2023 (11) TMI 972 - AT - Customs

Discharge of education cess and secondary higher education cess that had been debited against scrip issued under the Merchandise Exports from India Scheme (MEIS) in the Foreign Trade Policy (FTP) - HELD THAT - In terms of the decision of Hon ble High Court of Bombay in LA TIM METAL INDUSTRIES LIMITED VERSUS THE UNION OF INDIA AND ORS. 2022 (11) TMI 1099 - BOMBAY HIGH COURT , it would appear that the proposal for recovery itself was flawed inasmuch as any cess collectible as percentage of duty liability, and which is exempted thereof under any notification, could not be computed in the absence of any duty liability. It is also on record that circular no. 3/2022 dated 1st February 2022 of Central Broad of Indirect Taxes Customs (CBIC) relates to social welfare surcharge and it is quite likely that lack of specific reference to this surcharge precluded acceptance of the submission in the impugned order. The Hon ble High Court of Madras in M/S. KTV HEALTH FOOD PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (PREVENTIVE) , TIRUCHIRAPALLI 2021 (10) TMI 119 - MADRAS HIGH COURT had held that When such a circular was issued by the Customs Department and the same having been implemented in respect of various people like the petitioner, the benefit of the said circular cannot be denied to the petitioner on the alleged reason that, the education cess or the higher and secondary education cess being a different component cannot be treated as customs duty or additional customs duty and therefore, the benefit conferred under Clause 11 of the said circular cannot be made available to the petitioner. In view the decisions cited supra and the clarification of Central Board of Indirect Taxes Customs (CBIC), nothing survives in this matter - the impugned order is set aside - appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are seeking 'out-of-turn' disposal of appeal, duty payment aspect, debiting of scrip for discharge of cess, absence of specific provision in policy for payment, relevant notifications, judicial determinations, circular of Central Board of Indirect Taxes & Customs (CBIC), and decisions of the Hon'ble High Courts.

Out-of-turn Disposal of Appeal:
The application sought 'out-of-turn' disposal of appeal no. C/86304/2022 against the order of Commissioner of Customs (Appeals), Mumbai. The applicant's counsel argued that the issue is covered by the decision of the Hon'ble High Court of Bombay and followed by the Tribunal in other decisions. After hearing both sides, the application was allowed for disposal.

Duty Payment Aspect:
The dispute revolved around the demand raised for the discharge of 'education cess' and 'secondary & higher education cess' debited against the scrip issued under the Merchandise Exports from India Scheme (MEIS) in the Foreign Trade Policy (FTP). The objection was primarily against debiting the scrip for cess discharge without specific provision in the policy or relevant notification. The impugned order did not consider the decisions of the Hon'ble Bombay High Court in re LA Tim Metal & Industries Limited.

Judicial Determinations and Circular of CBIC:
Referring to the decision of the Hon'ble High Court of Bombay in re LA Tim Metal & Industries Limited, it was noted that any cess collectible as a percentage of duty liability exempted under any notification could not be computed in the absence of duty liability. The circular no. 3/2022 of CBIC related to 'social welfare surcharge,' and lack of specific reference to this surcharge affected the submission in the impugned order. The judgment highlighted the statutory declaration made by the Act of Parliament regarding the imposition of education cess and secondary & higher education cess on imported goods.

Decision and Disposal of Appeal:
Considering the decisions cited and the CBIC clarification, the impugned order was set aside, and the appeal was allowed. It was concluded that nothing further remained in the matter, and the appeal was disposed of accordingly.