a legal undertaking can be taken as bond under Notification No.83/90-Cus and non execution of bond when end use certificate stands issued cannot be reason to deny exemption as held by the larger bench of this Tribunal in the case of Meltron Semi Conductors Limited-1987 (31) ELT 117 (Tri.-LB). He also relied on the decision of Hon'ble Supreme Court in the case of Hari Chand Shri Gopal-2010 (260) ELT 3 (SC). He also relied on the decision of Hon'ble Apex Court in the case of Srikumar Agencies-2008 (232) ELT 577 (SC). He also referred to the decision of the Hon'ble Apex Court in the case Dilip Kumar & Co-2018 (361) ELT 577 (SC) which was referred during the course of argument have no application to the 6 C/182/2011 facts of this case as there is no ambiguity in the condition of the notification.
7. He further submits that as the appellant was entitled to take modvat credit if CVD which would have been paid by the, therefore, this is revenue neutrality. Therefore, the demand of CVD is to be set aside. In view of this, the impugned order is to be set aside and appeal be allowed by giving the benefit of exemption Notification No.83/90-Cus.
8. On the other hand, the arguments advanced by the Ld. Consultant, Ld. AR submits that the exemption notification is to be construed strictly and the show cause notice has been rightly issued to the appellant as the appellant surrendered advance licence as the appellant failed to complete his export obligation. Therefore, the Revenue in its right perspective to raise the demand as it is well settled law that any benefit of exemption notification and following of its conditions has to be construed strictly. To support his contention, he relied on the following decisions:-
(i) Hemraj Gordhandas vs. H.M.Dave-CCE-1978 (2) ELT 350
(ii) Rajasthan Spg. & Weaving Mills v.CCE-1995 (77) ELT 474 (SC)
(iii) Uttam Industries vs. CCE-2011 (265) ELT 14 (SC)
(iv) Pappu Sweets & Biscuits vs. Commissioner Trade Tax, Lucknow-2004 (178) ELT 48 (SC)
9. He further submits that after remand by this Tribunal, the appellant tried to take the advantage of another exemption 7 C/182/2011 notification without following the procedure and conditions of the exemption Notification No.83/90-Cus and for end use certificate issued by the Central Excise authorities in July, 1996 but none of the other conditions of the said notification viz. filing of bond for following the procedures thereunder, extension from the Assistant Commissioner of Customs were not fulfilled. Therefore, the benefit of exemption is not available.
10. He further submits that the reliance placed by the appellant on the decision of Moonling Exim P.Ltd.-2014 (300) ELT 91 (Tri.-Del.) and Kusum Alloys vs. CC, Bangalore are not applicable as the facts are distinguished. In both the cases, the importers had filed bond and followed the procedure laid down for compliance and involved only late production of end use certificate.
11. He further submits that in the case of n the case of Hari Chand Shri Gopal (supra), Hon'ble Apex Court has held that substantial compliance means actual compliance in respect to the substance essential to very reasonable objective of the statute. He submits that in the case of Novapan India Limited vs. CCE, Hyderabad-1994 (73) ELT 769 (SC), Hon'ble Apex Court has held that exemption being in the nature of exception is to be construed strictly at the stage of determination whether assessee falls within its terms or not and in case of doubt or ambiguity, the benefit of it must go to the State. The issue has been settled by the Hon'ble Apex Court in the case of Dilip Kumar & Co. (supra).
8 C/182/2011
12. With regard to the revenue neutrality, it is his submission that if this ground is accepted then it is the Revenue neutrality situation then no importer have to pay CVD. To support this contention, he relied on the Jay Yuhsin Limited vs. CCE, New Delhi-2000 (119) ELT 718 (Tri.-LB). and Commissioner of Service Tax v. Melange Developers Private Limited vide Miscellaneous Order NO.50388/2019 dated 23.05.2019.
13. With regard to the limitation, he submits that it is case of import under Advance Licence for which the importer had executed a bond with the Revenue for complying with the conditions of duty free import and the bills of entry were assessed provisionally for this reason. Therefore, the extended period of limitation is applicable to the facts of this case.
14. Heard the parties and considered the submissions.
15. We have gone through the records placed before us and found that in earlier round of litigation while remanding the matter back to the adjudicating authority, this Tribunal passed the following order:-
"We have carefully considered the submissions made from both sides. It is not in dispute that what was permitted under the DEEC licence was import of re-rollable scrap and what was imported is HMS. Under these circumstances, it will not be proper to extend the benefit of DEEC benefits for the said goods and also enforce the condition imposed under the concerned notification. Therefore, we find that the request of the Ld. Advocate for permitting them to pay the applicable duty on the HMS after extending the notifications which were in force merits consideration. However, we find that the issue thought has been raised at earlier stages, the Commissioner has not given a finding. Therefore, we deem it proper to set aside the order of the Commissioner and remand the matter to consider these pleas afresh after giving reasonable opportunity of hearing 9 C/182/2011 to the appellant. The plea on admissibility of credit CVD will also be considered by the adjudicating authority at the time of re-adjudication."
