2015 (11) TMI 1235 - SC - Customs

Clearance of rejects of all wool fabrics and polywool fabrics into DTA without payment of appropriate duties of surcharge , Special Additional Customs Duty and Countervailing duty (CVT) - Held that - No error in the view taken by the Commissioner which is upheld by the CESTAT also that Section 3 was amended retrospectively vide Notification No. 2/95-CE dated 04.01.1995 which was amended by Notification No. 38/99 dated 16.09.1999 making it prospectively. - larger Bench of the Tribunal in the case of Fabworth (India) Ltd. v. Commissioner of Central Excise, Nagpur 2002 (6) TMI 60 - CEGAT, COURT NO. IV, NEW DELHI has taken the same view which has been accepted by the Department as no appeal was preferred thereagainst. The view was reiterated in Modern Denim Ltd. v. Commissioner of Central Excise, Ahmedabad 2006 (8) TMI 224 - CESTAT, MUMBAI . - Decided against Revenue.

Summary

Issues:
1. Duty on 'rejects' of wool fabrics and polywool fabrics cleared into DTA without payment of appropriate duties.
2. Interpretation of Section 3 of the Customs Tariff Act 1975.
3. Retrospective amendment of Section 3.

The judgment deals with the issue of the assessee clearing 'rejects' of wool fabrics and polywool fabrics into DTA without paying the appropriate duties of 'surcharge,' 'Special Additional Customs Duty,' and 'Countervailing duty' (CVT). A show cause notice was issued, and the respondent contested it, arguing that the duty was not leviable under Section 3 of the Customs Tariff Act 1975 at the relevant time. The Commissioner noted that Section 3 was amended in 1999, and therefore, any demand prior to 1999 could not be made, leading to the proceedings being dropped. This decision was upheld by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). However, for the period after 1999, the matter was remitted back for fresh consideration.

The Supreme Court focused on the period before 1999 and upheld the Commissioner and CESTAT's decision that Section 3 was amended retrospectively by Notification No. 2/95-CE dated 04.01.1995, which was later amended by Notification No. 38/99 dated 16.09.1999 to make it prospective. The Court agreed with this view, citing the case of 'Fabworth (India) Ltd. v. Commissioner of Central Excise, Nagpur' and 'Modern Denim Ltd. v. Commissioner of Central Excise, Ahmedabad,' where a similar interpretation was accepted by the Department without any appeals being filed.

Consequently, the appeals were dismissed, affirming that the duty demand prior to 1999 was not applicable due to the retrospective amendment of Section 3. The judgment clarifies the retrospective nature of the amendment and the consistent interpretation by the Tribunal and previous cases, leading to the dismissal of the appeals in this matter.