Custom, Excise & Service Tax Tribunal
M/S. Arora Fibres Ltd vs Cce, Surat on 6 May, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066. BENCH-DB PRINCIPAL BENCH - COURT NO. I Excise Appeal No. E/6267/04 [Arising out of Order-in-Appeal No. RKS/164/Vapi/2004 dated 15.7.2004 passed by the Commissioner (Appeals), Central Excise, Surat]. For approval and signature: Honble Mr. Justice R.M.S. Khandeparkar, President Honble Mr.Rakesh Kumar, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s. Arora Fibres Ltd. Appellants Vs. CCE, Surat Respondent
Present for the Appellants : Shri L.P. Asthana, Advocate &
Shri A. Jaju, Advocate
Present for the Respondent : Shri V. Chaudhary, DR
Coram:Honble Mr.Justice R.M.S.Khandeparkar, President
Honble Mr. Rakesh Kumar, Member (Technical)
Date of Hearing:06.05.2010
Date of decision:________
FINAL ORDER NO. _______________ DATED:________
PER: RAKESH KUMAR
The Appellants are a manufacturer of polyester staple fibre in their factory at 213, Piparia Industrial Estates, Silvassa. They were granted an import licence under Export Promotion Capital goods scheme (EPCG Scheme) under para 38 of the EXIM Policy, 1992-97 against which they could import capital goods valued at Rs.6,55,72,140/- on payment of customs duty at concessional rate of 15%. The capital goods so imported were to be used in the manufacture of finished goods for export and their export obligation under the EPCG Scheme was four times the CIF value of the capital goods imported at concessional rate of duty. The Appellants imported
(a) Capital goods v/a Rs.5,09,84,800/- CIF on payment of basic customs duty of Rs.76,47,720/- and nil addl. Customs duty under B/E No.11547 dated 30.6.96 and
(b) Capital goods v/a Rs.1,54,12,600/- CIF on payment of basic customs duty of Rs.23,11,890/- and nil Addl. Customs duty under B/E No.4157 dated 10.1.95. During the period of import, while the normal rate of basic customs duty was Rs.25% and Additional customs duty was 10% aggregating to 37.5% exemption notification No.160/92-Cus. dated 20.4.92 prescribed concessional rate of duty of 15% adv. basic and Nil Addl. Customs duty in respect of capital goods imported under EPCG Scheme. As per the condition of the licence, the export obligation was to be completed on or before 27.7.99 i.e. within a period of five years and the Appellants were to pay normal duty without any exemption in respect of shortfall in meeting the export obligation. Since the Appellants failed to meet the export obligation, as their exports were only Rs.4,50,62,330/- against their export obligation of Rs.26,22,88,560/- Show cause notices dated 31.7.98 and 7.8.98 were issued in respect of B/E No.4157 dated 10.1.95 and No.11547 dated 30.4.94 respectively for demand of total differential duty of Rs.1,66,71,217/- (basic + additional duty) alongwith interest. The Appellants filed an application dated 30.3.2000 before the Settlement Commission under section 127 B of the Customs Act, 1962 wherein they admitted their duty liability as Rs.1,23,81,895/-. The Settlement Commission, vide order dated 2/2002- Cus dated 9.1.02 finalized their duty liability at Rs.1,23,33,557/-. The Settlement Commission determined this duty liability on the basis that while the total differential duty (basic + additional customs duty) payable is Rs.1,49,39,415/- and the Appellants have met their export obligation only to the extent of about 17%, resulting in about 83% short fall, their duty liability would be 83% of Rs.1,49,39,415/- i.e. Rs.1,23,33,557/-. The Settlement Commission also directed that the question regarding eligibility for cenvat credit of the Additional customs duty component of the total duty demand of Rs.1,23,33,557/- would be decided by the Jurisdictional Central Excise Officers.
