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2021 (1) TMI 102 - HC - CustomsBenefit of concessional rate of duty - Scope of expression for use in specified Plantation sector as actual use in specified Plantation sector - Import of hi-tech appliances i.e., sprayers, power weeders, Tea Pruners and Mist Blowers - multi utility / general purpose goods which are capable of use in the specified plantation sector by importing the condition of actual use in the specified plantation sector - benefit of S.No.252A of the Notification No.21/2002 cus dated 01.03.2002 - decision of the Supreme Court in the case of State of Haryana vs. Dalmia Dadri Cement Ltd. 1987 (11) TMI 94 - SUPREME COURT Wherein for use has been interpreted to mean capable of use, complied with or not - HELD THAT - The Supreme Court in Dalmia Dadri Cement Ltd. 1987 (11) TMI 94 - SUPREME COURT while considering the expression 'for use' in Section 5(2)(a)(v) of the Punjab General Sales Tax Act held that the aforesaid expression means intended for use. It was further held that inability to prove the actual use or the fact that use was some purpose in addition to that stated in the certificate of the use is irrelevant. It was further held that if the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in generation and distribution of electrical energy, the phraseology used in exemption clause would have been different such as 'goods actually' used or 'goods used'. It is well settled in law that exemption Notification has to be interpreted strictly and the burden of proving applicability is on the assessee to show that his case comes within the parameters of exemption clause or exemption Notification. It is equally well settled legal proposition that if ambiguity in exemption Notification is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue. The Notification does not stipulate a condition of proof for end use in order to claim exemption. It is pertinent to mention here that wherever the benefit of a Notification is granted subject to condition of actual use, in such a case, the Notification has used the words 'only, exclusively or entirely'. In this connection, Entry 250 in the Notification dated 01.03.2002, is referred, which grants exemption subject to actual use and adherence to concessional rate of duty as a condition in the Notification. In view of the Circular issued by the Finance Department, dated 11.01.2005, it is evident that the Entry in question does not suffer from any ambiguity and does not impose any condition of actual use. The tribunal therefore, erred in law in holding that the appellant is not entitled to the benefit of exemption Notification - Even otherwise, there is ample material on record to show that the goods were used in tea, coffee and rubber plantation sector viz., the communication dated 04.08.2007 and 12.09.2007 issued by Joint Agricultural Director and the Government of Karnataka, Department of Agriculture, communication dated 20.07.2007 issued by Andhra Pradesh State Agro Industries Development Corporation Limited and the statements given by the dealers that the goods are meant to be used in tea, coffee and rubber plantation. Thus, the substantial questions of law framed by this court are answered in favour of the appellant and against the revenue - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Interpretation of the expression "for use in specified Plantation sector" versus "actual use in specified Plantation sector." 2. Denial of benefit of S.No.252A of Notification No.21/2002 cus dated 01.03.2002 to multi-utility/general-purpose goods. 3. Whether the appellant was guilty of suppression of facts regarding the use of goods in non-plantation sectors. 4. Applicability of the exemption Notification and the burden of proof for end use. Detailed Analysis: Issue 1: Interpretation of "for use in specified Plantation sector" The High Court had to determine whether the Tribunal correctly interpreted the phrase "for use in specified Plantation sector" as requiring "actual use in specified Plantation sector." The appellant argued that the phrase should be understood as "capable of use," referencing the Supreme Court's decision in the State of Haryana vs. Dalmia Dadri Cement Ltd., where "for use" was interpreted to mean intended for use. The court concluded that the expression "for use" means intended for use and does not necessitate proof of actual use. The Notification did not stipulate a condition for proof of end use, and thus, the Tribunal erred in its interpretation. Issue 2: Denial of Benefit under Notification No.21/2002 The appellant imported goods availing concessional duty under S.No.252A of Notification No.21/2002, which were sold to dealers and customers in various sectors, including non-plantation sectors. The Tribunal denied the benefit, stating the exemption was only for goods used in tea, coffee, and rubber plantations. However, the court noted that the Notification did not impose a condition of actual use and relied on a Circular from the Ministry of Finance, which clarified that general-purpose machinery capable of use in the specified sector qualifies for exemption. Therefore, the Tribunal's denial of the benefit was incorrect. Issue 3: Suppression of Facts The revenue argued that the appellant suppressed facts by not disclosing the sale of goods to non-plantation sectors. The court found ample evidence, including communications from government departments and statements from dealers, indicating the goods were intended for use in the plantation sector. The Tribunal did not record any findings that the goods were used in non-plantation sectors. Therefore, the allegation of suppression of facts was not substantiated. Issue 4: Applicability of Exemption Notification and Burden of Proof The court reiterated that exemption Notifications must be interpreted strictly, and the burden of proving applicability lies on the assessee. However, if there is ambiguity, it must be resolved in favor of the revenue. In this case, the court found no ambiguity in the Notification, which did not require proof of actual use. The appellant provided sufficient evidence to show the goods were intended for use in the plantation sector. Thus, the appellant was entitled to the benefit of the exemption Notification. Conclusion: The court answered the substantial questions of law in favor of the appellant and against the revenue. It quashed the Tribunal's order imposing a duty and penalty of ?1,30,22,441/- on the appellant. The appeal was allowed, and the benefit of the exemption Notification was granted to the appellant.
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