2020 (9) TMI 561 - AT - Customs

Refund of Customs Duty - Liquefied Petroleum Gases for supply to household domestic consumers - Effect of Notification, prospective or retrospective? - N/N. 37/05-Cus dated 2.5.2005 was issued exempting Liquefied Petroleum Gases for supply to household domestic consumers at subsidized prices from whole of customs duty - period September, 2004 to April, 2005. HELD THAT - The undisputed facts are that the appellants had imported commercial butane (Liquefied Petroleum Gases) classifying it under Chapter heading 2711.1300 of Customs Tariff Act, 1975 on payment of applicable Basic Customs Duty (BCD) of 10%. Two amended notifications of the basic notification No. 21/02-Cus dated 1.3.2002 were in force during the period namely, Notification No. 82/04-Cus dated 18.8.2004 and 11/05- Cus dated 1.3.2005. Under Notification No. 82/04-Cus dated 18.8.2004, Liquefied Petroleum Gases (LPG) falling under Chapter subheading 2711 1900 attracted concessional duty @ 5%, whereas the amending notification No. 11/05-Cus prescribed exemption to Liquefied Petroleum Gases for supply to household domestic customs falling under the same chapter heading 2711.1900. It is the contention of the appellant that after the issuance of first amending notification No. 82/04-Cus dated 18.8.2004, they have represented to the Government that oil marketing company did not import Liquefied Petroleum Gases as such, but commercial butane or propane of mixture of commercial butane and propane. In the present case, in both amending exemption notifications No. 82/04-Cus and 11/05-Cus, concessional rate of duty Nil rate of duty as the case may be the prescribed to be applicable only to Liquefied Petroleum Gases falling under Chapter 2811.1900. There was no mention of Chapter heading 2711.1300 as declared by the appellant while importing commercial butane (Liquefied Petroleum Gas). Applying the principles of strict interpretation, the exemption notification cannot be made applicable to the clearances of commercial butane (Liquefied Petroleum Gas) during the said period. In the present case, we are concerned with the period prior to 2.5.2005 where under the notifications did not contain all the three chapter sub-headings like Entry No. 75E of Notification 37/2005Cus. dated 02.5.2005, both notifications 82/2004 Cus and 11/2005 Cus. mentioned the Chapter sub-heading 27111900 only and the description of goods as Liquefied Petroleum Gas only. Besides, the principle of interpretation of an exemption notification is now well settled by the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT - it needs to be construed strictly. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Entitlement to refund of customs duty paid on imported commercial butane (Liquefied Petroleum Gas) during September 2004 to April 2005.
2. Retrospective applicability of Notification No. 37/05-Cus dated 2.5.2005.
3. Interpretation of exemption notifications and classification of imported goods.

Detailed Analysis:

1. Entitlement to Refund of Customs Duty:
The appellant, an importer of Liquefied Petroleum Gas (LPG), sought a refund of ?11,60,61,990/- paid as customs duty on commercial butane imported during September 2004 to April 2005. The appellant argued that the imported commercial butane fell under Chapter Tariff heading 2711.1300 and should have been eligible for a concessional duty rate under Notification No. 82/04-Cus dated 18.8.2004 and 11/05-Cus dated 1.3.2005. The appellant contended that commercial butane is a type of LPG and should be eligible for the same exemptions. However, the Tribunal noted that the appellant did not challenge the classification of the imported goods at the time of assessment and paid the duties as per the declared classification.

2. Retrospective Applicability of Notification No. 37/05-Cus:
The appellant argued that Notification No. 37/05-Cus dated 2.5.2005, which included commercial butane and propane under the exemption, should have retrospective effect. The Tribunal rejected this argument, stating that the notification did not explicitly provide for retrospective application. The Tribunal referred to the judgment in Priya Blue Industries Ltd. Vs. Commissioner of Central Excise, which held that a refund claim cannot be entertained unless the assessment order is successfully challenged.

3. Interpretation of Exemption Notifications and Classification:
The Tribunal emphasized the need for strict interpretation of exemption notifications, as laid down by the Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Co. The exemption notifications in question (82/04-Cus and 11/05-Cus) specifically applied to LPG under Chapter subheading 2711.1900 and did not mention commercial butane under Chapter heading 2711.1300. The Tribunal concluded that the appellant failed to prove that the imported commercial butane qualified for the exemption under the specified notifications. The Tribunal also noted that the appellant did not challenge the initial classification of the imported goods, which is a prerequisite for claiming a refund based on reclassification.

Conclusion:
The Tribunal upheld the rejection of the refund claim, stating that the appellant did not meet the criteria for the claimed exemptions and failed to challenge the initial classification of the imported goods. The appeal was dismissed as devoid of merit.