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TMI Blog2020 (11) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... ff Act - even the levy of additional duty under section 3 of the Tariff Act, which is in addition to the duty of customs under section 2 of the Tariff Act, would not be duty of customs for the purpose of Notifications issued under the Customs Act. It is, therefore, clear that though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act. A perusal of the main body of the Exemption Notification would indicate that it refers not only to duty of customs leviable thereon which is specified in the First Schedule to the Tariff Act, but also to integrated tax and compensation cess which are leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. However, column (3) of the Table accompanying the main Notification for serial no. 2 refers to only duty of cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Appeal allowed - decided in favor of appellant. - Customs Appeal No. 51732 of 2019 - FINAL ORDER NO. 51226-51571/2020 - Dated:- 2-11-2020 - MR. JUSTICE DILIP GUPTA, PRESIDENT AND MR. C L MAHAR, MEMBER (TECHNICAL) Shri B L Narasimhan and Ms. Jyoti Pal, Advocates for the Appellant Shri J P Singh, Sunil Kumar and Shri Rakesh Kumar, Authorised Representatives of the Department for the Respondent. Customs Appeal No. 51732 of 2019 with 53906 of 2018- 54001 of 2018, 53777 of 2018- 53785 of 2018, 53787 of 2018- 53792 of 2018, 53794 of 2018- 53805 of 2018, 53807 of 2018- 53815 of 2018, 51153 of 2019- 51189 of 2019, 51733 of 2019- 51790 of 2019, 51906 of 2019- 51923 of 2019, 51791 of 2019- 51890 of 2019 ORDER 1. All these 346 appeals have been filed by M/s Interglobe Aviation Limited [ the Appellant ]. The issue raised in all these appeals is about the availability of Integrated Goods and Service Tax [the Integrated Tax] exemption provided at serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017[the Exemption Notification ], as amended by Corrigendum Notification dated July 22, 2017, to aircrafts and parts thereof that are re-imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is stated that when the engines/ auxiliary power units or other parts of the aircrafts began to develop defects, they were exported out of India for repairs to M/s Pratt Whitney, which is a maintenance and repair organisation specializing in maintenance of parts/ aircrafts. It is further stated that at times, the aircrafts also have to be exported out of India for repairs and maintenance. The repaired parts/ aircrafts are thereafter re-imported into India and at the time of re-import, Bills of Entry are filed. These Bills of Entry are assessed to basic customs duty and integrated tax at the applicable rates. The dispute in all these appeals is as to whether the Appellant is justified in claiming exemption of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India during the period from August, 2017 to March, 2019. 7. The Appellant had claimed exemption at the time of re-import from payment of basic customs duty for aircrafts/ parts under a Notification No. 50/2017 dated June 30, 2017. There is no dispute in these appeals with regard to this exemption. The dispute is in regard to the levy of integrated tax on the re-import of air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (7) of section 3 of the Tariff Act was substituted with effect from July 1, 2017. Section 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges.- (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article. Provided xxxx xxxx xxxx Explanation- xxxx xxxx xxxx (7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under section 5 of the Integrated Goods and Service Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section(8). (8) For the purposes of calculating the integrated tax under sub-section (7) on any imported article where such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Tariff Act, as is in excess of the amount indicated in the corresponding entry in column (3) of the said Table. Table Sl No. Description of goods Conditions (1) (2) (3) 1. xxxx xxxx xxx xxxx xxxx xxxx 2. Goods, other than those falling under Sl No. 1 exported for repairs abroad Duty of customs which would be leviable if the value of re-imported goods after repairs were made up of the fair cost of repairs carried out including cost of materials used in repairs (whether such costs are actually incurred for not), insurance and freight charges, both ways. 13. Learned Counsel appearing for the Appellant made the following submissions: (i) Duty of customs, as mentioned in the conditions for serial no. 2 of the Exemption Notification, cannot be interpreted to include integrated tax within its purview since a plain reading of the Exemption Notification clearly denotes that what is payable in terms of serial no. 2 is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Learned Authorised Representatives of the Department, however, supported the impugned order passed by the Commissioner (Appeals) and made the following submissions: (i) The intention of the Exemption Notification is to give relief from levy of certain components of duty of customs, depending on the nature of the re-imported goods. The duty of customs, among others, includes (A) basic customs duty i.e. duty of customs leviable thereon under section 2 which is