Custom, Excise & Service Tax Tribunal
Inox India Pvt Ltd vs Vadodara-Ii on 1 November, 2018
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Date of
Impugned
Appeal No. Impugned Passing Authority Appellant Respondent
order details order OIO-VAD-
Commissioner of Central E/10003/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10004/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10005/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10006/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10007/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10008/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10009/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10010/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10011/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10012/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10013/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
OIO-VAD-
Commissioner of Central
E/10014/2017- EXCUS-002- Inox India C.C.E. & S.T.-
27/09/2016 Excise and Service Tax-
DB COM-017-028- Pvt Ltd Vadodara-ii
VADODARA-II
16-17
Commissioner of Central
OIA-VAD-
E/11108/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11109/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11110/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11111/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11112/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
2|Page E/10003-10014,11108-11122/2017-DB
Commissioner of Central
OIA-VAD-
E/11113/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11114/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11115/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11116/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11117/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11118/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11119/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11120/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11121/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Commissioner of Central
OIA-VAD-
E/11122/2017- Excise, Customs and Inox India C.C.E. & S.T.-
EXCUS-002-APP- 10/01/2017
DB Service Tax-VADODARA- Pvt Ltd Vadodara-ii
502-516-16-17
I( Appeal)
Represented by:
For Appellant: Mr. J.C.Patel (Advocate) For Respondent: Mr. J. Nagori (AR) CORAM:
HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) Date of Hearing:10.10.2018 Date of decision:01.11.2018 Final Order No. A/ 12493-12519 /2018 Per: Ramesh Nair The brief facts of the case related to Appeal No.s E/10003- 10014/2017 are that the appellant is a 100% EOU which is engaged in the manufacture of disposable gas cylinders falling under Central Excise Tariff Heading 73.11. Apart from exporting the said goods the appellant
3|Page E/10003-10014,11108-11122/2017-DB had been supplying the said to the holders of advance license. Initially such supplies were made against advance release orders issued by the office of the Joint Director General of Foreign Trade Policy 2004-2009 to the holder of advance licensee. Subsequently under para 4.1.11 of Foreign Trade Policy 2004-2009 the holder of a advance license had the option to source duty free inputs from indigenous sources (including from 100%) instead of importing the same. The appellant have supplied goods to the advance licence holder under Notification No. 23/2003-CE dated 31.03.2003 (Serial No. 22 condition No. 11 of the Notification). The Revenue sought to deny the exemption on the following two grounds.
(a) That permission of Development Commissioner was not taken by the appellant for effecting the supplies to holders of advance license.
(b) That the values of said supplies made to the holders of advance license exhausted the limit of 50% of the FOB Value of export prescribed under para 6.8 (a) of FTP for making DTA sales.
1.1 As regard appeal No. E/11108-11122/2017, the issue involved is that whether the appellant is entitled to clear waste and scrap by availing the benefit of exemption Notification No. 2/95-CE and later 23/2003-CE without the clearance of such waste and scrap is included in overall 50% of FOB value of exports which includes physical export as well as deemed export. The contention of the Revenue is that for the purpose of computing 50% of FOB value of exports only value of physical exports to be taken and not the value of deemed exports.
4|Page E/10003-10014,11108-11122/2017-DB 1.2 The adjudicating authority by adjudication orders confirmed the demands and imposed penalties on the appellant. Hence, the present appeals.
2. Sh. J.C. Patel, Ld. Counsel appearing on behalf of the appellant submits that the exemption was denied on the ground of non- compliance of certain conditions such as without obtaining the permission from Development Commissioner. However, there is no such condition prescribed for availing the exemption notification No. 23/2003-CE. He further, submits that para 4.1 of the FTP 2004-09 states that an Advance License is issued as a duty exemption scheme. Para 4.1.3 of the Policy states that an Advance License is issued to allow duty free import of inputs. Under para 4.1.11 of the Policy, an option is given to the holder of the advance license to source the inputs from indigenous sources including from EOU instead of importing the same. To give effect to these provisions, serial No. 22 of Notification No. 23/2003-CE dated 31.03.2003 grants exemption to the goods cleared by EOU to holders of Advance Licence. The only condition which is stipulated for such exemption is condition no. 11 which nowhere stipulates that permission of Development Commissioner is required. It is not the case of the department that condition No. 11 is not satisfied in this case.
