Custom, Excise & Service Tax Tribunal
Jain Irrigation Systems Ltd vs Cce Nashik on 17 October, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
Excise Appeal No. 1574 of 2011
(Arising out of Order-in-Appeal No. AKP/152/NSK/2011 dated
30.06.2011 passed by the Commissioner of C.Ex.(Appeals), Nashik)
M/s. Jain Irrigation Systems Ltd. .....Appellant
Jain Plastic Park,
National Highway no. 6,
Bambhori, Dist. Jalgaon
Vs.
Commissioner of Central Excise, Nashik .....Respondent
Nashik Commissionerate, Kendriya Rajaswa Bhavan, Gadkari Chowk, Nashik APPEARANCE:
Shri M.H. Patil, Advocate for the appellant Shri Ajay Kumar, Addl. Comm(Authorised Representative) for the respondent CORAM: HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) FINAL ORDER No: A/86840 / 2019 DATE OF HEARING : 15.04.2019 DATE OF DECISION : 17.10.2019 PER: C J MATHEW This appeal of M/s Jain Irrigation Systems Ltd, a manufacturer of 'PVC pipes and fittings', lies against order-in-appeal no. AKP/152/NSK/2011 dated 30.06.2011 of Commissioner of Central -2- E/1574/2011 Excise (Appeals), Nashik which has upheld the order of the original authority confirming demand of `5,51,92,879/- being the duty leviable on supplies effected between 1st March 1994 and 2nd April 1994 to Superintendent Engineer, Irrigation Department, Patna for execution of 'Bihar Public Tubewell Project' which was awarded pursuant to 'international competitive bidding' process. Appellant is a '100% export oriented unit' operating against Letter of Permission (LoP) issued by the jurisdictional Development Commissioner and the impugned goods were proceeded against on the premise that these goods were being cleared into the 'domestic tariff area' on which duty liability arises under section 3 of Central Excise Act, 1944, in show cause notice issued on 12th May 1994.
2. According to Learned Counsel for appellant, approval of jurisdictional Development Commissioner had been obtained on 15th October 1993 before the commencement of bid, was reconfirmed on 20th April 1994 and thereafter the Ministry of Commerce, Government of India vide its letter dated 19th September 1994 impressed upon the central excise authorities the need for such implementation. He contends that the eligibility for consideration of these clearances as 'deemed exports,' provided for in paragraph 103 of the Export Import Policy (as it was then), and the permission accorded by the jurisdictional Development Commissioner would exclude them from duty liability. He drew attention to paragraph 121E of Export Import Policy (AM 1992-1997) and paragraph 9.10 of the Policy to make it -3- E/1574/2011 abundantly clear that all the privileges of fulfilment of export obligation should attach to the goods so cleared. According to him, the procedure is clearly laid down in paragraph 184 and 185 of the Handbook of Procedures Vol. I (AM 1992-1997) which, in addition, place the burden of discharge of excise duty and other taxes on the purchaser of the goods. He placed reliance on the decision of the Tribunal in Sri Varalakshmi Jute Twine Mills P Ltd v. Commissioner of Central Excise, Visakhapatnam [2011 (266) ELT 241 (Tri-Bang.)] holding that, for clearance effected prior to 11th May 2001, duty liability under section 3(1) of Central Excise Act, 1944 would be a consequence only when approval of the jurisdictional Development Commissioner has not been sought and that such clearances are entitled to the benefit of notification no. 125/84-CE dated 26th May 1984. Placing reliance on the decision of the Hon'ble Supreme Court in Suchitra Components Ltd v. Commissioner of Central Excise, Guntur [2007 (78) RLT 463 (SC)] to the effect that any circular that confer beneficial effect should be applied retrospectively, entitlement of exemption in circular no. 618/9/2002-CX dated 13th February 2002 of Central Board of Excise & Customs was claimed. Reliance is also placed on the overruling of the Larger Bench of the Tribunal in Jaipur Golden Transport Co Ltd v. Commissioner of Central Excise, Surat [2007 (215) ELT 503 (Tri-LB)], by the Hon'ble Supreme Court in Commissioner of Central Excise, Visakhapatnam- II v. NCC Blue -4- E/1574/2011 Water Products Ltd [2010 (258) ELT 161 (SC)] upholding the contrary decision of the Tribunal.
3. According to Learned Counsel, the effect of notification no. 125/84-CE dated 26th May 1984 would entitle 'deemed exports' to be charged to nil rate of duty. Alternatively, it was contended that the benefit of notification no. 101/93-CE dated 27th December 1993 and notification no. 260/92-Cus dated 27th August 1992 should be made available to them. Likewise, pointing out to notification no. 82/92- CE dated 27th August 1992 which enables duty free clearance by person holding 'advance release order' and notification no. 108/95-CE dated 28th August 1995, extending duty free clearance to certain specified international organisation, he claimed that the duty liability would not arise in any case. Furthermore, he contends that the benefit of cum-duty should also be extended.
