2005 (8) TMI 532 - AT - Customs

Import of Aromatic Chemicals - benefit of Customs Notification No. 56/98-Cus - Goods sold as such - Meaning of Words and Phrases - Demand - Grants exemption from payment of SAD - HELD THAT - On a careful consideration, we notice that this legal fiction on manufacture incorporated in the Chapter Note of the Excise Tariff cannot be invoked to interpret a Notification under the Customs Tariff Act. The goods have not undergone any change by any process and they remained the same even on repacking. The term as such referred to in the Notification is to mean that the goods should not undergo any process of change. This change has not taken place admittedly on being repacking. Therefore, invocation of Chapter Note of Chapter 29 to hold that the goods have not been sold as such is not correct in the light of the interpretation placed by us. The goods have remained the same and they have sold as such and paid the sales tax. Therefore, the view taken by the department that the goods are not sold as such on being repacked is not a correct one as there is no such definition given to the term as such in the Notification. So long as the same goods are sold as such either in the same condition or in the repacked condition, the benefit cannot be denied to them. Moreover, the purpose of levy of SAD is to make it par with the local sales on payment of sales tax. As the sales tax has been levied in the present case, the question of again levying SAD does not arise. Furthermore, we notice that the High Court of Karnataka, in the case of Lipton India Ltd. v. State of Karnataka 1994 (6) TMI 202 - KARNATAKA HIGH COURT was considering the question as to whether the process of blending, mixing and repacking the tea would convert the tea into a distinct commercial commodity. The assessee contended that they were paying Central Excise Duty on the repacked tea and, therefore, the repacked commodity was commercially different from the unpacked tea. The High Court rejected the above contention and held that tea continues to retain its identity even after the process of blending and repacking and that the definition in Central Excise Law cannot be used to interpret the Sales Tax Law. In the light of this ratio, we hold that the invocation of Chapter Note of Chapter 29 to hold that the goods are different on repacking is not a correct view taken by the Commissioner. The goods remained as such even on repacking as they had not undergone any change. Further, we agree with the contention of the appellant that the demands are time barred. As they had already filed all the details and there is no suppression of facts in the matter, was for the department to call for further details if they had any doubt. In the result, the impugned order is set aside and the appeal is allowed.

Summary

Issues:
1. Interpretation of Customs Notification No. 56/98-Cus. granting exemption from Special Additional Duty (SAD) on imported goods sold "as such."
2. Application of Chapter Note in the Excise Tariff Act to determine if repacking for retail sale disqualifies goods from exemption.
3. Time-barred demands and the impact of Finance Bill 2005 omitting Section 3A of the Customs Tariff Act for levying SAD.

Analysis:
1. The appeal concerned the confirmation of demands of SAD on the import of Aromatic Chemicals under Customs Notification No. 56/98-Cus. The appellants claimed exemption from SAD, arguing that the goods were imported for sale "as such" and a specific declaration was made in the Bill of Entry as required by the Notification. They contended that the invocation of the Chapter Note in the Excise Tariff Act to suggest repacking for retail sale disqualified them from the exemption was incorrect. The appellants highlighted that they had paid sales tax, which, according to them, negated the need for levying SAD to safeguard domestic manufacturers paying sales tax.

2. The contention of the appellants was that the goods were sold "as such" without undergoing any process, and therefore, they were entitled to the benefit of the Notification. They argued that the invocation of the Chapter Note to suggest a manufacturing process due to repacking for retail sale was unfounded. The Tribunal agreed with the appellants, emphasizing that the goods remained the same even after repacking and were sold "as such." The Tribunal held that the legal fiction of "manufacture" under the Chapter Note in the Excise Tariff Act could not be used to interpret the Customs Notification. The Tribunal also cited a previous case where repacking did not change the identity of the goods, supporting the appellants' position.

3. Regarding the time-barred demands and the impact of the Finance Bill 2005 omitting Section 3A of the Customs Tariff Act for levying SAD, the Tribunal noted that the demands were time-barred as all details were provided, and there was no suppression of facts. The Tribunal concluded that since the goods were sold "as such" and sales tax was paid, the levy of SAD was unwarranted. The Tribunal set aside the impugned order, allowing the appeal in favor of the appellants. The judgment highlighted the importance of interpreting the term "as such" in the context of the purpose for which SAD was levied, emphasizing that the goods should not undergo any change to qualify for the exemption under the Customs Notification.