9911796707
TMI Blog2017 (3) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... f imposed will take it beyond the consolidated rate of 16% in terms of N/N. 21/2002, dated 01.03.2002, as CVD, at the rate of 16% is already imposed. Which of the two duties is to be levied, i.e., ADE or SAD? - Held that: - Since, ADE is exempted, quite clearly, the respondents were entitled to levy SAD, as was indicated, initially. ADE could be sourced to Section 3(5) of CTA, in our view, is also erroneous for the following reasons : First, ADE is in the nature of excise duty leviable under the 1957 of the Act. Its an imposition in the form of additional duty on articles imported into India and is traceable to Section 3(1) of CTA, and not, to Section 3(5) of CTA. A plain reading of Section 3(5) of CTA would show that additional duty on the imported articles, is levied to counter-balance Sales Tax, Value Added Tax, Local Tax, or other charges for the time being levied on a like article upon on its sale, purchase, or transportation in India which cannot be imposed at the rate exceeding 4%. Clearly, therefore, the justification provided for levy of ADE at the rate of 8% under Section 3(5) of CTA, cannot be sustained. Appeal allowed - decided in favor of appellant-assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, was issued, subject to the condition, that the goods imported would be used in the manufacture of textile garments and / or leather garments. In other words, the imported goods could not be sold and disposed of in the domestic market. 5.1. Admittedly, the goods which were imported by the appellant were diverted to the domestic market and thereby, ended up violating the conditions of import. 6. This information was made available to the customs authority, which resulted, ultimately, in the issuance of a show cause notice dated 28.05.2003 (in short, SCN). 6.1. The record shows that no reply to the SCN was filed by the appellant; a fact which has been admitted before us by Mr.Murugappan. 7. The appellant, however, filed an application before respondent no.1, i.e., the Customs and Central Excise Settlement Commission, (hereinafter, referred to as 'the Settlement Commission'), on 15.09.2003. 8. We must indicate, at this juncture, that apart from the appellant, there were eight other entities, which were issued, a show cause notice, for the very same infraction, that is, for diversion of goods to the domestic market. 8.1. Furthermore, along with the appellant, the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty (in short BCD ), Counter Vailing Duty (in short CVD ). CVD was levied at the rate of 16%. Apart from this, Additional Duty of Excise (in short, ADE) was also levied, albeit, at the rate of 8%. 12.1. In addition thereto, the appellant was also called upon to pay cess at the rate of 0.5% of the aggregate of assessable value and BCD, as per the table appended to the final order. 12.2. In lieu thereof, the appellant was given immunity from interest in the excess of 10%; penalty, fine and prosecution under the Act. 13. The appellant, however, was not satisfied with the final order passed by the Settlement Commission, as it sought to levy ADE at the rate of 8%. Resultantly, the appellant filed a writ petition, under Article 226 of the Constitution. The learned Single Judge, as stated at the very outset, dismissed the writ petition, as also, the review petition preferred by the appellant. 14. It is, in these circumstances, that the appellant has preferred the instant appeal before us. 15. In support of the appeal, arguments have been advanced by Mr.Murugappan, while the respondents are represented by Mr.Sundareswaran. 16. Mr.Murugappan, has briefly submitted that under the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... background that, at the relevant time, before the Settlement Commission the appellant took the stand that it could only be called upon to pay BCD and CVD at the rate of 16%. 19.4. In other words, according to the appellant, the Customs Authorities could neither impose SAD, nor, could the Settlement Commission, by way of the final order have imposed ADE, in view of the terms of the Notification No.21/2002, dated 01.03.2002. 20.This submission, however, today, is not pressed before us, by the learned counsel, given the nature of the proceedings from which, the instant appeal emanates. The learned counsel says that he is conscious of the fact that the appellant on its own volition, had approached the Settlement Commission for a settlement, based on the duty delineated under various heads of duty as set out in the SCN. 20.1.The SCN referred to three components of duty, i.e., BCD, CVD and SAD. 20.2.Therefore, the learned counsel submits that neither he nor the Settlement Commission, given the nature of proceedings, can go beyond the SCN. 20.3.Thus, in other words, the submission is that the appellant, in a case, de hors a settlement proceeding, could have, perhaps, argued that duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission in its second report dated the 18th December, 1990. .... " (emphasis is ours) 26. If that be so, then, Mr.Murugappan is right in his contention, which is that, the Notification No.21/2002, dated 01.03.2002, would come to the aid of the appellant. 26.1.The reason being that the said notification which is issued under Section 25 of the Act, exempts, so much of additional duty which is leviable under sub-section (1) of Section 3 of the CTA, which is in excess of the rate specified in the corresponding entry in column 5 of the table appended to the said notification. Section 3 (1) of the CTA speaks about excise duty. The entry 410 in Column 5 of the table appended to Notification No.21/2002, dated 01.03.2002, restricts the duty to 16%. 27. Therefore, in our view, as correctly submitted by Mr.Murugappan, ADE, which is in the nature of excise duty is the additional duty, which, if imposed will take it beyond the consolidated rate of 16% in terms of Notification No.21/2002, dated 01.03.2002, as CVD, at the rate of 16% is already imposed. 27.1. Therefore, this brings us to the next point, that is, as to which of the two duties is to be levied, i.e., ADE or SAD. Since, ADE is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002. 30.2. These are notifications which provide for effective rates of SAD. 30.3. The relevant entry in Notification No.23/2002, dated 01.03.2002, is set out at serial no.62, which is a residuary entry and, it reads as follows: S. No. Chapter or heading or sub-heading Description of goods Standard rate 62 Any Chapter All goods, other than those specified against S.Nos.1 to 61 above 4% ad valorem 31. It is not in dispute that even if ADE was traced to 3 A (1) of CTA, by virtue of the Notification, the rate of duty could only be 4%. The indication in the proviso to Section 3A(5) of the CTA that the rate of duty could be 8% is subject to any Notification being issued by the Central Government. Since, a Notification is in place, the rate of duty could not have exceeded 4%. 32. This brings us to the last aspect of the matter, as to whether the Settlement Commission could have gone beyond the SCN. 33. As indicated, right at the beginning, the SCN only speaks of three components of duty, i.e., BCD, CVD and SAD. The Settlement Commission, while, giving relief to the appellant, vis-a-vis, SAD has by way of settlement imposed ADE upon it, for the reasons given in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Commissioner of Central Excise, (2005) 7 SCC 159). 36. The learned Single Judge's reasoning for dismissing the writ petition is, broadly, pivoted on the following rationale : Firstly, that the appellant had conceded to the imposition of ADE @ 8%. It appears that the learned Single Judge has concluded that, since, the appellant allowed the case to be settled, on the said basis, it is thereafter estopped from contending to the contrary. The other reason given by the learned Single Judge, in coming to the conclusion, that the writ petition was not viable, and therefore, had to be rejected, was that, such ADE could be levied under Section 3(5) of the CTA. 36.1. We are unable to agree with the learned Single Judge, with regard to the either of the two reasons given by him, in support of his conclusion that the writ petition could not be entertained. 36.2. As indicated above, the appellant had principally objected to levy of SAD @ 4%. The Settlement Commission, while agreeing with this submission of the appellant, ended up, imposing ADE @ 8%. According to us, as discussed above, only one of the two duties could have been levied, i.e., SAD or ADE. 36.3. The provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
