Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri K.M. Mondol, ... on 17 February, 2011
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : C/215,216,350 to 352, 133,134, 191 to 193 of 2010 Arising out of : OIA No. 77 to 79/Commr (A)JMN/2010 dt. 30.4.2010 and No. 3 & 4/Commr (A)JMN/2010 dt.1`5.01.2010 Passed by : Commissioner of Customs (Appeals) Jamnagar For approval and signature : Hon'ble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. B.S.V. Murthy, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : Commissioner of Customs Jamnagar Represented by : Shri K.M. Mondol, Commissioner (DR). Respondent (s) : M/s. Reliance Industries Limited
Represented by : Shri J.C. Patel, Advocate CORAM :
Hon'ble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. B.S.V. Murthy, Member (Technical) Date of Hearing : 17.02.2011 Date of Decision : _________ ORDER No. _____________ /WZB/AHD/2011 Per : Mrs. Archana Wadhwa;
All the appeals filed by the Revenue against the impugned order of Commissioner (Appeals), are being disposed off by a common order as the issue involved is identical.
2. As per facts on record, the respondent herein M/s. Reliance Industries Limited is a 100% EOU they have imported various consignments of crude petroleum oil at Sikka Port and sought the clearance of the same without payment of duty by filing into-Bond bill of entry. The said goods were taken clearance of and deposited in the bonded warehouse situated within the jurisdiction of the Assistant Commissioner, Central Excise, Jamnagar Division, without payment of duty, under the provisionally assessed warehousing bills of entry, against procurement certificate issued by the proper officer of Central Excise. In some of the cases, the clearances were affected after payment of National Calamity Contingent Duty (NCCD), Education Cess and Secondary & Higher Education Cess (SHE Cess), levied under the Section 134 of Finance Act, 2003, under protest. Filtering out the unnecessary details in respect of various bills of entries, whether the appellants paid the said NCCD, SHE Cess and Education Cess, at the time of clearance under protest or the demands were subsequently raised in respect of the said NCCD and Cess, the core question required to be decided in the present appeal is as to whether the respondents are liable to pay the National Calamity Contingent Duty, SHE and Education Cess on the various consignments of imported crude petroleum oil.
3. After hearing both the sides, we find that the respondents took number of pleas before the Commissioner (Appeals). It was contended by them that since no basic custom duty is required to be paid by them in terms of the provisions of Notification No. 52/2003-Cus dated 31.02.2003, the same would also include the exemption to NCCD based on the ratio of the Tribunals decision in the case of Toyota Kirloskar Motor Pvt. Limited vs. CCE Bangalore 2007 (217) ELT 403 (Tri. Bang.). In other words, the respondents contention was that inasmuch as they are exempted from payment of basic custom duty, they would also be exempted from payment of NCCD. They also contended that the object underline the EOUs scheme is, that the goods imported and used by them in the EOU, should not bear any duty whatsoever. Para 6.2 of the Foreign Trade Policy provide for imports of the goods by an EOU without payment of duty. Customs exemption notification is only meant to implement and give effect to the said provisions of the Foreign Trade Policy and inasmuch as the customs duty was exempted by virtue of exemption Notification No 52/2003, the said exemption would also apply to NCCD in view of the Section 134 (4) of the Finance Act, 2003. Alternatively, they submitted that that they had warehoused the goods in their 100% EOU and have not cleared the same for home consumption. Duty is payable only when the goods warehoused are sought to be cleared for home consumption under Section 68, at the rate in force on the date of filing of the bill of entry for home consumption as provided in the Section 25 (b) of the Act. Since there was no clearance of the imported goods from warehouse in these cases, the question of payment of any duty on such goods, does not arise. For the above proposition they relied upon the Tribunal decision in the case of Natural Stone Exports Limited vs. CCE 2006 (198) ELT 440; DSL Software (India) Limited vs. CCE 2005 (181) ELT 250: CCE vs. Infosys Technology Limited 2003 (159) ELT 863.