4. Learned Authorised Representative in his detailed submissions pointed out that the issues are the dutiability of goods cleared under paragraph 103 of Export Import Policy, that the clearances should be treated as not having been sold in India and whether the respective benefits of notification and valuation, as claimed by appellant, should be made available. Extracting from different portion of the impugned order, he submits that the lower authorities have responded appropriately to each of the issues and sought dismissal of the appeal. He placed reliance on the decision of the Tribunal in Jeevan Diesels & -5- E/1574/2011 Electricals Ltd v. Commissioner of Central Excise Puducherry [2016 (340) ELT 594 (Tri-Chennai)], of the Hon'ble High Court of Karnataka in Commissioner of Customs, Bangalore v. Leela Scottish Lace Ltd [2011 (268) ELT 185 (Kar.)] and of the Hon'ble Supreme Court in Commissioner of Central Excise v. Mewar Bartan Nirman Udyog [2008 (231) ELT 27 (SC)]; in the last, attention was drawn to the mandate of strict interpretation as laid down therein.
5. Having heard the rival submissions at length, the facts that remain undisputed are that the appellant is a '100% export oriented unit' entitled to duty-free clearance of raw materials, consumables and capital goods required for manufacture of the permitted products intended for export. The supply of impugned goods to a project funded by the International Development Agency, and against 'international competitive bidding' is also undisputed. The claim of appellant that supplies to the agencies, who are entitled otherwise to import without payment of duty should also logically be extended to '100% export oriented unit' which are obliged under the Letter of Permission (LoP) to export goods and earn foreign exchange. There is no doubt that such supplies do result in saving of foreign exchange, and for that reason, are extended the benefits of 'deemed export' without having to leave the shores of India. However, we take note that these are prescriptions under the Export Import Policy and entitlements are restricted to the incentives enumerated therein. It is also not the case of the assessee that the central excise authorities or -6- E/1574/2011 customs authorities are seeking to deny them the benefit granted at the time of import. In terms of Export Import Policy, the eligibility of inclusion of such clearances in the prescribed export obligation automatically derives for them the benefit of import duty exemption.
6. The same, however, cannot extend to the finished products which are governed by exemption notification no. 125/84-CE dated 26th May 1984 applicable except when sold in India. The logic for that does not require much elaboration; the exigibility to central excise duty arises upon manufacture and this exemption is intended to sequester them from the obligation of such duties which, would not crystallise when cleared for export. By any description and, notwithstanding the communications emanating from the jurisdictional Development Commissioner and Ministry of Commerce, the clearance cannot be designated as anything other than sale in India. Thereby the provisions of Section 3 of Central Excise Act, 1944 with appropriate duty liability will get triggered.
7. In re Sri Varalakshmi Jute Twine Mills P Ltd, the issue was limited to the chargeability under section 3(1) of Central Excise Act, 1944 vis-à-vis the proviso, on goods clandestinely removed which would apply only when the permission of the Development Commissioner was not obtained. In re Suchitra Components Ltd, the claim of the appellant for applicability of circular dated 13th February 2002 which was considered therein does not appear to be of much -7- E/1574/2011 relevance in this dispute as the intent of the circular was to prevent proceedings being initiated under Customs Act, 1962. Impliedly, it would appear that in those matters dealt with in the circular, the duty foregone were sought to be recovered instead of levy of duties of central excise. Considering all these aspects, which do not come to the aid of appellant, the provisions of section 3 of Central Excise Act, 1944 would apply to all clearances that are not exported out of India or supplied in terms of exemption afforded by notifications under section 25 of Customs Act, 1962.
8. In terms of the claim for the benefit of notification no. 260/92- Cus dated 27th August 1992, it would appear that this was intended for material procured to manufacture goods which were supplied to specified agency for specified projects. It is worth noting that the condition prescribed in the said notification were relevant to the cases of licensing which were attendant upon these projects specified therein and is limited to the inputs procured for such. It is not the case of the appellant herein that, at the time of import of materials that ultimately found use in the impugned goods, supply to the specified project was intended. Furthermore, the benefits of a claim under the Export Import Policy as implemented through a specific notification under the taxing statute and notification, however akin it may be, is not a permissible substitution; the former is contingent upon a letter of permission contemplated in the scheme while the latter is not so restricted.
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9. The clearance have been effected to the 'domestic tariff area' with permission accorded by the jurisdictional Development Commissioner in accordance with the prescription in the Export Import Policy. The benefits of various concessions available therein would apply if within the quantitative prescriptions in the Export Import Policy and the relevant notification. Furthermore, the Learned Counsel for the appellant has furnished a worksheet in terms of which the duty liability is computed at `99,00,973.50. The impugned order has not examined the applicability of the said notification or the submission on the computation of the duty liability. Accordingly, holding that the proviso in Section 3(1) of Central Excise Act, 1944 is applicable to the impugned goods, the matter is remanded back to the original authority for computation of the duty liability after applying eligible notifications and scrutinising the claim of the appellant to a lesser assessable value.
(Order pronounced in open court on 17.10.2019) (C J Mathew) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) //SR1610171017101710