16. As per the order of this Tribunal, this Tribunal has given direction that the adjudicating authority shall consider the plea of admissibility of CVD will also be considered by the adjudicating authority. The appellant has claimed the benefit of exemption Notification NO.83/90-Cus which provided clearance of goods on fulfilling of conditions of the said notification at concessional rate of duty. The appellant has raised the issue that the show cause notice has been issued to the appellant for non fulfillment of the conditions of the Notification No.203/92-Cus whereas the goods in question cannot be imported by allowing the benefit of exemption Notification No.203/92-Csu. Therefore, the impugned proceedings are beyond the scope of show cause notice. We are not in agreement with the said contention of the appellant as while remanding the matter back to the adjudicating authority, this Tribunal has clearly stated that for import of HMS, the benefit of notification which has been claimed at the time of importation is not available as the same is not covered under the advance licence. Therefore, the adjudicating authority shall consider the issue whether at the time of importation, the appellant was entitled for benefit in other notification or not. Therefore, the argument advanced by the Ld. Consultant for the appellant that the impugned order is also beyond the scope of show cause notice is not sustainable.
10 C/182/2011
17. Ld. Consultant raised the issue of limitation to say that the show cause notice has been issued beyond the normal period of limitation. We are not in agreement with the Ld. Consultant that the goods in question has been imported by executing a bond under Notification NO.203/92-Cus wherein the appellant was required to fulfill the conditions of the said notification in the conditions of the notification have not been fulfilled, the bond issued by the appellant was in force. Therefore, the appellant cannot claim that the show cause notice issued to them is barred by limitation.
18. Ld. Consultant further claimed the benefit of Notification No.83/90-Cus. The said notification is having the following conditions:-
(a) the imported goods shall be used in the manufacture of the goods which have been cleared on payment of duty within six months
(b) if the imported goods have not been used in the manufacture of goods which have been cleared on payment of duty then the extension of time is required to be obtained from the Assistant Commissioner and
(c) to execute a bond to that effect if the end use certificate is not produced and the appellant duty applicable at the time importation on the said goods.
19. The claim of the appellant is that they have produced end use certificate though late and claimed the benefit of the said notification. Therefore, in the facts and circumstances of the case, it is to be examined whether the appellant has complied with the conations under Notification No.83/90-Cus or not?
11 C/182/2011
20. The substantial condition of the notification is that the imported goods are to be used in the manufacture of ingots which have been cleared on payment of duty.
The other conditions are that the said goods to be used within six months if not then the time extension is required which can be granted. Further a bond in case failure to use goods and to execute the bond to utilize the goods in the manufacture of ingots which have been cleared on payment of duty.
21. In view of above discussion, it is coming out if end use certificate is produced that will qualify to comply all the conditions of Notification No.83/90-Cus as the extension of time is a procedural condition and execution of a bond is to safeguard the revenue in case of failure to produce the end use certificate. Therefore, we hold that the appellant has complied with the substantial condition of notification. In fact, the same is actual compliance of the said notification. Therefore, in terms of decision of Hon'ble Apex Court in the case of Hari Chand Shri Gopal (supra), we hold that the appellant has complied with the condition of the said notification No.83/90-Cus as amended from time to time and they require to pay duty by availing the benefit of concessional rate of duty in terms of the said notification.
22. We further take note of the fact that although not under Notification No.83/90-Cus, the appellant executed a bond under notification No.203/92-Cus to pay differential duty in case failure thereof. The said bond can be used for execution of bond under Notification No.83/90-Cus.
12 C/182/2011
23. We further note the fact of the case in the case of Meltron Semi Conductors Limited (supra), wherein this Tribunal has held as under:-
"The appellants were entitled to have their claim examined on its merits, provided the Assistant Collector was satisfied about the end use of the goods with reference to the certificate which has now been produced. The fact that they did not execute a bond at the time of importation should not stand in the way of their claim. We accordingly allow the appeal, and order that the appellants shall be granted consequential relief, subject however to the conditions that the Assistant Collector is satisfied with reference to the end-use certificate now produced that the goods have been used in the manufacture of the goods specified against S.No.1 of Notification No.116/80 dated 19.6.1980."
24. Therefore, we allow the benefit of exemption notification No.83/90-Cus.
25. We also take note of the fact that reliance placed by the Ld. AR in the case of Dilip Kumar & Co. (supra), the said decision is not applicable to the facts of this case as in the said case, Hon'ble Apex Court has held that in case of interpretation of notification if there is ambiguity then the benefit is to be given in favour of the Revenue. Admittedly, there is no ambiguity in the terms and conditions of the notification, in the case in hand, therefore, the decision in case of Dilip Kumar & Co. (supra), is not applicable to the facts of this case.
