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2016 (9) TMI 568 - AT - CustomsDemand of SAD - Section 28(1) of the Customs Act 1962 - demand of interest - Section 28AB of the Customs Act 1962 - imposition of penalty - Section 112(a) of the Customs Act 1962 - trading - imported Polyester Filament Yarn - imported Polyester Chips - exemption of SAD - Notification No. 22/99-Cus dated 28.02.99 - contravention of condition provided under Sr. 5 of the table annexed to the Notification No. 22/99-Cus. - whether the appellant is entitled for exemption under Notification No. 22/99-Cus dated 28.2.1999 from payment of Special Additional Duty in terms of Sr. No. 5 of the table annexed to the above referred Notification? - Held that - similar issue has been decided in the case G.H. Shaikh v. CCE Pune 2002 (9) TMI 702 - CEGAT MUMBAI where it was held that the proviso to Sl. No. 5 relates to a place from where sales takes place and not place to which sale is made. Exemptions have been given under the Sales tax Act in respect of certain transactions and such exemptions for specified cases would not make the place an area where no duty is chargeable on sale and purchase of goods - Even though the sales tax was not charged from area from where the goods sold such area shall not become non taxable territory to apply the proviso of Sr. 5 of the Notification No. 22/99-Cus - appellant entitled to claim exemption under notification no. 22/99-Cus - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to exemption under Notification No. 22/99-Cus dated 28.2.1999 from payment of Special Additional Duty (SAD). 2. Applicability of the proviso to Sr. No. 5 of the table annexed to Notification No. 22/99-Cus. 3. Invocation of the extended period under Section 28(1) of the Customs Act, 1962. 4. Imposition of penalty under Section 112(a) of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Entitlement to Exemption under Notification No. 22/99-Cus: The central issue was whether the appellant was entitled to exemption from SAD under Notification No. 22/99-Cus dated 28.2.1999. The appellant argued that they sold the goods from Silvassa, which is not an exempted area from sales tax, and thus, the exemption should be applicable. They contended that the goods were sold against Form ST XI, which is permissible under the Dadra and Nagar Haveli Sales Tax Regulation, 1978. The Tribunal found merit in the appellant's argument, noting that the area was not exempt from sales tax, and the exemption was available on a case-to-case basis depending on the provision of Form ST XI by the buyer. 2. Applicability of the Proviso to Sr. No. 5 of the Notification: The Tribunal examined the proviso to Sr. No. 5 of the Notification, which states that exemption shall not apply if the importer sells the goods from an area where no tax is chargeable on sale or purchase of goods. The Tribunal clarified that the exemption from sales tax could be area-based or conditional. In this case, the exemption was conditional and not based on the area. The Tribunal concluded that since the area (Dadra and Nagar Haveli) was not exempt from sales tax, the proviso did not apply, and the appellant correctly availed the exemption. 3. Invocation of the Extended Period under Section 28(1): The appellant argued that the demand was barred by limitation as the show cause notice was issued on 10/9/2003 for imports made in 1999. The Tribunal did not address this issue in detail, as the matter was decided on merit. However, the appellant contended that there was no willful misstatement, and the area was chargeable to sales tax, which would negate the basis for invoking the extended period. 4. Imposition of Penalty under Section 112(a): The appellant argued that since the issue involved the interpretation of the notification, the penalty was not imposable. The Tribunal, having decided the matter on merit and finding that the appellant correctly availed the exemption, implicitly set aside the penalty imposed under Section 112(a). Conclusion: The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The decision was primarily based on the interpretation of the proviso to Sr. No. 5 of the Notification No. 22/99-Cus, confirming that the appellant was entitled to the exemption claimed. The Tribunal relied on previous judgments, including G.H. Shaikh Vs. C.C. Pune and Jindal Photo Films Ltd. Vs. Commissioner of Customs, Mumbai, to support its findings. The order was pronounced in court on 26/07/2016.
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