2016 (9) TMI 778 - HC - Customs

Calculation of differential duty demanded - BCD - CVD - SAD - Section 3A(5) of the Customs Tariff Act, 1975 - Central Excise Notification No.14 of 2002, dated 01.03.2002 - whether SAD will apply to the goods chargeable to additional duties levied under Section 3(1) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957? - Held that - the additional duty leviable and the power to levy the Additional Duty of Excise is traceable to sub-section (5) of Section 3 of the Customs Tariff Act, 1975, which gives power to the Government to levy such additional duty as would counter balance the sales tax on a like article on its sale in India. The goods which were imported by the petitioner were meant to be used for manufacture and the petitioners availed the benefit of the exemption notification. This condition having been violated and the goods having been cleared to the domestic area and the petitioner having accepted their mistake, the additional duty of excise is leviable in terms of sub-section (5) of Section 3 of the Customs Tariff Act. The exemption which is sought to be granted by the Budget Notification pertains to the duty leviable under sub-section (1) of Section 3 of the Customs Tariff Act and there is no reference to the additional duty of excise leviable in terms of sub-section (5). The petitioner already accepted before the Settlement Commission regarding the leviability of the additional duty of excise at 8% - the petitioner has not made out any case for interfering with the order passed by the Settlement Commission. Petition disposed off - decided in favor of petitioner.

Summary

Issues Involved:
1. Legality of the order passed by the Customs and Central Excise Settlement Commission.
2. Applicability of Special Additional Duty (SAD) on imported goods.
3. Levy of Additional Duty of Excise (ADE) at 8%.
4. Petitioners' concession before the Settlement Commission and its implications.

Issue-wise Detailed Analysis:

1. Legality of the Order Passed by the Customs and Central Excise Settlement Commission:
The petitioners challenged the order dated 19.11.2004 by the Customs and Central Excise Settlement Commission, Additional Bench, Chennai. The petitioners had filed applications for settlement of proceedings initiated via show cause notices dated 28.05.2003, demanding differential duty on imported lining and interlining materials. The Settlement Commission admitted the applications and settled the case by determining the duty payable, which included Basic Customs Duty, CVD at 16%, ADE at 8%, and Cess at 0.05%.

2. Applicability of Special Additional Duty (SAD) on Imported Goods:
The petitioners contended that SAD was not applicable to the imported goods under Section 3A(5) of the Customs Tariff Act, 1975, as the goods were covered by the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The Settlement Commission, however, concluded that the imported goods should have been charged with Additional Duty of Excise, and therefore, SAD was not applicable.

3. Levy of Additional Duty of Excise (ADE) at 8%:
The Settlement Commission directed the Revenue to calculate the duty including ADE at 8%. The petitioners argued that the duty should only be 16% as per Notification No.21 of 2002. However, the Revenue and the Settlement Commission maintained that ADE at 8% was leviable under Section 3(5) of the Customs Tariff Act. The Court upheld this view, stating that the additional duty of excise is meant to counterbalance sales tax and other local taxes, ensuring no revenue loss to the states.

4. Petitioners' Concession Before the Settlement Commission and Its Implications:
The petitioners had conceded before the Settlement Commission that ADE at 8% was leviable. The Court held that the petitioners were estopped from challenging the Settlement Commission's order after having accepted the terms during the settlement process. The Court emphasized that the petitioners cannot retract their concession and challenge the order on this ground.

Conclusion:
The High Court dismissed the Writ Petitions, affirming that the Settlement Commission's order was correct both on the grounds of the petitioners' prior concession and on the merits of the case. The Court concluded that the additional duty of excise at 8% was properly levied in accordance with Section 3(5) of the Customs Tariff Act, and the petitioners' arguments did not warrant any interference with the Settlement Commission's order.