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26. The appellant has claimed the benefit of CVD which was entitled to them as modvat credit. We find that in the case of Mafatlal Industries Limited vs. CCE, Daman-2009 (241) ELT 153 (Tri.-Ahmd.) upheld by the Apex Court reported as 2010 (255) ELT a-77 (SC) to argue that the credit would have been available if CVD had been levied. In the said case involving Central Excise duty, the appellants and buyer unit were both owned by the same assessee. In that background, the Tribunal held that the situation was revenue neutral. Admittedly, in the present case, whatever CVD has been paid by the appellant, the CVD entitled as modvat credit. The contention of the Ld. Consultant is also acceptable.
27. In view of the above discussion, we grant the benefit of exemption notification no.83/90-Cus as amended to the appellant and is entitled modvat credit on CVD paid by the appellant being revenue neutrality. Therefore, we remand the matter back to the adjudicating authority for quantification of the demand, if any, in terms of above directions.
28. In view of this, the appeal is allowed by way of remand as discussed above.
(Order pronounced in the open court on ________________________) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL)
- Separate order -
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) mk 14 C/182/2011 Per: Sanjiv Srivastava I have gone through the order prepared by the learned Member (Judicial). However with all the respect to the efforts put in by him I do not find myself in position to agree with the same.
2. Since Member (Judicial) has reproduced the facts in respect of the imports made and the issue involved I am not again reproducing the same.
3. Admittedly appellants had imported 357.445 MT of Heavy Melting Scrap (HMS) vide Bill of Entries dated 8.02.1994 and 12.03.1994, claiming benefit of Exemption Notification No. 203/92-Cus in terms of Value Based Advance License produced by them under DEEC scheme. The benefit of duty free clearance was extended to the appellants against the bond executed by them as prescribed by the notification. Subsequently it was found that the license produced by the Appellants for the clearance of goods claiming the exemption was not in respect of the same goods which were cleared duty free by the appellants. Thus proceedings were initiated against the appellant, for denying the exemption claimed and allowed at the time of clearance. This proceedings in respect of denial of exemption under Notification 203/92-Cus attained finality with the Tribunal Order. However while upholding the demand made by denial of the benefit of Notification, tribunal had remanded the matter to Commissioner for consideration of the appellant claim to any other exemption notification which may be admissible. Hence I am in full agreement with the view of the Member (Judicial) 15 C/182/2011 rejecting the arguments advanced by the learned consultant in this respect.
4. In the remand proceedings appellant claimed the exemption under Notification No 83/1990-Cus. Appellants have produced an end use certificate from the Assistant Commissioner of Central Excise dated 02.08.1996 certifying the end use of the imported goods as required by the said notification.
5. For the ease of reference the text of Notification No 83/1990-Cus dated 20.03.1990 is reproduced in para 18 by Member (Judicial).
6. From the text of the notification as reproduced above it is quite evident that Notification No 83/1990-Cus dated 20.03.1990 is a conditional exemption notification and the benefit of the said notification is admissible subject to fulfilment of the conditions prescribed by the notification. In case of Mihir Textiles vs Collector of Customs, Mumbai [1997 (92) ELT 9 (SC)] Hon'ble Supreme Court while holding that exemption benefit dependent upon satisfaction of certain conditions cannot be granted unless such conditions are complied with, even if such conditions are only directory laid down the law as follows:
"Learned counsel contended that the importer is not to be blamed for non-compliance with the conditions prescribed in the entry because all what should have been done by them and what remained to be done was only that part which the authorities had to do in the matter. Obviously the aforesaid contention has no legs to stand at least in one case wherein no application was 16 C/182/2011 made at all for registration of the contract before the goods were cleared.
In the other appeal it was submitted on behalf of the appellant that as a matter of fact the appellant had made the application before the goods arrived at the port. Counsel for the appellant invited our attention to a letter which appellant has addressed to "Ministry of Industry, Udyog Bhawan, Maulana Azad Road, New Delhi" as proof of such application. Learned Additional Solicitor General contended that the said letter could not be treated as the application contemplated in the proviso to Entry 84.66, as the ministry of Industry is not the prescribed authority for granting registration.
Even assuming that the said letter should have been treated as the application contemplated in the proviso can the appellant legally claim the relief of concessional duty? Two circumstances have been highlighted against his claim. First is that though the appellant got the import licence on 22-10-1980 he did not make any application for registration for almost six months thereafter. Second is that even the letter which he claims to be the prescribed application was sent only a month before clearance of the goods from the port and during the remaining period he could not except the Central Government to rush through all the formalities necessary for granting registration. If any hasty steps were adopted on the application the resultant order would have been vulnerable to be assailed as an act done with undue haste. In this context learned Additional Solicitor General referred us to the following observations made by Jeevan Reddy, J in S.B. 17 C/182/2011 International Ltd & others vs. Assistant Director General of Foreign Trade & others, 1996 (2) SCC 439:
"On receipt of the application, the authorities have to satisfy themselves about the correctness of the contents of the application.
