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2018 (5) TMI 1248 - AT - CustomsExemption from SAD - N/N. 53/2003-Cus. - Duty Free Credit Entitlement scheme - contention of the Department is that during the period of import i.e. from 01.03.2006 to 18.12.2006 the SAD was not exempted under N/N. 53/2003-Cus. therefore debited in respect of SAD (Special Additional Duty of Customs) made by the appellant is incorrect to that extent the appellant is liable to pay the Customs duty. Held that - there is alternative exemption notification in respect of special additional duty leviable under Section 3(5) of Customs Tariff Act 1975 under N/N. 20/2006-Cus. As per said notification all goods are exempted from payment of special additional duty if the goods are exempted from payment of whole of Customs duty and whole of additional duty leviable under Section 3(1) of Customs Tariff Act 1975 - In the present case the goods imported are admittedly exempted from whole of the Customs duty and additional duty under Section 3(1) of the said Act therefore special additional duty is exempted under N/N. 20/2006-Cus. From the judgment Gujarat Ambuja Exports Ltd. Vs. Union of India 2013 (6) TMI 536 - GUJARAT HIGH COURT it can be seen that though in the case of DEPB scheme exemption is provided by debiting the duty in DEPB scrip it is considered as exempted. The similar procedure is available in the Notification No. 53/2003-Cus therefore the ratio is squarely covered in the present case for the purpose under Notification No. 20/2006-Cus. Accordingly the condition of the Notification No. 20/2006-Cus is fully complied with therefore the special additional duty cannot be demanded from the appellant. Since we decide the exemption of special additional duty leviable under Section 3(5) of Customs Tariff Act only on the basis of N/N. 20/2006-Cus. We need not to address the exemption of such duty under N/N. 53/2003-Cus. - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Exemption applicability of Special Additional Duty (SAD) under Notification No. 53/2003-Cus. 2. Alternative exemption under Notification No. 20/2006-Cus. 3. Legality of duty debit in Duty Free Credit Entitlement scrip. 4. Relevant precedents and judicial interpretations. Issue-wise Detailed Analysis: 1. Exemption Applicability of Special Additional Duty (SAD) under Notification No. 53/2003-Cus: The appellant imported goods under the Duty Free Credit Entitlement scheme, debiting the duty per Notification No. 53/2003-Cus. The Department contended that during the import period (01.03.2006 to 18.12.2006), SAD was not exempted under this notification, making the debit incorrect. The appellant argued that the SAD, initially leviable under Section 3A, was substituted by Section 3(5) of the Customs Tariff Act, and thus, the exemption should apply similarly. They also suggested that the exemption under Notification No. 53/2003-Cus should cover SAD under Section 3(5) due to legislative oversight. 2. Alternative Exemption under Notification No. 20/2006-Cus: The appellant alternatively claimed that SAD under Section 3(5) was exempted by Notification No. 20/2006-Cus. This notification exempts goods from SAD if they are exempt from the whole of Customs duty and additional duty under Section 3(1). Since the goods were exempt under Notification No. 53/2003-Cus from all duties, including SAD under Section 3A, they argued that SAD under Section 3(5) should also be exempt. The Department countered that the exemption under Notification No. 53/2003-Cus was via debit in the scrip, not an outright exemption. 3. Legality of Duty Debit in Duty Free Credit Entitlement Scrip: The Tribunal found that Notification No. 53/2003-Cus indeed provided for the exemption from the whole of Customs duty, additional duty under Section 3(1), and SAD under Section 3A. Thus, the goods imported under the Duty Free Credit Entitlement certificate were exempt from these duties, and the debit in the scrip was correct. This interpretation was supported by the Gujarat High Court's ruling in Gujarat Ambuja Exports Ltd. v. Union of India, which held that goods exempted by debiting duty in DEPB scrips are considered exempt. 4. Relevant Precedents and Judicial Interpretations: The Tribunal referenced the case of Punj Lloyd Ltd. v. Commissioner of Customs, New Delhi, where it was held that goods exempt from basic Customs duty and additional duty under Section 3(1) are also exempt from SAD under Notification No. 20/2006-Cus. The Tribunal concluded that since the goods were exempt from these duties under Notification No. 53/2003-Cus, they were also exempt from SAD under Notification No. 20/2006-Cus. The Tribunal emphasized that the exemption is valid even if the duty is debited in the scrip, as this is a procedural matter. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order. It was decided that the special additional duty under Section 3(5) of the Customs Tariff Act was exempt under Notification No. 20/2006-Cus. Consequently, the demand for SAD from the appellant was not sustainable. The Tribunal did not address the exemption under Notification No. 53/2003-Cus separately, as the decision was based on Notification No. 20/2006-Cus. The appeals were allowed, and the order was pronounced in court on 18.05.2018.
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