2024 (1) TMI 1335 - AT - Service Tax

Denial of benefit of duty exemption No. 21/2002 CUS dated 01.03.2002 - imported coke breeze - validity of the show cause notice, having invoked the extended period of limitation u/s Section 28(4) of the Customs Act - penalty - HELD THAT - Metallurgical coke and coke breeze are two distinct and different products having their own separate characteristics and uses. The two in no way can be considered as one and the same and thus at par. Coke Breeze being a byproduct of the process of coke manufacture and not utilizable as such in a blast furnace, where met coke alone fits the bill. As the two products are clearly distinct with wide variation in their sales price, it is opined that the question of interpretation of an exemption notification and the case law analysis on this aspect of the matter does not actually arise. Language employed in statute is the determination of legislative intent. Nonetheless, it may be apt for sake of records to state what the Hon ble Courts have held on this aspect of the subject matter. Thus in the foremost, it is settled law that an exemption notification calls for a strict interpretation and no liberal constriction can be placed to extend the scope of the notification. In view of clear and appreciable differences as noted detailing the difference in technical parameters and usage considerations, the goods imported by the appellant viz. coke breeze is not entitled to the benefit of the exemption notification, 21/2002-Cus dt. 1.3.2002 and/or 12/20112-Cus dt. 17.03.2012 prescribing Nil rate of duty for import of metallurgical coke. The impugned orders therefore call for no interference as regards merits of the case. Extended period of limitation - penalty - HELD THAT - As the importer had clearly declared the imported goods as coke breeze in the Bills of Entry filed at the time of import, the charge of suppression willful misstatement as levelled against the importer does not hold good and cannot be sustained. It is for the department to have allowed or dis-allowed the exemption benefit depending upon their understanding and interpretation of the subject notification, however to impute it as a case of misstatement on part of the importer is certainly uncalled for and is not established from the facts of the case. The larger period of limitation under Section 28(4) of Customs Act is thus not invokable. The imported goods are therefore not liable to confiscation nor is any penalty leviable on the appellant. Appeal allowed.

Summary

Issues Involved:

1. Validity of the show cause notice invoking the extended period of limitation under Section 28(4) of the Customs Act.
2. Entitlement of imported coke breeze to the benefit of Nil rate of duty under the relevant notifications.

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice and Extended Period of Limitation:

The crux of the issue revolves around whether the extended period of limitation under Section 28(4) of the Customs Act was rightly invoked. The appellant argued that the charge of suppression or willful misstatement was unfounded, as they had clearly declared the imported goods as coke breeze in the Bills of Entry. The Tribunal found merit in this argument, noting that the department had the responsibility to allow or disallow the exemption based on their interpretation of the notification. The imputation of misstatement was deemed unsubstantiated, and thus, the invocation of the extended period of limitation was not justified. Consequently, the imported goods were not liable for confiscation, nor was any penalty leviable on the appellant. The appeal was allowed on grounds of limitation.

2. Entitlement to Duty Exemption for Coke Breeze:

The primary contention was whether coke breeze qualifies as metallurgical coke under the relevant notifications, thereby entitling it to a Nil rate of duty. The Tribunal examined extensive technical literature, industry standards, and previous case law to discern the distinction between metallurgical coke and coke breeze. It was established that metallurgical coke and coke breeze are commercially understood as distinct products with different properties, uses, and market prices. Metallurgical coke is used in blast furnaces, while coke breeze is used in sintering processes. The Tribunal concluded that coke breeze does not meet the criteria for exemption under the notifications, as it is not the same as metallurgical coke. The language of the exemption notifications was clear and unambiguous, necessitating a strict interpretation. Therefore, the appellant's claim for exemption was not upheld, and the differential duty was confirmed.

In summary, while the appeal was allowed on the grounds of limitation, the substantive issue regarding the duty exemption for coke breeze was decided against the appellant, affirming the distinction between the two products and upholding the denial of exemption.