They also have to satisfy themselves that the application satisfies all the requirements of the scheme and the other applicable provisions of law, if any. In a country like ours, where abuse of such facilities is rampant, reasonable time has to be afforded to the authorities to process the application. What is a reasonable time, of course, depends on the facts of each case. No hard and fact limit can be prescribed".
Learned counsel for the appellant raised an alternative contention that the deficiency in the contract for obtaining the concessions should not have been taken so seriously and the Customs Authorities should have granted the reliefs as the appellants had performed their part complying with the conditions. Non-compliance of the conditions, according to the counsel, was only due to the lapses on the part of the authorities concerned. This contention was expatiated to the extent that the conditions prescribed in the proviso to entry No. 84.66 are merely directory and not mandatory. According to the counsel, the conditions prescribed, if interpreted strictly, would result in the denial of concessional reliefs which statute has conferred on the citizen.
18 C/182/2011 In support of that contention, counsel invited our attention to the decision of a Constitution Bench of this Court in State of U.P. vs. Manbodhan Lal Srivastava 1958 SCR 533, wherein their Lordships were considering the implication of non-compliance with the conditions provided in Article 320(3) of the Constitution on an order imposing punishment to a Government servant without reference to the Public Service Commission. While considering that question learned Judges made a reference to the Privy Council decision in Montreal Street Railway Company vs. Normandin AIR 1917 PC 142 and the Federal Court decision in Biswanath Khemka Vs. Emperor AIR 104 & FC 67. The Constitution Bench held that the provisions of Article 320(3) are not mandatory and non-compliance of those provisions does not afford any cause of action in a court of law. Privy Council in the above quoted decision has observed that the question whether provisions in a statute are directory or imperative depends upon the object of the statute and no general rule can be laid down.
"When the provisions of the statute relate to the performance of a public duty and the case is such that to hold null and void sets done in neglect of this duty would work serious general inconvenience or injustice to person who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory." This is not a case where a certain provision is mandatory or directory. Here the question is whether concessional relief of duty which is made dependent on the satisfaction of certain conditions can be
19 C/182/2011 granted without compliance of such conditions. No matter even if the conditions are only directory."
7. In case of Dilip Kumar and Co [2018 (361) ELT 526 (SC)] Hon'ble Supreme Court has clearly laid down as follows:
"44. In Hansraj Gordhandas Case (supra), the Constitutional Bench unanimously pointed out that an exemption from taxation is to be allowed based wholly by the language of the notification and exemption cannot be gathered by necessary implication or by construction of words; in other words, one has to look to the language alone and the object and purpose for granting exemption is irrelevant and immaterial.
45. In Parle Exports Case (supra), a bench of two Judges of this Court considered the question whether non- alcoholic beverage base like Gold spot base, Limca base and Thumps Up base, were exempted from payment of duty under the Central Government notification of March, 1975. While considering the issue, this Court pointed out the Strict interpretation to be followed in interpretation of a notification for exemption.
These observations are made in para 17 of the judgment, which read as follows: "How then should the courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language
employed therein bearing in mind the context in which the expressions occur. The words used in the provision, 20 C/182/2011 imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India, 1962 Supp 3 SCR 481 = AIR 1963 SC
98. See also Kailash Nath v. State of U.P., AIR 1957 SC 790. The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment. But in this connection, it is well to remember the observations of the Judicial Committee in Coroline M. Armytage v. Frederick Wilkinson, (1878) 3 AC 355, that it is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises. The Judicial Committee reiterated in the said decision at page 369 of the report that in a taxing Act provisions enacting an exception to the 21 C/182/2011 general rule of taxation are to be construed strictly against those who invoke its benefit. While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided." In the above passage, no doubt this Court observed that "when two views of a notification are possible, it should be construed in favour of the subject as notification is part of fiscal document". This observation may appear to support the view that ambiguity in a notification for exemption must be interpreted to benefit the subject/assessee. A careful reading of the entire para, as extracted hereinabove would, however, suggest that an exception to the general rule of tax has to be construed strictly against those who invoke for their benefit. This was explained in a subsequent decision in Wood Papers Ltd. Case (supra). In para 6, it was observed as follows:
"... In Collector of Central Excise v. Parle Exports (P) Ltd., (1989) 1 SCC 345, this Court while accepting that exemption clause should be construed liberally applied rigorous test for determining if expensive items like Gold Spot base or Limca base of Thums Up base were covered in the expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held 'that it should not be in consonance with spirit and the reason of law to give exemption for non-alcoholic beverage 22 C/182/2011 basis under the notification in question'. Rationale or ratio is same. Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit."
46. The above decision, which is also a decision of two Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports Case (supra) deduced as follows:
"Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally".
47. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand Case (supra).
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48. The next authority, which needs to be referred is the case in Mangalore Chemicals (supra). As we have already made reference to the same earlier, repetition of the same is not necessary. From the above decisions, the following position of law would, therefore, clear. Exemptions from taxation have tendency to increase the burden on the other unexempted class of tax payers. A person claiming exemption, therefore, has to establish that his case squarely falls within the exemption notification, and while doing so, a notification should be construed against the subject in case of ambiguity.
