2015 (4) TMI 561 - SC - Customs

Import of Nylon Filament Yarn - Denial of Exemption form CVD under Notification No. 6/2002-CE dated 01.03.2002 - denial on the ground that cenvat credit was availed - whereas it was not possible to avail the credit - Held that - the CEGAT has come to the conclusion that when the credit under the CENVAT Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India 1987 (10) TMI 53 - HIGH COURT OF JUDICATURE AT BOMBAY , wherein the Bombay High Court had held that it is impossible to imagine a case where in respect of raw nephtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid. Thus, the CEGAT found that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied. - Following decision of Thermax Private Limited v. Collector of Customs (Bombay), New Customs House 1992 (8) TMI 156 - SUPREME COURT OF INDIA and Hyderabad Industries Limited v. Union of India 1999 (5) TMI 29 - SUPREME COURT OF INDIA and AIDEK Tourism Services Private Limited v. Commissioner of Customs, New Delhi 2015 (3) TMI 690 - SUPREME COURT appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/02 - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of condition for exemption from payment of additional duty/Countervailing Duty (CVD) under Notification No. 6/2002.
2. Applicability of CENVAT credit rules in determining eligibility for exemption.
3. Comparison of previous judgments and their impact on the present case.

Issue 1: Interpretation of exemption condition:
The case involved the interpretation of condition No. 20 of Serial No. 122 of Notification No. 6/2002 regarding the exemption from payment of additional duty/CVD. The appellant imported Nylon Filament Yarn and claimed nil rate of additional duty by relying on the mentioned exemption. The authorities denied the exemption citing non-fulfillment of condition No. 20, which required no availing of credit under CENVAT Credit Rules. The CEGAT affirmed the denial, emphasizing the inadmissibility of CENVAT credit to the appellant. However, the Supreme Court analyzed previous judgments and concluded that the denial based on inadmissibility of CENVAT credit was not valid.

Issue 2: Applicability of CENVAT credit rules:
The appellant did not avail of CENVAT credit, but the authorities argued that since no credit was admissible under CENVAT Rules, the condition for exemption was not fulfilled. The CEGAT relied on the Bombay High Court judgment to support this reasoning. However, the Supreme Court disagreed, citing judgments in Thermax Private Limited and Hyderabad Industries Limited cases. The Court clarified that the inadmissibility of CENVAT credit did not affect the fulfillment of the condition for exemption under Notification No. 6/2002.

Issue 3: Comparison with previous judgments:
The Supreme Court compared the present case with previous judgments to establish the correct interpretation of the law. Referring to the AIDEK Tourism Services Private Limited case, the Court reiterated the principles laid down in Thermax Private Limited and Hyderabad Industries Limited cases. The Court emphasized that the levy of additional duty under Section 3(1) did not require the actual manufacture or production of a like article in India. Applying these principles, the Court held that the appellants were entitled to exemption from payment of CVD under Notification No. 6/2002, setting aside the demand raised by the authorities.

In conclusion, the Supreme Court allowed the appeals, ruling in favor of the appellants and holding that they were entitled to exemption from payment of CVD under Notification No. 6/2002. The judgment clarified the interpretation of the exemption condition, the applicability of CENVAT credit rules, and the impact of previous judgments on the present case.