2015 (3) TMI 690 - SC - Customs

Eligibility for concessional rate of additional duty - Notification No. 64/93-CE - Refund filed on import of Honda Accord car which was manufactured abroad - In this refund claim the assessee sought refund of 10% of total CVD - Held that - levy under Section 3 of the Tariff Act is in the nature of a countervailing duty and is with a view to levy additional duty on an import to counter balance the excise duty payable on a like article indigenously manufactured. The Court also adverted to the scope/effect of Section 3 of the Tariff Act, particularly the expression, Excise Duty for the time being leviable on a like article in produced in India and the explanation thereto - for the purpose of saying what amount, if any, of additional duty is leviable under Section 3(1) of the Customs Tariff Act, it has to be imagined that the articles imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon. Since we are dealing with exemption notification issued under Rule 8 of the Rules, which was the position in Thermax Private Limited (1992 (8) TMI 156 - SUPREME COURT OF INDIA) as well, for the purpose of extending benefit of concession contained in Notification No. 64/93-CE, the principle in Thermax Private Limited (1992 (8) TMI 156 - SUPREME COURT OF INDIA) would clearly become applicable. We may point out that a specific query was put to the learned counsel for the Revenue to the effect that if the importer is not deemed as manufacturer for the purpose of applicability of the said notification, then there cannot be a situation where such benefit of this Notification would be extended to any person, inasmuch as, it was almost impossible to visualise a situation where a foreign manufacturer would import the saloon cars in this country and would utilise those cars for tourist taxis. Revenue had no answer or reply to our query. It is obvious that the purpose of exemption Notification No. 64/93-CE was to extend benefits to the importers of saloon cars to use the said cars for tourist taxis. Going by the spirit and the objective behind this Notification, the irresistible conclusion would be to apply the principle of Thermax Private Limited (1992 (8) TMI 156 - SUPREME COURT OF INDIA) in the present case as well. - assessee shall be entitled to refund of 10% CVD paid by him - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility for concessional rate of additional duty (Counter Vailing Duty - CVD) under Notification No. 64/93-CE.
2. Interpretation of the term "manufacturer" in the context of the notification.
3. Conflicting decisions by the Delhi Bench and Mumbai Bench of the Customs, Excise, and Gold (Control) Appellate Tribunal (CEGAT).

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Rate of Additional Duty (CVD) under Notification No. 64/93-CE:
The central issue in these appeals is whether the assessee, who imported Honda Accord cars for use as taxis, is eligible for a concessional rate of additional duty (CVD) under Notification No. 64/93-CE. The notification exempts goods under Heading 87.03 of the Central Excise Tariff Act, 1985, from duty exceeding 40% ad valorem, with a further 10% exemption for saloon cars used solely as taxis, provided certain conditions are met.

2. Interpretation of the Term "Manufacturer" in the Context of the Notification:
The crux of the dispute is the interpretation of the term "manufacturer" in the proviso to the notification. The Revenue argued that only the manufacturer of the saloon car is entitled to the additional exemption, while the assessee contended that the importer should be deemed the manufacturer for the purpose of this notification. The Mumbai Bench of CEGAT accepted the assessee's interpretation, granting the benefit of the notification, whereas the Delhi Bench rejected it, siding with the Revenue.

3. Conflicting Decisions by the Delhi Bench and Mumbai Bench of CEGAT:
The Mumbai Bench of CEGAT relied on the Supreme Court's judgment in Thermax Private Limited v. Collector of Customs (1992) and Hyderabad Industries Ltd. v. Union of India (1999), which treated the importer as the manufacturer for the purpose of exemption notifications. The Delhi Bench, however, distinguished these judgments and held that the importer could not be deemed the manufacturer for the additional 10% exemption under Notification No. 64/93-CE.

Analysis and Rationale:
The Supreme Court examined the conflicting decisions and the relevant legal principles, particularly focusing on the judgments in Thermax Private Limited and Hyderabad Industries Ltd. The Court noted that Section 3(1) of the Customs Tariff Act mandates that the additional duty (CVD) on imported goods should be equal to the excise duty on a like article if produced or manufactured in India. This principle requires imagining the importer as the manufacturer to determine the applicable excise duty.

In Thermax Private Limited, the Court held that the importer could be deemed the manufacturer for the purpose of availing concessions under Chapter X of the Central Excise Rules. This rationale was based on the need to provide a level playing field between imported and domestically manufactured goods, ensuring that the additional duty on imports mirrors the excise duty on domestic products.

The Supreme Court found that the same reasoning applied to the present case. The purpose of Notification No. 64/93-CE was to encourage the use of imported saloon cars as taxis by offering a concessional rate of CVD. Interpreting the term "manufacturer" to include importers aligns with the notification's objective and ensures that the benefit is practically available.

Conclusion:
The Supreme Court allowed the appeal by the assessee, reversing the Delhi Bench's decision and upholding the Mumbai Bench's view. The Court held that the assessee is entitled to the 10% CVD exemption under Notification No. 64/93-CE, deeming the importer as the manufacturer for this purpose. Consequently, the assessee is entitled to a refund of the 10% CVD paid. The appeals by the Revenue were dismissed, and no costs were awarded.