3. He further submits that when there is no condition stipulated against serial No. 22 of the Notification of obtaining the permission of Development Commissioner, the exemption under the said Notification cannot be denied. In this regard, he relied upon the Hon'ble Gujarat High Court judgment in the case of Inter Continental India vs UOI 2003 (154) ELT 37 (Guj.) that the exemption cannot be denied by reading into Notification some condition which is not stipulated therein. The said
5|Page E/10003-10014,11108-11122/2017-DB judgment was upheld by the Hon'ble Supreme Court reported in 2008 9226) ELT 16 (SC). He further submits that in the case of appellant's own group company, the Hon'ble Tribunal in Inox Air products vs CCE 2007 (2011) ELT 284 held that no permission of Development Commissioner is required for effecting the supplies to advance license holders and there is no such condition in the Notification. The adjudicating authority has totally ignored this decision though cited before him. He further submits that without prejudice to the stand that no permission is required, in any event the appellant has from time to time intimated to the Development Commissioner the values of supplies made to advance licence holders as deemed exports in their quarterly and annual returns filed with the Development Commissioner. At no point of time, the Development Commissioner has raised any objection that permission of Development Commissioner was not obtained for making such supplies. This, itself shows that no permission was required. He further submits that supply of goods to holders of advance license are considered as deemed exports under para 8.2(a) of FTP 2004-09. Further para 6.9(a) of FTP 2004-09 provides that such supplies made by 100% EOU to holders of advance license will be counted for the purpose of fulfilment of positive NFE. This clearly shows that supplies to holders of advance license do not fall under the purview of para 6.8(a) and cannot be equated with DTA sales referred to in para 6.8(a). Consequently the restriction of 50% of FOB value of exports prescribed under para 6.8(a) of the FTP for making DTA sales is inapplicable to supplies made to sales to advance licence holders. He further submits that the supplies made by advance license holder is a deemed export. It is held by Hon'ble Gujarat High Court and this
6|Page E/10003-10014,11108-11122/2017-DB Tribunal held that deemed exports are at par with physical exports. He placed reliance on the following judgments:
CCE vs NBM 2012(276) ELT 9 (Guj.) Nandan Synthetics P. Ltd. vs CCE 2015 (315) ELT 454 CCE vs Nandan Synthetics 2015 (319) ELT A119 CCE vs Gandhi Fibres 2011 (268) ELT 354 (Guj.) CCE vs Gandhi Fibres 2015 ( 3180 ELT A250 (SC) CCE vs Shilpa Copper Wires Ind. 2011 (269) ELT 17 (Guj.) Juned Bilal Menon vs CCE 2008 (221) ELT 45 (Tr. LB) 3.1 He submits that in the following judgments the law was laid down that the supplies made to advance license holders which are deemed exports are not at par with DTA sales and hence, no permission of Development Commissioner is required for such service.