49. The ratio in Mangalore Chemicals Case (supra) was approved by a three-Judge Bench in Novopan India Ltd. v. Collector of Central Excise and Customs, 1994 Supp (3) SCC
606. In this case, probably for the first time, the question was posed as to whether the benefit of an exemption notification should go to the subject/assessee when there is ambiguity. The three- Judge Bench, in the background of English and Indian cases, in para 16, unanimously held as follows:
"We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Papers, referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision, they have to be construed strictly. A person invoking an exception or an exemption provision 24 C/182/2011 to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State...."
50. In Tata Iron & Steel Co. Ltd. v. State of Jharkhand, (2005) 4 SCC 272, which is another two-Judge Bench decision, this Court laid down that eligibility clause in relation to exemption notification must be given strict meaning and in para 44, it was further held - "The principle that in the event a provision of fiscal statute is obscure such construction which favours the assessee may be adopted, would have no application to construction of an exemption notification, as in such a case it is for the assessee to show that he comes within the purview of exemption (See Novopan India Ltd v. CCE and Customs)."
51. In Hari Chand Case (supra), as already discussed, the question was whether a person claiming exemption is required to comply with the procedure strictly to avail the benefit. The question posed and decided was indeed different. The said decision, which we have already discussed supra, however, indicates that while construing an exemption notification, the Court has to distinguish the conditions which require strict compliance, the non-compliance of which would render the assessee ineligible to claim exemption and those which require substantial compliance to be entitled for exemption. We are pointing out this aspect to dispel any doubt about the legal position as explored in this decision. As already concluded in para 50 above, we may reiterate that we are only concerned in this case with a situation 25 C/182/2011 where there is ambiguity in an exemption notification or exemption clause, in which event the benefit of such ambiguity cannot be extended to the subject/assessee by applying the principle that an obscure and/or ambiguity or doubtful fiscal statute must receive a construction favouring the assessee. Both the situations are different and while considering an exemption notification, the distinction cannot be ignored.
52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.
(3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled."
8. Hon'ble Member (Judicial) has in the proposed order while referring to the decision of Apex Court in case of Dilip Kumar & Co found the said decision to be not applicable for the reason that there is no ambiguity in the notification. It is no body case that there is ambiguity in the notification. The issue which the needs consideration is whether in terms of para 52(1) of the 26 C/182/2011 order in case of Dilip Kumar & Co and the decision in the case of Mihir Textile, the conditions as prescribed by the notification can be held to be satisfied in the present case for extending the benefit of Notification No 83/1990-Cus dated 20.03.1990.
9. In my view benefit of exemption under Notification was not claimed by the appellant at the time of importation of the said goods, i.e. appellants had never at the time of clearance of the goods made any claim to this exemption under notification No 83/1990-Cus. Neither they satisfied any of the conditions as prescribed by the notification at the time of importation, by way of executing the bond as required in terms of that notification. Appellants have not used the goods within six months from the date of clearance and produced the end use certificate from the jurisdictional Assistant Commissioner. Also no extension of the time limit of six months has been sought from the Assistant Commissioner of Customs permitting the clearance of goods have been sought. It is more than two years and six months subsequent to the clearance of goods that appellants have obtained the end use certificate from the jurisdictional Assistant Commissioner of Central Excise. In my view production of such a end use certificate without getting any extension from the concerned Assistant Commissioner of Customs assessing and permitting the clearance of the said goods can be said to be substantial compliance with the conditions of the notification No 83/1990-Cus. Hence the benefit of this notification cannot be extended to the appellants.
27 C/182/2011
10. Now coming to the issue of revenue neutrality raised by the appellants now. In my view in these proceedings which are for consideration of the order passed in the remand proceedings with specific direction for consideration of claim to certain exemptions this issue could have been raised. Once Member (Judicial) has held that Tribunal has in earlier round decided issue for denial of exemption Notification No 203/92-Cus to the Appellants both on merits and on limitation, the issue in respect of demand made by the show cause notice has been foreclosed and could not have been raised in these proceedings. Secondly the revenue neutrality claimed by the Appellant's is not correct and contrary to the appeal filed by them. If the issue was revenue neutral than Appellant's would have paid the amounts due and taken the credit if admissible rather than pursuing and litigating the matter before various forums for more than twenty years. Hon'ble Supreme Court has in case of Star Industries [2015 (324) ELT 656 (SC)] stated in similar circumstances as follows:
"35. It was submitted by the learned counsel for the assessee that the entire exercise is Revenue neutral because of the reason that the assessee would, in any case, get Cenvat credit of the duty paid. If that is so, this argument in the instant case rather goes against the assessee. Since the assessee is in appeal and if the exercise is Revenue neutral, then there was no need even to file the appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit."