1.1 The Appellants, in pursuance of the Settlement Commissions order dated 9.1.2002, paid the duty of Rs.1,23,33,557/- and approached the Jurisdictional Central Excise Officers for permitting the Cenvat credit of the Additional Customs Duty component. Asstt. Commissioner, Central Excise, Vapi vide order dated 4.8.2003 informed the Appellants that Addl. Customs duty component of the duty of Rs.1,23,33,557/- paid by them is Rs.57,03,557/- and they would be entitled to cenvat credit of this amount only, as against the appellants claims of Rs.74,31,056/-, Commissioner (Appeals), Surat vide Order-in-Appeal No.RKS/164/Vapi/2004 dated 15.9.04 upheld the Asstt. Commissioners order. This appeal has been filed against the order dated 15.7.2004 of CCE (Appeals), Surat.
2. Heard both the sides.
2.1 Shri L.P. Asthana, Advocate, the learned Counsel for the Appellants pleaded that there is mistake in the Departments method of calculation of Additional Customs duty, as while as per the provisions of Sec. 3 (2) of the Indian Customs Tariff Act, 1975, the Additional Customs duty, when chargeable at an ad-valorem rate, is charged on the assessable value equal to the CIF price plus the basic customs duty, in this case, while calculating the Addl. Customs duty, the basic customs duty was not included in the assessable value and that if the differential Addl. Customs duty is calculated in this manner, the same would be Rs.68,51,976/-. He also presented a calculation chart in this regard.
2.2 Shri V. Chaudhary, the learned Departmental Representative defended the impugned order reiterating the Commissioner (Appeals)s findings.
3. We have carefully considered the submissions from both the sides and perused the records. As per the provisions of Sec. 3 (1) and 3(2) of the Indian Customs Tariff Act, 1975, in respect of the goods imported into India, an additional customs duty is also chargeable in addition to basic customs duty, at the rate equal to the rate of Central Excise duty chargeable on like goods produced or manufactured in India and when the additional customs duty is chargeable on an ad-valorem rate, the assessable value for the same would be the assessable value of the goods determined u/s. 14 of the Customs Act, 1962 plus the basic customs duty. In this case, the total assessable value (CIF value) of the goods imported was Rs.6,63,97,400/- on which the customs duty and additional customs duty chargeable without any exemption i.e at 25% adv. and 10% adv. respectively was Rs.1,65,99,350/- and Rs.82,79,675/- respectively. Since the duty paid at the concessional rate (15% basic + nil Addl. Customs duty) was Rs.99,59,610/- + nil Addl. Customs duty, the differential duty payable would be Rs.66,39,740/- (basic) plus Rs.82,99,675/- (Addl. Customs duty) (Total Rs.1,49,39,415/-), in case there were no exports at all. Since export obligation could be met by the appellants only to the extent of 17.45% i.e. exports of Rs.4,57,50,561/- as against export obligation of Rs.26,22,88,560/- resulting in 82.55% shortfall, the Settlement Commission has fixed the appellants duty liability at 82.55% of Rs.1,49,39,415/- = 1,23,33,557/-. Therefore the break up of Rs.1,23,33,557/- into basic customs duty and additional customs duty would be 82.55% of Rs.66,39,740/- and Rs.82.55% of Rs.82,99,675/- i.e. Rs.54,81,105/- and Rs.68,51,381/- respectively. Thus the addl. Customs duty component of the total customs duty of Rs.1,23,33,557/- paid by the appellants is Rs.68,51,381/- whose cenvat credit would be available to the appellants. The impugned order restricting the cenvat credit to Rs.57,03,557/- is, therefore, not correct. The appellants are entitled for cenvat credit of Rs.68,51,381/- and we order accordingly. The impugned order stands modified as above.
The appeal stands disposed off as above.
(Pronounced in the open Court on___________) (JUSTICE R.M.S.KHANDEPARKAR) PRESIDENT (RAKESH KUMAR) MEMBER (TECHNICAL) Anita