Om shanti Satins Ltd. 2010 (255) ELT 131 Suresh Synthetics 2013 (294) ELT 257 Jumbo Ltd. vs CCE 2005 (184) ELT 214 CCE vs Jumbo Bag ltd. 2015 (324) ELT A190 3.2 Without prejudice to the above submissions he further argued that SCN dt. 5/5/2009 was issued for the period April 2004 to March 2009 which is beyond the normal period of limitation. He submits that all the clearances were effected by producing the advance license/ advance release order before the Central Excise Authorities who made the debit entries in the same, therefore, there is no wilful misstatement or suppression of fact on the part of the appellant. Hence, the demand for the extended period is time barred. He placed reliance on the Hon'ble Bombay High Court judgment in the case of CCE vs MQ Electricals Ltd. 2016-TIOL-2679(HC)-Mum-Cx. Reliance was also placed on the
7|Page E/10003-10014,11108-11122/2017-DB following decisions Madhu Silica vs CCE 2016 (344) ELT 1072, CCE vs Meghmani Dyes and Intermediates Ltd. 2013 (288) ELT 514 (Guj.). 3.3 As regard appeal No. E/11108-11122/2017, Sh. J.C. Patel submits that it is settled law that deemed exports are at par with physical exports and in computing the limit of 50% of FOB value of exports for DTA sales deemed exports have also to be taken into account. He placed reliance on the aforesaid judgments. In these appeals also he made a submission on limitation inasmuch as SCN dated 28.12.2005 was issued invoking longer period of limitation covering the period 2000-01 to 2004-05. He submits that larger period of limitation is clearly inapplicable when there are several decisions taking the view that deemed exports are at par with physical exports and have to be taken into account for computing the said limit of 50% of FOB value of exports. Therefore, the view of the appellant was on a bonafide belief, hence three was no wilful misstatement or suppression of fact on the part of the appellant.
4. Sh. J. Nagori, Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that even though there is no explicit mention about the permission of the Development Commissioner but since physically goods were cleared in a domestic tariff area the permission otherwise was required for such removal. The supplies made to advance license holder may be treated as deemed export under the fiction of law but physically it is cleared domestically hence, the permission which is otherwise required for DTA clearance is equally applicable to these clearances also. He placed reliance on the following judgments.
Bony Polymers P. Ltd. 2016 (3430 ELT 288 (Del.)
8|Page E/10003-10014,11108-11122/2017-DB Sheshank Sea Foods 1996 (88) ELT 626 (SC) Sneh Enterprise2006 (202) ELT 7 (SC) VVF India Ltd. 2015 (317) ELT 561 Alnoori Tobacco Products 2004 (170) ELT 135 (SC)
5. We have carefully considered the submissions of both the sides and perused the records. We find that the whole issue to be decided is eligibility of the exemption Notification No. 23/03-CE dated 31.03.03 which provides the exemption to the clearance of goods by EOU to holders of advance license. As per the condition 11 of the Notification no any requirement of permission of Development Commissioner exist, therefore as per the plain reading of the Notification together with the condition, exemption is not based on any permission to be obtained from the Development Commissioner, therefore, the contention of the Revenue that the permission of Development Commissioner was not obtained in order to avail the exemption Notification No. 23/2003-CE is patently incorrect and without any basis. We agree with the submission of the Ld. Counsel that in the case of Inter-Continental (supra), the Hon'ble Gujarat High Court has categorically held that the words which is not existing in any notification cannot be imported into it to interpret the exemption Notification. The said judgment was upheld by the Hon'ble Supreme Court, therefore, in context with the present case also since there is no condition of Development Commissioner's Permission laid down for allowing the exemption Notification 23/03-CE, the benefit of the Notification was wrongly denied by the lower authority. It is also observed that in the appellants own case, this Tribunal in the case law reported at 2007 (211) ELT 84 clearly held that no permission of Development Commissioner is required for effecting the supplies to advance license holders as there is no such condition in the exemption
