2020 (1) TMI 439 - HC - Customs

Requirement of Registration under Rules 3 and 4 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - whether the requirements are procedural in nature or not - HELD THAT - The learned Tribunal has erred in holding that the Rules are merely procedural or directory in nature and upholding the grant of exemption to the Assessee in respect of Bill of Entry No.550344 dated 28.6.2003 by which the goods were imported and cleared on 30th June 2003. The Certificate issued by the Superintendent of Central Excise, relied upon by the learned counsel for the Assessee is not under the aforesaid 1996 Rules but it is only a Certificate that the Assessee has not availed the Cenvat Credit on that consignment and that Certificate has nothing to do with the 1996 Rules in question. There are no justification for the learned Tribunal to hold that these Rules are only procedural or directory in nature and therefore it could be applied for the import made at prior point of time. Then, the very purpose of Rules and requirement of the Assessee to apply under Rule 4 for the intended imports in future would be frustrated, if these Rules were to be applied retrospectively to the imports already made. There was no question of substantial compliance by the Assessee. The very initiation of procedure of registration and application was not undertaken by the Assessee in the present case. It is well settled law that to avail the exemption of duty under any Notification, the Rules and Regulations and the conditions prescribed therein have to be strictly adhered and there is no place for equity or intendment in the interpretation of the taxing Statutes. By holding that the Rules of 1996 are only procedural or directory in nature, the learned Tribunal has frustrated the very purpose of Rules 3 and 4 in question by holding that the Assessee is entitled to the exemption for import made on 28.6.2003. The controversy in the present case is not with regard to the valuation of the goods in question or rate of duty, but, the question is of the wrong exemption claimed by the Assessee and granted by the Tribunal - Therefore, the Appeal is maintainable before this Court in accordance with law and the said objection of the Assessee is overruled. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Appeal against CESTAT order granting exemption based on procedural rules interpretation.

Analysis:
1. The Revenue appealed against the CESTAT order granting exemption to the Assessee under Customs Rules 1996, despite the goods being imported before registration. The Tribunal upheld the exemption, considering Rules 3 and 4 as procedural, ensuring intended use of imported goods.
2. The Tribunal's observation highlighted the procedural nature of Rules 3 and 4, emphasizing the importance of the declared purpose of imported goods. The lower appellate authority's decision was upheld due to the goods falling under a specific notification, justifying the exemption granted to the Assessee.
3. The Senior Standing Counsel argued that the Tribunal erred in granting exemption based on registration done after import. However, the Assessee's counsel contended that a certificate issued earlier allowed the exemption, supporting the Tribunal's decision.
4. The absence of the registration application in the record raised doubts about the Assessee's compliance with Rule 3. The Rules required registration before importing goods for concessional duty rates, emphasizing the importance of procedural adherence.
5. The Court disagreed with the Tribunal's view that the Rules were merely procedural, emphasizing strict compliance with exemption conditions. The Superintendent's certificate did not align with Rules 1996, indicating a lack of justification for retrospective application of the Rules.
6. Upholding the importance of following statutory requirements for duty exemptions, the Court rejected the Tribunal's decision to grant exemption for goods imported before registration. Equity or intendment had no place in tax statute interpretation, necessitating strict adherence to prescribed conditions.
7. The Court addressed the Assessee's objection regarding the Appeal's maintainability under section 130 of the Act. It clarified that the issue pertained to wrongful exemption rather than valuation or duty rate, making the Appeal valid for the High Court's jurisdiction.
8. Consequently, the Appeal by the Revenue was allowed, setting aside the Tribunal's order and closing the related Miscellaneous Petition without costs.