28 C/182/2011
11. In view of the discussions as above I am of the view that the appeal needs to be dismissed.
Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) Point of Difference In view of above, following questions are referred to President for reference to third Member, for resolution in difference of opinion between of us:
1. Whether in facts of the case the benefit of exemption under notification No. 83/1990-Cus dated 20.03.1990 should be allowed to the appellant as has been held by the Member (Judicial) or disallowed as held by the Member (Technical)?
2. Whether the demand should be set aside on the ground of revenue neutrality as held by the Member (Judicial) or the demand should be upheld as held by the Member (Technical).
3. Whether the appeal should be allowed as held by Member (Judicial) or dismissed as held by Member (Technical).
(Interim order pronounced on 08.06.2020) Sd/- Sd/-
SANJIV SRIVASTAVA ASHOK JINDAL
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
29 C/182/2011
Reference to Third Member :
CORAM : MR. S. S. GARG, MEMBER (JUDICIAL)
Appearance:
Shri P.S. Pruthi, Consultant for the appellant Sh Anurag Kumar, Authorized Representative for the respondent DATE OF HEARING : 28.03.2025 PER : S. S. GARG
1. The difference on the following issues, recorded in terms of two separate orders passed by two Members of the original Division Bench, has been placed before me to give my opinion as a Third Member:
1) Whether in facts of the case the benefit of exemption under notification No. 83/1990-Cus dated 20.03.1990 should be allowed to the appellant as has been held by the Member (Judicial) or disallowed as held by the Member (Technical)?
2) Whether the demand should be set aside on the ground of revenue neutrality as held by the Member (Judicial) or the demand should be upheld as held by the Member (Technical)?
3) Whether the appeal should be allowed as held by Member (Judicial) or dismissed as held by Member (Technical)?
2. Though the facts of the case have already been recorded by the Members of the Original Bench, but for the sake of appreciation, I would like to state the facts in brief, which are as under:.
2.1 The appellants have imported 357.445 MTs of Heavy Melting Scrap vide Bills of Entry dated 08.02.1994 and 12.03.1994 claiming benefit of exemption Notification No. 30 C/182/2011 203/92-Cus dated 19.05.1992 in terms of Value Based Advance License procured by them under DEEC. The benefit of duty free clearances was extended to the appellants against the bond executed by them as prescribed by the said notification. Subsequently, it was found that the license produced by the appellants for the clearance of goods claiming the exemption was not in respect of the same goods which were got cleared duty free by the appellants. Thereafter, the proceedings were initiated against the appellants for denying the exemption claimed and allowed at the time of clearance. 2.2 The adjudicating authority vide its Order-in-Original No. 70/97 dated 31.10.1997 confirmed the demand of customs duty of Rs.15,70,597/- and additional customs duty of Rs.3,57,445/- along with penalty of Rs.2,00,000/- and redemption fine of Rs.3,00,000/-.
2.3 On appeal, the Tribunal vide its Final Order No. 1021/2000 dated 22.11.2000 said aside the above Order-in-Original and remanded the case for considering the submissions of the appellants.
2.4 The case was adjudicated de novo vide Order-in-Original No. 34/CUS/2005 dated 30.11.2005, wherein the adjudicating authority did not accept the pleas of the appellants that both conditions of notification stood fulfilled. 2.5 Aggrieved by the said Order-in-Original, the appellant again filed appeal before the Tribunal and the Tribunal vide its Final Order No. 640/2008 dated 24.11.2008, once again 31 C/182/2011 remanded the matter back to the Commissioner of Customs for de novo order.
2.6 The case was re-adjudicated by the Commissioner of Customs vide impugned order dated 27.01.2011 whereby the Commissioner of Customs held that the appellants are not entitled to the benefit of Notification No. 83/90-Cus 20.03.1990 as amended on the ground that two conditions of the said notification were not fulfilled by the appellants. 2.7 Aggrieved by the said impugned order dated 27.01.2011, the appellants filed the present appeal before the Tribunal and initially the Tribunal vide its Final Order No. 62207/2017 dated 23.08.2017 dismissed the appeal of the appellants. 2.8 Thereafter, the appellant filed an ROM application before the Tribunal and the Tribunal vide its order dated 30.03.2019 allowed the ROM application and recalled its Final Order dated 23.08.2017.
2.9 Thereafter, the matter was heard by the Division Bench consisting of the Member (Judicial) Shri Ashok Jindal and the Member (Technical) Shri Sanjiv Srivastava, who vide the Interim Order No. 23/2020 dated 08.06.2020 took contrary views and the matter was referred to me to decide the issues cited above as a third Member.
