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2023 (3) TMI 958 - AT - CustomsEligibility for exemption notification - Benefit subject to the condition of manufacture - Notification no 30/2004-CE dated 9.7.2004 as amended by N/N. 34/2015-CE dated 17.7.2015 - additional duty of Customs - case of the appellants is that they are entitled to the benefit of the exemption notification even after the amendment on 17.7.2015 and it is the case of the Revenue that the appellants are not entitled to this benefit after the amendment. Whether or not the appellants would be entitled to the benefit of the exemption notification 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 read with the explanation dated 21.7.2015? HELD THAT - Before 17.7.2015, the only condition in the exemption notification was that no CENVAT credit should have been availed on the inputs used in manufacture of the goods. It is obvious that the CENVAT credit will not be available at all if the goods are manufactured outside India and therefore, it is impossible to have availed CENVAT credit on the goods manufactured outside India. Therefore, it is fair to assume that no CENVAT credit was availed on the inputs used in the manufactured of imported goods. Therefore, the condition that no CENVAT credit should have been availed is fulfilled with respect to imported goods. After 17.5.2015, a second condition has been added that Central Excise duty should have been paid on the inputs. Just as it is impossible for the manufacturer outside India to have availed CENVAT credit, it is equally impossible for Central Excise duty to have been paid on the inputs used in the manufacture of the goods. Therefore, it is reasonable to assume that this condition was not fulfilled with respect to imported goods just as it is reasonable to assume that no CENVAT credit has been availed. If the exemption notification is read as per the appellant‟s submissions, it will put the domestic industry at a disadvantage and unduly favour the imported goods. To claim the benefit of the same exemption notification, the domestic industry will have to manufacture it out of duty paid inputs while the imported goods will get this benefit without paying duty on the inputs. Any exemption notification must be strictly interpreted as it is drafted and there cannot be any intendment while interpreting it. The person claiming the benefit of the notification will have to fulfill all the conditions in the notification. If the conditions are not fulfilled, the benefit is not available. The benefit of the exemption notification 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 will not be available to the goods which are imported - Hon'ble High Court of Madras in M/S HLG TRADING VERSUS UNION OF INDIA, JOINT SECRETARY, TRU CENTRAL BOARD OF EXCISE AND CUSTOMS, CHIEF COMMISSIONER OF CUSTOMS, COMMISSIONER OF CUSTOMS, M/S ADITYA INTERNATIONAL LTD AND OTHERS 2015 (11) TMI 313 - MADRAS HIGH COURT and in THE COMMISSIONER OF CUSTOMS (EXPORTS) VERSUS M/S. PRASHRAY OVERSEAS PRIVATE LIMITED, CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL 2016 (5) TMI 1106 - MADRAS HIGH COURT held that the benefit of the exemption notification will not be available to the imported goods. In the facts of these cases, the matters pertained to the period after the amendment 34/2015-CE dated 17.7.2015 adding the new condition that central excise duty should have been paid on the inputs was introduced and further after the explanation was inserted by 37/2015-CE dated 21.07.2015. The undisputed position is that there are two conditions (1) no CENVAT credit should have been availed which is fulfilled and (2) that excise duty should have been paid on the inputs which has not been fulfilled. Respectfully following the judgment of the Madras High Court, it is held that the appellants were not entitled to the benefit of 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 for the CVD on the imported goods. There is no infirmity in the impugned orders - Appeal dismissed.
Issues Involved:
1. Entitlement to the benefit of Central Excise Notification No. 30/2004-CE dated 9.7.2004 as amended by Notification No. 34/2015-CE dated 17.7.2015 for the additional duty of Customs (CVD) on imported goods. Summary: Issue 1: Entitlement to the benefit of Central Excise Notification No. 30/2004-CE for CVD on imported goods before 17.7.2015: The appellants argued that the benefit of the exemption notification 30/2004-CE should be available for the CVD on imported goods, citing the Supreme Court decision in SRF Ltd. vs Commissioner of Customs, Chennai, which held that the benefit would be available since it is impossible for a foreign manufacturer to avail CENVAT credit on inputs used in the manufacture of imported goods. The Tribunal agreed that before the amendment on 17.7.2015, the only condition was that no CENVAT credit should have been availed, which is inherently fulfilled for imported goods. Issue 2: Entitlement to the benefit of Central Excise Notification No. 30/2004-CE for CVD on imported goods after 17.7.2015: After the amendment on 17.7.2015, an additional condition was introduced that the appropriate amount of Central Excise duty should have been paid on inputs. The appellants contended that since it is impossible to pay Central Excise duty on inputs manufactured outside India, the condition should be deemed fulfilled. However, the Tribunal held that the condition of paying Central Excise duty on inputs cannot be waived for imported goods. The Tribunal emphasized that exemption notifications must be strictly interpreted, and the benefit cannot be extended if the conditions are not met. Issue 3: Interpretation of the explanation inserted on 21.07.2015: The appellants argued that the explanation stating that "appropriate duty includes nil duty" should mean that non-payment of duty on inputs manufactured outside India should be considered as payment of duty at NIL rate. The Tribunal rejected this interpretation, stating that the explanation does not nullify the requirement of paying duty on inputs but only clarifies that NIL duty, if applicable, is acceptable. Issue 4: Precedents and conflicting judgments: The Tribunal acknowledged conflicting decisions from coordinate benches and the Madras High Court. The Tribunal chose to follow the Madras High Court's decision in Prashray Overseas Pvt. Ltd., which held that the benefit of the exemption notification is not available to imported goods if the conditions are not fulfilled. The Tribunal found no infirmity in the impugned orders and dismissed all appeals. Conclusion: The Tribunal upheld the impugned orders, concluding that the appellants are not entitled to the benefit of the exemption notification 30/2004-CE as amended by Notification No. 34/2015-CE for the CVD on imported goods due to the non-fulfillment of the condition of paying Central Excise duty on inputs. All appeals were dismissed.
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