2010 (6) TMI 410 - AT - Customs

DEPB scheme - Duty Entitlement Pass Book on exports at specified rates and subsequently debiting amount equal to duty payable Exemption from Education cess - full exemption from Customs duty - under Notification No. 89/2005-Cus.and notification No. 45/2002-Cus - Reliance Industries judgment stand reversed by higher appellate forum - appeal is rejected

Summary

Issues:
1. Whether Education Cess is leviable on fully exempted DEPB imports?
2. Interpretation of Notification No. 89/2005-Cus. in comparison to Notification No. 45/2002-Cus.

Issue 1:
The main issue in this case was whether Education Cess is applicable on fully exempted DEPB imports. The appellant contended that Education Cess should not be debited from the DEPB under the relevant notifications and circulars. The appellant relied on a previous decision by the Hon'ble CESTAT in the case of CC v. Reliance, which held that no education cess is leviable on fully exempted DEPB imports. The Commissioner (Appeals) also supported this view by referring to a similar case involving Reliance Industries Ltd. where it was held that full exemption from Customs duty under the DEPB scheme implies no debits from the DEPB scrip are required. The Commissioner further emphasized that Education Cess should not be levied on fully exempted DEPB imports as the customs duty is nil in such cases. The Tribunal upheld this view and rejected the Revenue's appeal, concluding that no Education Cess is leviable on fully exempted DEPB imports.

Issue 2:
The second issue revolved around the interpretation of Notification No. 89/2005-Cus. in comparison to Notification No. 45/2002-Cus. The Revenue argued that there was a vital difference between the two notifications, specifically pointing out condition No. (vi) in Notification No. 89/2005-Cus., which was not present in the earlier notification. However, the Tribunal found that despite the additional condition in Notification No. 89/2005-Cus., the essence of the exemption and the operation of the DEPB scheme remained the same as in the earlier notification. The Tribunal held that the decision in the Reliance Industries case, based on Notification No. 45/2002-Cus., was applicable to the current case involving Notification No. 89/2005-Cus. The Tribunal dismissed the Revenue's appeal, emphasizing that the change in the period of the notification did not alter the applicability of the law declared in the Reliance Industries case.

In conclusion, the Appellate Tribunal CESTAT, Ahmedabad, in the judgment delivered by Ms. Archana Wadhwa and Shri B.S.V. Murthy, clarified that Education Cess is not leviable on fully exempted DEPB imports and upheld the decision of the Commissioner (Appeals) in this regard. The Tribunal also interpreted Notification No. 89/2005-Cus. and established that the law declared in the Reliance Industries case applied to the current scenario despite minor differences in the notifications. The Revenue's appeal was rejected, affirming the position that Education Cess should not be debited from DEPB scrips for fully exempted imports under the relevant notifications and legal precedents.