4. The Commissioner (Appeals) vide his impugned orders held that the NCCD leviable on the imported Crude Petroleum Oil under Section 134 of Finance Act, 2003 is neither specified in the first schedule to the Customs Tariff Act, 1975, nor levied under Section 3 of the Customs Tariff Act, 1975 and therefore, the exemption granted from the duty of customs specified in the first schedule of Customs Tariff Act, 1975 and additional duty of customs levied under Section 3 of the Customs Tariff Act, 1975 in respect of imports made by the 100% EOU in terms of Notification No 52/2003-Cus dated 31.3.2003, cannot be said to be exempting NCCD & Cess and other Cess. Accordingly, he held against the respondents in respect of the above issue by holding that in the absence of any Notification under Section 25 of the Customs Act, 1962, granting exemption from payment of duty to the imported goods, they have to discharge the NCCD and other Cess (SHE & Education Cess) levied vide Section 134 of the Customs Act, 2003.
5. However, he accepted the respondents stand that the Assistant Commissioner of Jamnagar, who had confirmed the demand of NCCD & other Cess as a result of finalization of the in-bond bill of entry, was not having any jurisdiction, inasmuch as the proper officer to raise the demand was Assistant Commissioner of Central Excise Rajkot, who was having administrative control of the 100% EOU. He relied upon the Board circular No. 31/2003-Cus dated 07.04.2003 laying down that the administrative control over all the EOUs shall be with jurisdictional Commissioner of Central Excise. Inasmuch as the Crude Petroleum Oil imported by the respondents was cleared by the Customs at Sikka Port against procurement certificate issued by the jurisdictional Central Excise authorities, with whom they executed the bond and all the consignments were cleared against in-bond bills of entry and the imported goods were duly warehoused in the licensed warehouse of the appellant 100%EOU for which re-warehousing certificates were issued by the jurisdictional Central Excise authorities, it was the jurisdictional Central Excise authorities at Rajkot, who was having the jurisdiction to raise or confirm any demand on account of short levy or non levy etc. For the above proposition, he relied upon the LB decision of the Tribunal in the case of Ferro Alloys Corporation Limited vs. CCE (Appeals) Bhubneshwar 1995 (77) ELT 310 (Tribunal), laying down that jurisdiction for raising demands for non levy or short levy lie with the proper officer having jurisdiction over the 100% EOU and not with the Customs House, where the goods were already assessed on an into-bond for the purpose of being warehoused.
6. Commissioner (Appeals) also observed that in terms of the provisions of Section 15 of the Customs Act, 1962, in case of warehoused goods cleared under Section 68 of the Act, duty becomes payable on the date on which a bill of entry for home consumption in respect of such goods is presented. Every 100% EOU have the licensed warehouses within the meaning of Section 58 of the Customs Act, 1962 and in the case of imported Crude Petroleum Oil, covered by the impugned orders, there is no dispute that such goods were duly warehoused in the licensed/ registered warehouse of the appellants EOU for which rewarehousing certificates issued by the jurisdictional Central Excise officers were received by the Customs. No clearance for home consumption of the imported Crude Oil has been alleged in the impugned order.
7. On the basis of above reasoning, the Commissioner (Appeals) held that respondents were not liable to pay any NCCD as well as SHE Cess and Education Cess. The said order of Commissioner (Appeals) is impugned before us.
8. We have heard Shri K.M. Mondal, learned consultant appearing for the Revenue and Shri J.C. Patel, learned advocate appearing along with Shri Vipin Jain, for the respondents. Shri Mondal has filed written submissions in support of his arguments. The respondents have also filed rejoinder in response to the written submissions filed by Shri Mondal.
9. After carefully considering the submissions made by both sides, we note that the sole issue required to be decided in the present appeal of the Revenue is as to whether the respondents, being an EOU, were liable to pay NCCD, SHE and Education Cess in respect of the Crude Oil imported by them.
10. The facts are not in dispute. The imported Crude Petroleum Oil was cleared at the port of import i.e. Sikka by filing in-bond bill of entry for re-warehousing the goods in their 100% EOU. The goods were cleared and brought to the 100% EOU. The fact that in some cases the said clearances were under provisionally assessed into bond bill of entry or after payment of NCCD and other cess etc. under protest, will not make a difference in as far as the legal issue is concerned. Both the sides have advanced argument that the exemption from basic excise duty as available in terms of Notification No 53/2003-Cus would also get extended to NCCD and Education and SHE Cess. However, we note that the present appeals can be disposed off without going to the dispute as to whether exemption of basic customs duty granted vide education notification No. 52/2003-Cus would entered to the NCCD, Cess & Secondary and Higher Education Cess.
