2011 (1) TMI 665 - AT - Customs

Levy of CVD (countervailing duty) equal to duty of excise - Notification No. 30/2004-C.E. dated 9-7-2004 - The respondent had imported grey cotton fabrics in a consignment covered by one Bill of Entry and cotton/lycra fabrics in six consignments covered by six Bills of Entry during the period from April to August 2008. - where the inputs contained in the imported commodity are shown to be not chargeable to duty of excise in India there is no question of an Indian manufacturer of such commodity availing CENVAT credit and consequently there is no question of levy of countervailing duty on the imported commodity.

Summary

Issues:
Whether the benefit of Notification No. 30/2004-C.E. would be admissible to the respondent in respect of countervailing duty on imported fabrics.

Analysis:
The appeal focused on whether the respondent was entitled to the benefit of Notification No. 30/2004-C.E. regarding countervailing duty on imported fabrics. The respondent had imported grey cotton fabrics and cotton/lycra fabrics during a specific period. The assessing authority rejected the importer's claim for exemption from countervailing duty under the said notification. The Commissioner (Appeals) allowed the appeals by remanding the case to the original authority for reconsideration based on earlier remand orders. The Revenue challenged this decision before the Appellate Tribunal.

The Revenue argued that the Commissioner (Appeals) should have made a final decision instead of remanding the case. They cited precedents stating that the benefit of the notification is not available if conditions are not met. Specifically, they referred to a Tribunal decision regarding conditional exemption notifications. The Revenue highlighted that lycra filament, an input in cotton/lycra fabrics, is chargeable to countervailing duty if imported into India, emphasizing the need to comply with notification conditions.

On the other hand, the respondent's counsel relied on a decision where the benefit of the notification was granted to an importer of silk yarn and fabrics from China. It was argued that if inputs are not subject to excise duty in India, countervailing duty on imported commodities is not applicable. The counsel pointed out that the yarn in the imported fabrics was either wholly or predominantly composed of cotton, recognized as not chargeable to duty, thus making the fabrics exempt from countervailing duty.

The Tribunal found merit in the respondent's arguments. They agreed with the counsel's submissions, emphasizing that if inputs in imported commodities are not subject to excise duty in India, countervailing duty cannot be levied. The Tribunal noted that the appellant did not dispute the applicability of the cited decisions and did not claim inputs under a tariff heading not covered by the notification. Therefore, the benefit of exemption from countervailing duty was deemed applicable to the respondent.

Additionally, the Tribunal addressed the issue of remand by the Commissioner (Appeals). They observed that the order was consistent with precedent and did not exceed the Commissioner's jurisdiction. Thus, the legality of the impugned order was upheld, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the impugned order, dismissing the appeal and affirming the respondent's entitlement to the benefit of Notification No. 30/2004-C.E. regarding countervailing duty on imported fabrics.