3. Heard both the parties and perused the material on record.
4. Shri P.S. Pruthi, the learned Consultant has appeared on behalf of the appellants.
32 C/182/2011 4.1 As regards the first issue, he submits that the finding of the Member (Judicial), whereby the Member (Judicial) has held that the appellants are entitled to the benefit of Notification No. 83/90-Cus, is correct because the appellants have made substantial compliance of the said notification i.e. they had produced the end-use certificate certifying consumption of imported scrap for manufacture of Steel Ingots which were cleared on payment of duty. He further submits that the finding of the Member (Judicial) is correct whereby the Member (Judicial) has held that late submission of end-use certificate by the appellants was a procedural condition because time to produce the certificate could be extended. He further supports the finding of the Member (Judicial) wherein the Member (Judicial) has held that the party had executed a bond under Notification No. 203/92-Cus binding themselves to safeguard the revenue. He further supports the finding of the Member (Judicial) on the issue of availment of the benefit of CVD by relying upon the decision of the Tribunal in the case of Mafatlal Industries Ltd vs. Commissioner - 2009 (241) ELT 153 (Tri. Ahmd.) which had been upheld by the Hon'ble Supreme Court in the case of Commissioner vs. Mafatlal Industries Ltd - 2010 (255) ELT A77 (SC).
4.2 He further submits that the opinion of the Member (Technical) on both the issues, is not legally sustainable and there are certain factual inaccuracies in the order of the Member (Technical). He further submits that the finding recorded by the Member (Technical) holding that the appellants have not 33 C/182/2011 complied with the conditions of Notification No. 83/90-Cus and therefore they are not entitled to the benefit of the same, is not accordance with law laid down by the Hon'ble Supreme Court in the case of CCE, Delhi vs. Hari Chand Shri Gopal - 2010 (260) ELT 3 (SC). He further submits that the Member (Technical) has wrongly relied upon the judgment of Hon'ble Apex Court in the case of CC (Import), Mumbai vs. Dilip Kumar & Company - 2018 (361) ELT 577 (SC) wherein it has been held that if there is any ambiguity in exemption notification, then benefit should go to the Revenue. He further submits that when the appellants have made substantial compliance of the conditions of the notification, then the exemption should not be denied to them as held by the Hon'ble Apex Court in the case of Commissioner vs. Salora Components Pvt Ltd - 2020 (371) ELT A87 (SC).
4.3 As regards the second issue, the learned Consultant submits that the view taken by the Member (Judicial) is correct. He also submits that the view taken by the Member (Technical) is not correct as the same is based on the Hon'ble Supreme Court's judgement in the case of Star Industries vs. CC (Imports), Raigad - 2015 (324) ELT 656 (SC), which is not applicable and is distinguishable.
4.4 He further submits that in the present case, the appellants have not mis-declared the goods and during adjudication, redemption fine and penalty were set aside. Further, the appellants, at the time of filing Bills of Entry, referred to a wrong notification, but the Revenue too assessed the goods under a 34 C/182/2011 wrong notification and in such a situation, the fault lies with the Revenue for wrong assessment of the goods when all the documents were present before the Revenue. For this, he relies on the decision of the Tribunal in the case of Exide Industries Ltd vs. CC, Chennai - 2007 (212) ELT 496 (Tri. Chennai) affirmed by the Hon'ble Apex Court in the case of Commissioner vs. Exide Industries Ltd - 2011 (274) ELT A48 (SC).
4.5 Finally, the learned Consultant prays that the appeal should be allowed and the impugned order should be set aside.
5. On the other hand, Shri Anurag Kumar, the learned Authorized Representative for the Revenue supports the view expressed by the Member (T) and submits that the appellants are not entitled to the benefit of exemption Notification No. 83/90-Cus for concessional duty on imported Heavy Melting Scrap as they had not complied with the conditions for availing the benefit thereunder.
6. I have considered the submissions made by both the parties and also perused the respective opinions recorded by both the learned Members in the Interim Order dated 08.06.2020.
7. It is a fact that initially the appellants imported the duty free goods under Notification No. 203/92-Cus which allowed duty free import of non-alloys and re-rollable scrap and not of M.S. scrap. But this mistake was not detected by the Customs officer while allowing the duty free import of M.S. scrap. Thereafter, during the remand proceedings, the appellants claimed the exemption under Notification No. 83/90-Cus and produced end-use 35 C/182/2011 certificate dated 02.08.1996 from the Assistant Commissioner of Central Excise certifying the end-use of the imported goods as required by the said notification. It is pertinent to note that in order to avail the benefit of Notification No. 83/90-Cus, following conditions have to be met:
(a) the imported goods shall be used in the manufacture of the goods which have been cleared on payment of duty within six months;
(b) if the imported goods have not been used in the manufacture of the goods which have been cleared on payment of duty, then the extension of time is required to be obtained from the Assistant Commissioner; and
(c) to execute a bond to that effect if the end-use certificate is not produced and the appellant to pay duty applicable at the time of importation of the said goods.
8. I find that the Notification No. 83/90-Cus dated 20.03.1990 is a conditional exemption notification and the benefit of said notification is admissible subject to fulfilment of the above conditions prescribed by the notification. Now, the question which arises in this case is whether the appellants have complied with the conditions of notification or not? In this regard, I find that the learned Member (Judicial) has held that the appellants have complied with the substantial conditions of the notification as they had produced the end-use certificate which entitled them the benefit of notification and the extension of time is a procedural condition and execution of a bond is a safeguard to 36 C/182/2011 revenue in case of failure to produce the end-use certificate. Further, the learned Member (Judicial) has held that the judgment of Hon'ble Apex Court in the case of Dilip Kumar & Co. (supra) is not applicable in the present case as there is no ambiguity in the exemption notification; whereas, the learned Member (Technical) has held that the said judgment of the Hon'ble Apex Court is very much applicable in the present case wherein the Hon'ble Apex Court has held in para 52 while answering the reference as under:
"(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification."
