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2017 (10) TMI 159 - AT - CustomsAdditional Duty of Customs (ADC) - Import of Nylon Filament Yarn - N/N. 29/2004-CE dated 09.07.2004, as amended - Department took the view that the imported goods do not satisfy the conditionalities of the said notification and hence the concessional rate of duty would not be available to them - whether the goods imported by the appellants will fall under the beneficial impact of Central Excise exemption N/N. 29/04-CE, Sl.No. 5A for the purpose of discharging additional duty of customs (CVD)? Held that - Additional duty of customs, also known as countervailing duty (CVD) is imposed to provide a level playing field for the indigenous goods who have to bear the brunt of local taxes, in particular central excise duty levied on manufacture of identical goods in India. Also, goods imported into India in most cases benefit from export incentives like duty drawback in the concerned country of export. The important factum, however, is that the additional duty of customs has to be equal to the excise duty for the time being leviable - Honble Supreme Court in the case of Thermax Pvt. Ltd. Vs. Collector of Customs 1992 (8) TMI 156 - SUPREME COURT OF INDIA , held that CVD will be equal to excise duty for the time being leviable on a like article if produced or manufacture in India. The Honble Apex Court went on to further observe that we have to forget that the goods are imported and imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called to pay in that event. In the case of the present appellants themselves held that for additional duty, actual manufacture or production of a like article was not necessary and for that quantification of additional duty imported article has to be imagined as to be manufactured or produced in India and then to see what excise duty was leviable there on. Appeal dismissed - decided against appellant.
Issues Involved:
1. Eligibility for concessional rate of Additional Duty of Customs (ADC) under Notification No. 29/2004-CE. 2. Interpretation of the conditionalities of the said notification. 3. Applicability of Central Excise Duty (CVD) on imported goods. 4. Compliance with the conditions prescribed in the notification for availing the concessional rate. Detailed Analysis: 1. Eligibility for Concessional Rate of Additional Duty of Customs (ADC): The appellants imported 51 consignments of Nylon filament yarn, claiming a concessional rate of ADC equal to Central Excise Duty (CVD) at 8% under Sl. No. 5A of Notification No. 29/2004-CE. The Department contended that the imported goods did not meet the conditions of the notification and issued a Show Cause Notice (SCN) demanding differential duty of ?34,60,822/- along with interest. The original authority confirmed this demand, and the Commissioner (Appeals) dismissed the appeal for non-compliance with pre-deposit requirements. On remand, the Commissioner (Appeals) upheld the original order, leading to the current appeal. 2. Interpretation of the Conditionalities of the Notification: The appellants argued that they imported Nylon Filament Yarn to manufacture yarn in India through a manufacturer who had the necessary facilities, as they did not possess such facilities themselves. They contended that they fulfilled the conditions of Notification No. 29/2004-CE, which allowed them to claim the concessional rate of ADC at 8%. The notification required that the filament yarn be procured from outside and subjected to any process by a manufacturer who did not have the facilities to manufacture filament yarns of Chapter 54. 3. Applicability of Central Excise Duty (CVD) on Imported Goods: The Tribunal examined the scope of additional duty of customs under Section 3 of the Customs Act, which mandates that ADC on imported goods be equal to the excise duty leviable on a like article produced in India. The Tribunal noted that additional duty of customs is imposed to provide a level playing field for indigenous goods, ensuring that imported goods do not benefit unduly from export incentives. 4. Compliance with the Conditions Prescribed in the Notification: The Tribunal analyzed the conditions of Notification No. 29/2004-CE, which required that the filament yarn be procured from outside, subjected to a process by a manufacturer who did not have the facilities for manufacturing filament yarns, and that the resultant goods fall under Chapter 54. The Tribunal found that the imported filament yarn satisfied the requirement of being procured from outside. However, it noted that the reduced rate of central excise duty was applicable only to yarns subjected to a process by a manufacturer without the facilities for manufacturing filament yarns, and not to the imported filament yarn itself. The Tribunal concluded that the additional duty of customs on the imported filament yarn must be equal to the central excise duty leviable on a like article produced in India. It relied on the Supreme Court's judgments in Thermax Pvt. Ltd. and Hyderabad Industries, which held that for additional duty, the imported article must be imagined as manufactured in India to determine the excise duty leviable. Conclusion: The Tribunal upheld the impugned order, dismissing the appeal. It held that the imported filament yarn was not eligible for the concessional rate of ADC at 8% under Notification No. 29/2004-CE, as the conditions of the notification were not met. The additional duty of customs must be equal to the central excise duty on a like article produced in India, as per the statutory provisions and judicial precedents.
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