11. The Commissioner (Appeals) vide his impugned order has accepted the issue of jurisdiction raised by the respondents inasmuch the issue stands covered by the Larger Bench decision of the Tribunal in the case of Ferro Alloys Corporation Limited vs. CCE (Appeals) Bhubneshwar 1995 (77) ELT 310 (Tribunal),. He also took note of the subsequent decision of the Tribunal in the case of CCE, Jaipur vs. Paras Fab International 2009 (237) ELT 711 (Tri. Del.) laying down that customs authorities at the port of import have no jurisdictions to raise the demand against an 100% EOU. For better appreciation relevant paragraph is reproduced below :-
7.4. In this background of the matter, I take up the question of jurisdiction of the adjudicating authority to raise demand of duty in the instant case. It is the contention of the appellant that the demand of NCCD levied vide Section 134 of the Finance Act, 2003 as a result of finalization of the in bond bills of entry made against them by the Assistant Commissioner of Customs, Jamnagar is not maintainable as they are a licensed 100%EOU situated in the jurisdiction of the Assistant Commissioner of Central Excise, Jamnagar Division under the administrative control of Central Excise, Rajkot Commissionerate. In this regard, I find that as per Boards circular No. 31/2003-Cus dated 07.4.2003, except in the port cities, the administrative control over all the EOUs shall be with jurisdictional Commissioner of Central Excise. The appellant submits that Crude Oil imported by them for captive use were cleared by CH Sikka against procurement certificate issued by the jurisdictional Central Excise Authorities with whom they had executed bond and all the consignments were cleared against In-bond bills of entry and the imported goods were duly warehoused in the licensed warehouse of the appellant 100% EOU for which re-warehousing certificates have been issued by the jurisdictional Central Excise authority. Every 100% EOUs have licensed private bonded warehouses within the meaning of Section 58 of the Customs Act, 1962. Once the imported goods have been warehoused in the licensed warehouse of 100% EOU, it shall be for the authority vested with the administrative control over the EOU to take action for any violations under the Customs Act, 1962 including demand on account of short levy/ non-levy, etc. on such warehoused goods. Accordingly, keeping in view the Boards circular No. 31/2003-Cus dated 07.4.2003, the authority vested with the administrative control over the EOU (in this case proper officer of Central Excise Commissionerate, Rajkot) has the exclusive jurisdiction to initiate action for any violations under the Customs Act, 1962 including raising/ confirming demand on account of short levy/ non levy etc. of the nature being dealt with in the instant appeals. I also observe that pronouncing upon the jurisdiction of the officer to raise demand in respect of goods imported by 100% EOU through a Customs Port, Hon'ble Tribunal, Principal Bench, New Delhi in its recent judgment in the case of CCE, Jaipur-I vs. Paras Fab Internation [2009 (237) ELT 711 (Tri. Del.)] has held that the jurisdiction is with the proper officer having administrative jurisdiction over the 100% EOU and not Custom House where the goods are assessed by In-bond bill of entry for the purpose of being warehoused. As the imported goods in this case have admittedly been warehoused in the registered warehouse of the appellant EOU, if at all a demand was required to be made for charging of and/ or to order recovery of duties not covered under the bond executed by the EOU or not covered by the Notification No. 52/2003-Cus dated 31.03.2003, it was for the jurisdictional Central Excise authority having administrative control over the appellant EOU to proceed against the appellant in this direction. In this view of the matter, the impugned orders determining chargeability of NCCD, Cess and interest by the Assistant Commissioner of Customs, Customs Division, Jamnagar on warehoused goods is vitiated and fails on the question of jurisdiction.
