9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (2) TMI 484 - HC - Central ExciseUnconstitutionality of Explanation Clause (G) to SSI Notification No.8 of 2003 - Exports to Nepal in SSI exemption - notification discriminatory - Held that - For the purpose of SSI exemption under said notification No.8/2003, however, it would continue to be treated as clearances for home consumption. This will be plainly discriminatory vis-a-vis other SSI units who might be having exports to countries other than Nepal as compared to the SSI units like the petitioners whose substantial exports may be to Nepal. Under such circumstances, the former set of SSI units would claim total exclusion of all clearances made by them to all countries while computing exemption limit under notification No.8/2003, whereas the later would be subjected to inclusion of value of exports made to Nepal for computation of such limit. Since with effect from 01.03.2012 exports to Nepal are put at par with exports to other countries, the petitioners and other SSI units making exports to the countries other than Nepal form a homogeneous class. Both sets of manufacturers are SSI units. Both export their goods to various countries. There cannot be further sub-classification of SSI units exporting to Nepal and those SSI units exporting to the countries other than Nepal since after 01.03.2012 the distinction has been obliterated. This distinction which was prevalent till 01.03.2012 lost its relevance on account of change of the Government of India policy. Continued reference of exports to Nepal in SSI exemption notification No.7/2003 would render, to that extent, such notification discriminatory and, therefore, violative of Article 14 of the Constitution. Under the circumstances, the portion and Nepal appearing in Explanation Clause (G) to SSI Notification No.8 of 2003 is declared unconstitutional with effect from 01.03.2012.
Issues Involved:
1. Challenge to Notification No.8 of 2003. 2. Entitlement to full exemption limit of Rs. 150 lakhs without including exports to Nepal. 3. Validity of Order-in-Original and Appellate Order. Issue-wise Detailed Analysis: 1. Challenge to Notification No.8 of 2003: The petitioners, small scale industrial units engaged in manufacturing ceramic and pottery items, challenged a portion of Notification No.8 of 2003 dated 01.03.2003. They argued that the notification, by including exports to Nepal within the exemption limit for home consumption, was discriminatory and arbitrary. The notification provided an exemption from excise duty for the first clearances up to Rs. 150 lakhs, but included exports to Nepal within this limit, unlike exports to other countries. 2. Entitlement to Full Exemption Limit of Rs. 150 Lakhs Without Including Exports to Nepal: The petitioners contended that due to the revised Indo-Nepal Treaty of October 2009 and subsequent changes in bilateral trade relations, exports to Nepal should be treated on par with exports to other countries. The Government of India had issued several notifications amending the rules to exclude Nepal from the special treatment it previously received, aligning it with other countries for rebate and bond furnishing purposes under Rules 18 and 19 of the Central Excise Rules, 2002. Despite these changes, the SSI notification No.8 of 2003 was not amended, causing continued inclusion of exports to Nepal within the exemption limit, which the petitioners argued was an oversight and discriminatory. 3. Validity of Order-in-Original and Appellate Order: The Assistant Commissioner of Central Excise issued an Order-in-Original confirming the central excise duty liability of Rs. 4.81 lakhs and imposed a matching penalty under section 11-AC of the Central Excise Act. The petitioners' appeal against this order was dismissed by the Commissioner. The petitioners sought to strike down the words "and Nepal" in para 5 (G) of the SSI notification No.8 of 2003 and set aside the Order-in-Original and the Appellate Order. Judgment Analysis: The court acknowledged that the bilateral treaty changes between India and Nepal necessitated treating exports to Nepal on par with exports to other countries. It noted that the Government of India had amended several notifications under Rules 18 and 19 to reflect this change but failed to amend the SSI notification No.8 of 2003. This omission was recognized even in a high-level conference of Customs officials, which recommended amending the notification to align with the revised trade policies. The court found the continued inclusion of exports to Nepal within the exemption limit under the SSI notification discriminatory and arbitrary. It held that such inclusion violated Article 14 of the Constitution, as it created an unjustifiable distinction between SSI units exporting to Nepal and those exporting to other countries. The court declared the portion "and Nepal" in Explanation Clause (G) of the SSI notification No.8 of 2003 unconstitutional with effect from 01.03.2012. Conclusion: The court allowed the petitions, rendering the Order-in-Original and the Appellate Order invalid. It emphasized that the Government of India's failure to amend the SSI notification No.8 of 2003, despite changes in bilateral trade relations, resulted in discriminatory treatment of SSI units exporting to Nepal. The judgment ensures that exports to Nepal are treated on par with exports to other countries for the purpose of calculating the exemption limit under the said notification.
|
