2022 (2) TMI 1355 - AT - Customs

CENVAT Credit on inputs - benefit of Notification No. 30/2004-CE dated. 19.07.2014 as amended by Notification No. 34/2015-CE dated. 17.07.2015 - benefit of the said notification on the ground that the condition provided in the proviso has not been complied - Board Circular No. 1005/12/2015-CX dated. 21.07.2015 - appellant has not lodged any protest at the time of assessment - failure to fulfill the conditions of Notification No. 30/2004-CE dated 09.07.2004 as amended i.e. non taking of Cenvat Credit on inputs/capital goods. HELD THAT - The appellant in principle entitle for exemption Notification as the condition of non availment of Cenvat Credit need not to be satisfied by the importer in respect of imported goods. The same has been clarified by the Central Board of Excise and Customs vide Circular No. 1005/12/2015-CX dated 21.07.2015. The above circular was issued as a consequent to the Hon ble Supreme Court judgment in the case of M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI 2015 (4) TMI 561 - SUPREME COURT and AIDEK TOURISM SERVICE PVT. LTD Vs. COMMISSIONER OF CUSTOMS, NEW DELHI 2015 (3) TMI 690 - SUPREME COURT . Wherein, it was held that the condition of non availment of Cenvat Credit on input/capital goods need not to be satisfied by the buyer/importer of such goods. In view of the above circular, the appellant was entitled for exemption from CVD at the time of clearance of the imported goods in terms of Notification No.30/2004-CE dated 09.07.2004. Needless to say that, it is a settled legal position by the Hon ble Apex Court that board circular/instructions are binding on the departmental officers. Therefore, the Assessing Officers while assessing the Bill of Entry was duty bound to verify the eligibility of the exemption Notification No. 30/2004-CE and to extend the benefit of the same. However, the Assessing Officer has not given any heed in extending the benefit of the said notification. The appellant are clearly entitled for the exemption Notification No. 30/2004-CE dated 09.07.2004 for exemption from CVD on the imported goods. Appeal allowed.

Issues Involved:
1. Entitlement to exemption under Notification No. 30/2004-CE.
2. Compliance with conditions of the notification.
3. Impact of not lodging a protest at the time of assessment.
4. Applicability of Board Circular No. 1005/12/2015-CX.
5. Precedent cases and their applicability.

Issue-wise Detailed Analysis:

1. Entitlement to exemption under Notification No. 30/2004-CE:
The appellant imported Polyester Knitted Fabrics and paid Customs duty including CVD. They later challenged the assessment, seeking the benefit of Notification No. 30/2004-CE, which provides exemption from CVD. The appellant argued that the exemption should apply as they did not avail Cenvat Credit on inputs, aligning with the conditions of the notification. The Tribunal found that the appellant was entitled to the exemption as the condition of non-availment of Cenvat Credit need not be satisfied by the importer, as clarified by the Central Board of Excise and Customs (CBEC) Circular No. 1005/12/2015-CX.

2. Compliance with conditions of the notification:
The Commissioner (Appeals) denied the exemption on two grounds: the appellant did not lodge a protest at the time of assessment, and they failed to fulfill the condition of non-availment of Cenvat Credit. The Tribunal held that the condition of non-availment of Cenvat Credit on inputs/capital goods need not be satisfied by the importer, as established by the Supreme Court in the case of SRF Ltd. vs. Commissioner of Customs and reiterated in the CBEC Circular. Therefore, the appellant's failure to meet this condition did not disqualify them from the exemption.

3. Impact of not lodging a protest at the time of assessment:
The Tribunal rejected the Commissioner (Appeals)'s reasoning that the appellant's failure to lodge a protest at the time of assessment precluded them from claiming the exemption. Citing the Bombay High Court's judgment in Hero Cycles Ltd., the Tribunal emphasized that the assessing officer had a duty to consider the exemption notification, even if the appellant did not explicitly claim it at the time of assessment. The Tribunal noted that the benefit of an exemption notification could be claimed at any stage.

4. Applicability of Board Circular No. 1005/12/2015-CX:
The Tribunal relied heavily on CBEC Circular No. 1005/12/2015-CX, which clarified that the condition of non-availment of Cenvat Credit on inputs/capital goods need not be satisfied by the importer. This Circular was issued following the Supreme Court's judgment in SRF Ltd. vs. Commissioner of Customs, which held that the benefit of excise duty exemption available to domestic manufacturers would also apply to importers for the purposes of CVD. The Tribunal underscored that board circulars are binding on departmental officers.

5. Precedent cases and their applicability:
The Tribunal referred to several precedent cases, including SRF Ltd. vs. Commissioner of Customs, AIDEK Tourism Service Pvt. Ltd. vs. Commissioner of Customs, and Enterprises International Ltd. vs. Commissioner of Customs, to support the appellant's entitlement to the exemption. The Tribunal noted that the decision in Enterprises International Ltd. had upheld the exemption under Notification No. 30/2004-CE, even after considering the judgment in Prashray Overseas Pvt. Ltd. The Tribunal concluded that the appellant was entitled to the exemption based on the settled legal position established by these cases.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeals with consequential relief, affirming the appellant's entitlement to the exemption under Notification No. 30/2004-CE for exemption from CVD on the imported goods. The Tribunal's decision was pronounced in open court on 18.02.2022.

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