12. Learned advocate Shri Mondal appearing for the Revenue has submitted that inasmuch as the respondent EOU has paid NCCD in 67 Cases out of the total 330 into bond bills of entry with the jurisdictional Central Excise authority at Jamnagar after the goods were warehoused, he agrees with the contention of the respondents that jurisdiction for raising demand for short levy or non levy will be with the Central Excise authorities at Jamnagar having jurisdiction over the respondent EOUs and not with the Customs authority at Sikka Port that the goods were assessed on into bond bill of entry. The situation is covered by the Larger Bench decision of the Tribunal in the case of Ferro Alloys Corporation Limited vs. CCE (Appeals) Bhubneshwar. However, he submitted that in respect of 257 bills of entry, NCCD was admittedly paid by the respondents at the Sikka Port at the time of clearance of the goods for warehousing. In these cases, he submits that jurisdiction for raising demand for short levy or non-levy will be clearly with the Customs authority at Sikka Port. As such, he submitted that atleast in those cases where the customs duty was paid at Sikka Port, the jurisdiction to raise the demand would lie with the customs authority at Sikka Port.
13. However, we do not find any merits in the above contention of the learned advocate appearing for the Revenue in artificially dividing the jurisdiction. As held by the Larger Bench in the case of Ferro Alloys Corporation Limited vs. CCE (Appeals) Bhubneshwar, the jurisdiction for raising demand for short levy, in respect of the goods imported by an 100%EOU and warehoused into 100% EOU, which is licensed under Section 58 as a private bonded warehouse, lies with the proper officer having jurisdiction over the EOU and not with Customs House, where the goods were assessed on an into bond bill of entry for the purpose of being warehoused. As such, the said decision clearly lays down that the jurisdiction to raise any demand of short levy or non levy lies with the Central Excise authorities have jurisdiction over 100% EOU. The fact of payment of NCCD or Cess by the respondents, at the time of assessment of into bond bill of entry, will not change the above legal position and would not bifurcate the jurisdiction vesting in two different authorities depending upon the fact of payment of NCCD.
Further, it has to be noted that the payments of NCCD were made by the respondents at Sikka Port under protest. The contention of the learned advocate appearing for the Revenue that the duty was paid under protest only in six cases does not seem to be factually correct, inasmuch as it stands recoded in the order in original, that NCCD was paid by the importer under protest. This leads us to conclude that the payment of duty at Sikka port by the importers under protest was on account of their not accepting the liability to pay NCCD. The fact of payment of duty under protest either at Sikka Port or at Rajkot, keeps the issue of payment of NCCD open and cannot be held to be amounting to acceptance on the part of importers as the very use of expression under protest reflects upon the right of the importers to contest the same. As such we find no infirmity in the view adopted by the learned Commissioner that the customs authority at Sikka Port were not having any jurisdiction, in view of the law declared by the Larger Bench in the case of Ferro Alloys Corporation Limited, referred supra to raise the demand of any short levy/ non levy of NCCD or Education Cess, Secondary and Higher education cess.
14. We also find favour with the submissions raised by the respondents that in any case, in any way of the matter, no duty was required to be paid by them in view of the law declared by the Larger Bench in the case of Paras Fab International. It stands held in the Larger Bench decision that inasmuch as the entire premises of 100% EOU have to be treated as a warehouse, the imported goods warehoused in the said premises and used for the purpose of manufacturing in-bond as authorized under Section 65 of the Customs Act 1962, cannot be treated to have been removed for home consumption. If that be so, the goods are not cleared from 100% EOU and hence there cannot be any demand of duty on the same. The Tribunal accordingly, affirmed the earlier judgment of the Tribunal in the case of STI India Limited reported as 2008 (222) ELT 112 (Tri.). While rendering the said Larger Bench decision, the Tribunal took into consideration the fact that the entire premises of an 100% EOU is licensed as private bonded warehouse under Section 58 of the Customs Act, 1962. The imported goods are required to be imported directly to such premises and a manufacturing is required to be done within the bonded premises. By taking note of the provisions of Customs Act as also the Customs Manual, it was observed that neither speaks of any requirement to pay any duty on the warehoused goods which are used for manufacture in bond nor it require filing of any ex-bond bill of entry at that stage. Sections 68 of the Customs Act, dealing with clearance of the warehoused goods for home consumption require filing of ex-bond bill of entry for payment of import duty and other charges. Section 65, which deals with manufacturing in bond does not required any filing of ex-bond bill of entry or payment of duty before taking warehoused goods for manufacture inside the bonded premises. There is also no provision treating the said goods as deemed to have been removed for the purpose of Customs Act. As such, the Larger Bench observed that if such use has to be treated as removal for home consumption and duty is required to be paid on such use, there will not be any incentive for an assessee to undertake manufacturing in-bond and the provisions made the provisions made in this regard would not be of any use. The policy objective behind enactment of such statutory provisions and designing of EOU scheme to make available duty free material for manufacturing export goods would be entirely defeated.
