2020 (3) TMI 644 - AT - Customs

Exemption from countervailing duty under Notification No.30/2004-CE, dated 09.07.2004 - imported silk fabrics falling under Heading 5007 of the Central Excise Tariff Act, 1985 - allegation that the importer has not fulfilled the condition of the notification that the inputs have to be used in the manufacture of the goods, which suffered duty and no Cenvat credit is availed on the inputs - HELD THAT - The Hon ble Madras High Court in the case of THE COMMISSIONER OF CUSTOMS (EXPORTS) VERSUS M/S. PRASHRAY OVERSEAS PRIVATE LIMITED, CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL 2016 (5) TMI 1106 - MADRAS HIGH COURT where it was held that In cases where the exemption Notification stipulates two conditions, namely that the inputs should have suffered duty and that no CENVAT credit should have been availed, then the benefit of the Notification will be available only if both conditions are satisfied. An importer will never be able to satisfy both these conditions and hence, he cannot claim the benefit. The impugned order does not call for any interference - appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether imported silk fabrics are eligible for exemption from countervailing duty under Notification No.30/2004-CE.

Analysis:
The appeal before the Appellate Tribunal CESTAT Chennai involved the consideration of whether imported silk fabrics falling under Heading 5007 of the Central Excise Tariff Act, 1985 are eligible for exemption from countervailing duty under Notification No.30/2004-CE. The issue arose as the importer had not fulfilled the condition of the notification requiring the inputs to be used in the manufacture of goods that suffered duty, without availing Cenvat credit on the inputs. The Tribunal noted that the Hon'ble Madras High Court had previously analyzed a similar issue in the appellant's case. The High Court had emphasized that if the inputs had not suffered any duty, the question of claiming Cenvat credit would not arise, rendering the importer ineligible for the exemption. The Tribunal concurred with the High Court's decision, reinforcing that fulfillment of both conditions - payment of duty on inputs and non-availment of Cenvat credit - was necessary for claiming the benefit of the exemption notification.

The Tribunal highlighted the High Court's stance that in cases where exemption notifications stipulate conditions related to duty payment on inputs and non-availment of Cenvat credit, importers must satisfy both conditions to be eligible for the benefit. Importers failing to meet these dual conditions cannot claim the exemption. The Tribunal further elucidated that exemptions not subject to conditions would be available to all importers, while those with specific conditions regarding duty payment on inputs aim to grant benefits only to products on which duty has been paid. The judgment emphasized that importers unable to fulfill the duty payment condition could not rely solely on the inapplicability of the Cenvat credit condition to claim exemption. Additionally, exemptions requiring both duty payment on inputs and non-availment of Cenvat credit necessitate compliance with both conditions for eligibility, which importers may find challenging to meet simultaneously. Based on the legal principles derived from the High Court's decision, the Tribunal concluded that the impugned order did not warrant interference, leading to the dismissal of the appeal.

In summary, the judgment underscored the significance of fulfilling conditions outlined in exemption notifications, particularly regarding duty payment on inputs and Cenvat credit availing, for importers to claim exemption from countervailing duty. The decision aligned with the legal interpretation provided by the Hon'ble Madras High Court, emphasizing the necessity of meeting all specified conditions for eligibility, and ultimately resulted in the dismissal of the appeal before the Appellate Tribunal CESTAT Chennai.