2016 (10) TMI 943 - AT - Customs

Interpretation of notification - refineries and power projects - Cables are exempted from all duties of customs under N/N. 23/1998-Cus dated 02.06.1998 - import of raw materials for manufacture of equipment required for refineries instead of cables - whether the appellant is eligible for benefit of exemption Notification No. 23/1998-Cus dated 02.06.1998 on import of raw material for manufacture of cables instead of cables? - Held that - the appellants imported instead of cables, raw materials for manufacture of cables. On perusal of Sl.No. 17 of list 27(Sl. No. 164 of the Table) annexed to the said notification the item that is listed for benefit of duty concession are goods specified in list 27 required for setting up crude petroleum refineries . The list 27, Sl.No.17, interalia, covers all types of cables . However, nowhere in the aforesaid notification or lists/entries thereof, are raw materials for manufacture of cables included or permitted for duty exemption benefit. This being the case, the appellant cannot stretch the scope of the notification and argue that if cables are extended exemption therein, raw materials for manufacture of such cables would also come within the permissible ambit of exemption. This is definitely not the benefit intended by the said notification. It is settled law that exemption notification has to be strictly interpreted. Reliance placed on the decision of B.P.L. Ltd. Vs Commr. of C. Ex., Cochin-II 2015 (5) TMI 248 - SUPREME COURT - appellant cannot claim unintended benefits by imported items which are not listed or included in the notification no. 23/98-Cus dated 02.06.1998. Whether interest liability will accrue in provisional assessments initated in July/August 1998, i.e. before 13.07.2006? - Held that - the Tribunal in Sterlite Industries (India) Ltd. Vs CC, Trichy 2013 (11) TMI 999 - CESTAT CHENNAI held that in respect of provisional assessment prior to 13-7-2006 interest would not be leviable by invoking Section 18 (3) of the Customs Act, 1962 - at the time of resorting to the provisional assessment there was no statutory provision authorizing imposing of interest on the differential duty, (the provision which was introduced w.e.f. 13-7-2006), hence we hold that there cannot be demand of interest liability. Premature demand - demand issued before finalization of provisional assessment - Held that - while the notification 23/98-Cus extended duty concessions, interalia, to all types of cables required for setting up crude petroleum refinery, however the goods actually imported were raw materials for the manufacture of cables and the appellant attempted to obtain undue benefit not available to such items by wrongly claiming benefit of notification no.23/98 supra. This being so, in the peculiar facts of this case, the appellant could not have claimed benefit of notification in any case, thus non finalization of assessment is not material. Duty demand sustained - benefit of notification not available - demand of interest not sustainable - appeal disposed off - decided partly in favor of appellant.

Summary

Issues Involved:
1. Eligibility for benefit of exemption under Notification No. 23/1998-Cus
2. Accrual of interest liability in provisional assessments before 13.07.2006

Analysis:

Issue 1: Eligibility for benefit of exemption under Notification No. 23/1998-Cus
The case involved a dispute regarding the eligibility of the appellant for the benefit of exemption under Notification No. 23/1998-Cus. The appellant, a manufacturer of cables, imported raw materials for the manufacture of cables intended for supply to oil refineries. The appellant claimed that since cables were exempted under the notification, raw materials for cables should also be covered. However, the Tribunal held that the notification specifically listed cables for duty concession, not raw materials. The Tribunal emphasized the principle of strict interpretation of exemption notifications, citing legal precedents that support this approach. It concluded that the appellant could not claim benefits for items not explicitly included in the notification, thereby denying the appellant's claim for exemption.

Issue 2: Accrual of interest liability in provisional assessments before 13.07.2006
The second issue revolved around the demand for interest liability in provisional assessments initiated before 13.07.2006. The Tribunal referred to a previous case law where it was established that interest would not be leviable on provisional assessments made before the specified date. Given that the statutory provision authorizing interest on differential duty was introduced after the provisional assessments in this case, the Tribunal ruled that no interest liability could be imposed. Additionally, the appellant argued that the demand was premature as it was issued before finalization of the provisional assessment. However, the Tribunal noted that the appellant had attempted to claim undue benefits by misinterpreting the notification, making the non-finalization of assessment immaterial in this context. Consequently, the Tribunal modified the impugned order by setting aside the demand for interest but upheld the duty demand, partially allowing the appeal on these terms.

In conclusion, the Tribunal's judgment clarified the eligibility criteria for exemption under the notification and addressed the issue of interest liability in provisional assessments, providing a detailed analysis based on legal principles and precedents.