15. Learned consultant for the Revenue Shri K.M. Mondal had admitted that there is no dispute that the respondent EOU is licensed as a private bonded warehouse in terms of Section 58 of the Customs Act. However, he submits that even than it cannot be said to be at par with any private bonded warehouse, inasmuch as EOU scheme is a special scheme with the main objective to promote exports and the EOU is required to execute a single all purpose B-17 bond in prescribed form undertaking to fulfill the condition stipulated in the exemption notification for EOU. He also submits that there are special procedures enacted for EOUs like procurement of business goods without payment of duty against CT-3 certificate. The detailed procedures are laid down in CBEC manual, required to be followed by the EOU. As such, he submits that though EOU is a private bonded warehouse but is governed by the warehousing provisions contained in Chapter-IX of the Customs Act. They cannot be equated with an ordinary private bonded warehouse where the imported goods are kept temporarily and are cleared as such for home consumption on payment of requisite customs duty by filing ex-bond bill of entry.
As against the above submission, the respondents have submitted that a bare reading of Section 59 of the Customs Act, 1962 which appears under Chapter IX of the Customs Act, would show that it applies to the goods specified in Section 61 (1). Section 61(1) clearly talks of goods intended for use in 100% EOU. As such Section 59 applies to goods imported by a 100% EOU, who have to only execute a bond for twice the duty assessed at the time of filing bills of entry for warehousing and there is no requirement of making any payment at that point of time. As such, there is no difference between a 100%EOU and any other bonded warehouse. Further, the submissions of the Revenue that goods imported by 100%EOU are meant for use in the warehouse whereas goods imported by other bonded warehouse are meant only for temporary storage and their ultimate home consumption, proceeds on an erroneous presumption that no manufacturing involved can be undertaken by an importer other than 100% EOU. Respondents have drawn our attention to the provisions of Section 65 (1) of the Customs Act which clearly providing that owner of any warehoused goods may carryon manufacturing operations in the warehouse in relation of such goods. As such, they have submitted that there is no difference between the 100% EOU warehouse and the other private bonded warehouse. The respondents have further argued that the Revenues contention that inasmuch as they have paid duty in 257 bills of entry at the time of assessment, the Larger Bench decision will not apply to such bills of entries, is totally perverse. Inasmuch as the duty was paid under protest, it will not alter the legal position that a 100% EOU being Customs Bonded Warehouse, there was no requirement to pay duty in respect of the warehoused goods except where the same are cleared from the warehouse for home consumption.
16. However, we find that all arguments raised by Shri Mondal stands considered by the Larger Bench decision of the Tribunal in the case of Paras Fab International. Fine distinction drawn by Shri Mondal between private bonded house and 100% EOU are of no help to the Revenue, inasmuch as the issue on the said dispute stands answered by the Larger Bench in the case of Paras Fab International which even Shri Mondal has also not denied. Further, the fact of payment of duty at the time of filing bill of entry for warehouse Under Protest will also not change the legal position that 100% EOU is required to pay duty only at the time of clearances of warehoused goods for home consumption. To arrive at the decision other than the one declared by the Larger Bench, would amount to sitting in the appeal over the Larger Bench judgment, which is not permissible under the law. As a division bench we feel bound by the law declared by the Larger Bench. By following the law declared by the Larger Bench decision in the case of Paras Fab International that 100% EOU is not required to discharge any duty liability in respect of the imported goods warehoused in their premises and used for the purpose of manufacturing in-bond, we hold that respondents were not required to pay any NCCD, Education Cess and SHE Cess. As such, on this point also the appeals filed by the Revenue are to be rejected. We order accordingly. Cross objections filed by the respondents also get disposed off.
(Pronounced in the Court on _______________)
(B.S.V. Murthy) (Archana Wadhwa)
Member (Technical) Member (Judicial)
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