9. I also find that the learned Member (Technical) in para 9 of his order, has held as under:
"9. In my view benefit of exemption under Notification was not claimed by the appellant at the time of importation of the said goods, i.e. appellants had never at the time of clearance of the goods made any claim to this exemption under notification No 83/1990-Cus. Neither they satisfied any of the conditions as prescribed by the notification at the time of importation, by way of executing the bond as required in terms of that notification. Appellants have not used the goods within six months from the date of clearance and produced the end use certificate from the jurisdictional Assistant Commissioner. Also no extension of the time limit of six months has been sought from the Assistant Commissioner of Customs permitting the clearance of goods have been sought. It is more than two years and six months subsequent to the clearance of goods that appellants have obtained the end use certificate from the jurisdictional Assistant Commissioner of Central Excise. In my view production of such an end-use certificate without getting any extension from the concerned Assistant Commissioner of Customs assessing and permitting the clearance of the said goods can be said to be substantial compliance with the conditions of the notification No 83/1990-Cus. Hence the benefit of this notification cannot be extended to the appellants."
37 C/182/2011 On going through the above para, I find that the learned Member (Technical) has clearly held that the appellants had never satisfied the conditions of notification by way of executing the bond as required in term of that notification and had not used the goods within six months from the date of clearance and produced the end-use certificate from the jurisdictional Assistant Commissioner; no extension of time limit of six months had been sought from the Assistant Commissioner; in fact, the end-use certificate was produced after more than two years without seeking extension which is in violation of the condition of the Notification No. 83/90-Cus. Here, I may refer to the judgment of Hon'ble Apex Court in the case of Star Industries vs. CC (Imports), Raigad - 2015 (324) ELT 656 (SC), wherein the Hon'ble Apex Court, in para 32, has observed as under:
"32. In M/s. Navopan India Ltd., Hyderabad v. Collector of Central Excise and Another - 1994 (73) E.L.T. 769 (S.C.), this principle of interpretation of an exemption notification was summarised in the following words :
"We are, however, of the opinion that, on principle, the decision of the Court in Mangalore Chemicals and in Union of India v. Wood Papers, referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound-does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and Other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of
38 C/182/2011 course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave, (1969) 2 SCR 253 that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption."
10. Therefore, I am of the view that the opinion of learned Member (Technical) that the appellants are not entitled to avail benefit of exemption Notification No. 83/90-Cus is legally sustainable and I also hold the same opinion.
11. Regarding the issue of revenue neutrality raised by the appellants, I find that the learned Member (Technical), after relying on the Hon'ble Supreme Court's judgement in the case of Star Industries (supra), has held in para 10 of his order as under:
"10. Now coming to the issue of revenue neutrality raised by the appellants now. In my view in these proceedings which are for consideration of the order passed in the remand proceedings with specific direction for consideration of claim to certain exemptions this issue could have been raised. Once Member (Judicial) has held that Tribunal has in earlier round decided issue for denial of exemption Notification No. 203/92-Cus to the Appellants both on merits and on limitation, the issue in respect of demand made by the show cause notice has been foreclosed and could not have been raised in these proceedings. Secondly the revenue neutrality claimed by the Appellant's is not correct and contrary to the appeal filed by them. If the issue was revenue neutral than Appellants would have paid the amounts due and taken the credit if admissible rather than pursuing and litigating the matter before various forums for more than twenty years. Hon'ble Supreme Court has in case of Star Industries [2015 (324) ELT 656 (SC)] stated in similar circumstances as follows:
"35. It was submitted by the learned counsel for the assessee that the entire exercise is Revenue 39 C/182/2011 neutral because of the reason that the assessee would, in any case, get Cenvat credit of the duty paid. If that is so, this argument in the instant case rather goes against the assessee. Since the assessee is in appeal and if the exercise is Revenue neutral, then there was no need even to file the appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit."
12. In view of my analysis above, I am of the considered view that the opinion expressed by the learned Member (Technical) is legally correct and I hold the same opinion, accordingly, I affirm the findings recorded by the learned Member (Technical). In my view, the opinion expressed by the learned Member (Judicial) is not sustainable in law.
13. Now, let the matter be placed before the Regular Division Bench for drawing majority view.
(Third Member's Order pronounced in the court on 15.07.2025) Sd/-
(S. S. GARG) MEMBER (JUDICIAL) RA_Saifi 40 C/182/2011 MAJORITY ORDER In view of majority order, the appeal is dismissed. (Final order pronounced in the court on 21.08.2025) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL)