2015 (9) TMI 458 - SC - Customs

Denial of benefit of Exemption Notification No. 34/98-Cus Pig hair bristles that were imported were sold against which revenue issued show cause notice stating that since these pig hair bristles were sold without any sales tax been paid thereon, benefit of Exemption Notification would not be available to importer Commissioner, concluded that Exemption Notification exempting pig hair bristles from tax would amount to case where no tax is chargeable on sale of goods and therefore, benefit of said Notification would not be available to importer Tribunal vide impugned order reversed order of commissioner Held that - on reading of Sections 3 and 7 of Delhi Sales Tax Act, 1975, it becomes clear, that so far as imported item, viz., pig bristles is concerned, no sales tax, in fact, is charged on same Since no tax is chargeable on sale of such goods, said Exemption Notification will therefore, not apply We, accordingly, set aside judgment of tribunal and restore Commissioners order Appeal disposed of.

Summary

Issues:
- Denial of benefit of Exemption Notification No. 34/98-Cus. dated 13.06.1998

Analysis:
The judgment deals with the issue of denial of the benefit of Exemption Notification No. 34/98-Cus. dated 13.06.1998. The notification specifies rates of special additional duty in respect of imported goods falling within the First Schedule to the Customs Tariff Act. The exemption under this notification is granted only if the importer sells the goods post-importation from an area where no tax is chargeable on the sale of goods. In this case, pig hair bristles were imported and sold in the years 1998-1999 and 1999-2000. The Revenue contended that since these goods were sold without paying sales tax, the benefit of the exemption notification should not apply.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held in favor of the assessee, stating that the exemption notification only deferred or exempted the payment of tax for a specific period but did not render the goods non-chargeable to tax. The CESTAT noted that the goods were otherwise chargeable to tax, and the exemption notification only provided a concession in tax. The CESTAT's decision was challenged on the grounds that it did not consider Section 7 of The Delhi Sales Tax Act, 1975, which classified pig hair bristles as tax-free goods.

The Supreme Court analyzed Section 7 of the Delhi Sales Tax Act, which states that no tax shall be payable on the sale of goods specified in the Third Schedule. Pig hair bristles were listed in Entry 67 of the Third Schedule, indicating that no sales tax was charged on these goods. Therefore, the Court concluded that since no tax was chargeable on the sale of pig hair bristles, the proviso to the Exemption Notification No. 34/98-Cus. would not apply. The Court set aside the CESTAT's judgment and upheld the decision of the Commissioner, denying the benefit of the exemption notification to the importer.