9|Page E/10003-10014,11108-11122/2017-DB Notification. In view of the said decision of this Tribunal, there is no scope to revenue to interpret the Notification differently, else it would be a violation of principle of judicial discipline. The supplies to advance license holder has been specifically provided under the FTP according to which the supplies made to advance license holders is treated as deemed export. For this reason also for the purpose of exports, no permission is required from the Development Commissioner. We have also observed that the appellant from time to time in their quarterly and annual returns filed with the Development Commissioner declared the values of supplies made to advance license holders as deemed exports. At no point of time Development Commissioner has raised any objection that permission of Development Commissioner was not obtained for making such supplies. This fact clearly shows that there is no legal requirement in the statute for obtaining the permission from Development Commissioner for supplies made to advance license holders. In various judgments of Hon'ble Supreme Court as well as Hon'ble High Court, it has been held that the deemed exports made by 100% EOU is on par with physical exports, therefore, for all the purposes supplies made to advance license holder which is deemed export is considered as export. Even for the purpose of 50% sealing of DTA export of FOB value of exports, the issue have been settled that for calculating the 50% not only the physical exports but also the deemed exports should also be considered. As regard the issue on limitation, we find that since the appellant have been supplying the goods to advance license holder by intimating to the department and the departmental officer was debiting the advacne license/ advance release order the entire facts was well within the knowledge of the Department, therefore, there is no iota of suppression or mis-declaration on the part 10 | P a g e E/10003-10014,11108-11122/2017-DB of appellant hence, the demand for the extended period issued in the SCN dated 05.05.2009 is clearly time barred. As per our above discussion, the demand is not sustainable on merit and the demand for the extended period is also not sustainable on limitation. Accordingly, we set aside the impugned orders and allow the appeals.
6. As regard appeal No. E/11108-11122/2017 (15 Appeals), the issue involved is whether for removal of scrap in DTA for computing the 50% of FOB value of export, whether the export includes deemed exports or otherwise. This issue has been considered time and again in the case of Nandan Synthetics P. Ltd. vs CCE-2015 (315) ELT 454 which was upheld by Hon'ble Supreme Court reported at 2015 (319) ELT A119- SC. In this decision of the Tribunal, the following order was passed.
"9. We find that in the case of Gandhi Fibers, this Bench vide order dated 11-6-2009 relying upon the judgment of Virion Textile Mills Ltd. had allowed the appeal of the assessee holding that assessee is eligible to clear goods to Domestic Tariff Area by taking 50% of the deemed exports value as their eligibility. It is noticed that this judgment of the Tribunal has attained finality in the hands of Apex Court. Since the issue is covered by the judgment of Hon'ble High Court of Gujarat in the case of Gandhi Fibers and as also in the case of NBM Industries and Amitex Silk Mills Pvt. Ltd., we find that the impugned order is incorrect.
10. Reliance placed by the ld. Departmental Representative on the judgment of the Tribunal in the case of Jumbo Bags Ltd. and the judgment of Hon'ble High Court of Madras in the case of BAP Industries Ltd. will not carry the case any further, as the Jurisdictional High Court's decision on the very same issue is a recent one and has been upheld by the Apex Court (SEEC Gandhi Fibers); needs to be followed."
7. As regard reliance placed by the Commissioner upon the order of Madras High Court in the case of BAPL Industries ltd. 2007 (211) ELT 23 (Mad.), we find that Hon'ble Gujarat High Court in the case of CCE vs NBM 2012 (276) ELT 9 (Guj.) expressly disagreed on the judgment of the Hon'ble Madras High Court, therefore, the same is distinguished. As per this settled position for the purpose of clearance of scrap in DTA 11 | P a g e E/10003-10014,11108-11122/2017-DB computing the 50% of FOB value of export, the value of deemed export need to be considered, therefore, on this count demand raised by the department is not sustainable. In appeal No.s E/11108-11122/2017 also the demand is clearly time bar as on the fact that there were various decisions on this issue as cited by the Ld. Counsel therefore, the appellant had bonafide belief that for the purpose of eligibility to clear the goods in DTA equal to 50%, if FOB value not only physical but also the deemed export has to be taken into account. Therefore, the demand for the longer period is not sustainable on the ground of limitation.
8. In view of out above discussions, the impugned order is set aside. Appeals are allowed in above terms.
(Pronounced in the open court on 01.11.2018) (Raju) (Ramesh Nair) Member (Technical) Member (Judicial) Neha