2014 (11) TMI 530 - AT - Customs

Imposition of Additional Custom Duty - benefit of Notification No.30/2004 and No.1/2011 - Whether homeopathic medicine imported by the Respondent is liable to Additional Customs Duty (ACD) @ 5% or 1% and 2% as the case may be of the value of import in terms of Notification No.1/2011/-CE dated 01.03.2011 during the material period - Held that - There was no import of the input, which are duty free under central excise law in India nor the homeopathy goods is duty free under Central Excise Tariff Act, 1985. Law is well settled that if excise duty is not leviable on the manufacture of goods, the question of import of like goods to suffer any additional customs duty does not arise as has been held in the case of CCE, Amritsar Vs. M/s. Malwa Industries Ltd. 2009 (2) TMI 41 - SUPREME COURT . Therefore, the respondents are liable to ACD equal to central excise duty as if the goods imported were manufactured in India with all remissions, concessions and impositions. The facts and circumstances of M/s. Dhana Exim Vs. CC, Chennai 2005 (8) TMI 232 - CESTAT, CHENNAI and CCE, Madras Vs. Sudharsan Pine Products Ltd. 1999 (1) TMI 132 - CEGAT, MADRAS relied by respondent are altogether different from the present context of the case. An exemption Notification is read strictly. The claimant of such benefit has to prove that conditions of the Notification have been satisfied discharging burden of proof following the ratio laid down in the case of Motiram Polaram Vs. Union of India 1999 (8) TMI 68 - SUPREME COURT OF INDIA and the ratio laid down in the case of Eagle Flask Industries Ltd. Vs. CCE, Pune 2004 (9) TMI 102 - SUPREME COURT OF INDIA . The respondents failed to discharge the burden of proof to the effect that the goods imported did not avail remission of CENVAT in the exporting country under WTO agreement - Decided in favour of Revenue.

Summary

Issues Involved:

1. Whether the imported homeopathic medicines are liable to Additional Customs Duty (ACD) at 5% or 1%/2% as per Notification No.1/2011-CE dated 01.03.2011.
2. Whether the Commissioner (Appeals) exceeded his jurisdiction by deciding on the constitutionality of the duty imposed.
3. Whether the imported goods availed CENVAT credit or input tax credit in the exporting country, thereby justifying the ACD at 5%.

Issue-wise Detailed Analysis:

1. Liability of Imported Homeopathic Medicines to Additional Customs Duty (ACD):

The primary issue is whether the imported homeopathic medicines should be subjected to ACD at 5% or at a reduced rate of 1%/2% as per Notification No.1/2011-CE dated 01.03.2011. The Tribunal examined Section 3(1) of the Customs Tariff Act, 1975, which mandates that imported goods should bear ACD equivalent to the excise duty on similar goods manufactured in India. The Tribunal noted that the homeopathic medicines manufactured in India were subject to excise duty at 5%, with a reduced rate of 1% if no CENVAT credit was availed. It was concluded that the imported goods must bear ACD at 5% to ensure a level playing field and fair competition, aligning with the WTO agreement that mandates remission of input duties on exported goods.

2. Jurisdiction of Commissioner (Appeals):

The Revenue contended that the Commissioner (Appeals) overstepped his jurisdiction by addressing the constitutionality of the duty imposed, a power reserved for constitutional authorities. The Tribunal agreed, stating that the Commissioner (Appeals) should have confined his decision within the statutory framework without converting the appeal into a writ petition. The Tribunal emphasized that a statutory authority should not usurp the powers of a constitutional authority.

3. Availment of CENVAT Credit or Input Tax Credit:

The Tribunal assessed whether the imported goods availed CENVAT credit in the exporting country, which would justify the imposition of ACD at 5%. It was established that under WTO agreements, member countries, including Germany (the exporting country in this case), provide input tax credit or remission on exported goods. Consequently, the imported homeopathic medicines, being duty-free in the exporting country, should bear ACD at 5% to counterbalance the excise duty levied on similar goods manufactured in India. The Tribunal referenced the case of Hyderabad Industries Ltd. and other precedents to affirm that the levy of ACD is justified to maintain competitive parity.

Conclusion:

The Tribunal concluded that the imported homeopathic medicines are liable to ACD at 5%, overturning the Commissioner (Appeals)' decision which had reduced the duty to 1%. The Tribunal underscored the necessity of maintaining a level playing field and fair trade practices, adhering to both domestic laws and international agreements. The appeals by the Revenue were allowed, reinstating the adjudication orders that imposed ACD at 5%.

(Pronounced in the open Court on 23.09.2014)