specified in the First Schedule and (B) additional duty, integrated tax, compensation cess leviable thereon respectively under sub-sections (1), (7) and (9) of section 3 of the Tariff Act. In the body of the Exemption Notification, before the Table, while exempting the re-imported goods, the Notification categorically mentions duty of customs leviable under the First Schedule, besides integrated tax, additional duty and compensation cess, but while imposing conditions for the said exemption in column 3 of the Table, the Exemption Notification consciously uses the phrase duty of customs only, (and not duty of customs leviable thereon which is specified in the said First Schedule), which fact has to be given due weight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-sections (7) and (9) of section 3 of the Tariff Act, as is in excess of the amount indicated in the corresponding entry in column (3) of the Table. 18. The Exemption Notification makes reference to the Tariff Act. Section 12 of the Customs Act also provides that duties of customs on goods imported into India shall be levied at such rates as may be specified under the Tariff Act. Section 2 of the Tariff Act provides that the rates at which duties of customs shall be levied under the Customs Act are specified in the First and the Second Schedules. Section 3 of the Tariff Act deals with levy of additional duty equal to excise duty, sales tax, local taxes and other charges. Sub-section (1) provides that any article which is imported into India, shall in addition, be liable to a duty to be called as additional duty, which would be equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. Sub-section (7) provides that any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding 40 per cent as is leviable under section 5 of the Integrated Goods and Services Tax Act [Integrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but also under any other law for the time being in force . Thus, the integrated tax leviable on imported goods by the Integrated Tax Act would also be a duty of customs and, therefore, the Appellant was correctly denied exemption from integrated tax leviable under section 3(7) of the Tariff Act. 23. It is not possible to accept this contention of the learned Authorized Representatives of the Department. Section 2(15) of the Customs Act defines duty to mean duty of customs leviable under the Customs Act. Section 12(1) provides that the duties of customs shall be levied at such rates as may be specified in the Tariff Act or any other law for the time being in force. It only means that the rates for duties of customs can be specified either under the Tariff Act or any other law for the time being in force. It does not expand the meaning of duties of customs . What is important to notice is that whereas section 2 of the Tariff Act refers to duties of customs , section 3 of the Tariff Act does not refer to duties of customs . It only provides for levy of additional duty equal to the excise duty, sales tax, local taxes and other charges. Additional duty is levied under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is in addition to the duty of customs under section 2 of the Tariff Act, would not be duty of customs for the purpose of Notifications issued under the Customs Act. 27. The Bombay High Court in Ceat Tyres of India Limited vs. Union of India [1992 (57) ELT 221 (BOM.)] also held that the expression duty of customs covered only the basic customs duty and not the additional duty. The observations are as follows: 2. By a Notification issued under section 25 (1) of the Customs Act, 1962, the goods specified in the Table thereto were, when imported into India, exempted from so much of that portion of the duty of Customs leviable thereon as was in excess of the rates specified in the corresponding column of the Table. The argument on behalf of the petitioners was that the expression duty of customs covered not only the basic customs duty but also additional and auxiliary duty. A Single Judge of this Court has taken the view that duty of customs covers only basic customs duty and not additional or auxiliary duty. The Kerala High Court has taken the same view. A special Leave Petition was filed before the Supreme Court against this judgment of the Kerala High Court and it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962). 30. It is, therefore, clear that though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act. 31. It also needs to be noted that the term integrated tax has not been defined either under the Customs Act or the Customs Tariff Act or under the Exemption Notification. As integrated tax is not levied under section 12 of the Customs Act, it cannot be called duty of customs . The charging section for integrated tax, in terms of which it is levied, is section 5 of the Integrated Tax Act and not section 3(7) of the Tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment intended to include integrated tax and compensation cess in the expression duty of customs. 36. It is not possible to accept this reasoning advanced by the learned Authorised Representatives of the Department. In the first instance, the meaning assigned to duty of customs, as discussed above, is the meaning assigned to duty under section 2(15) of the Customs Act, which would be the duty leviable under section 12 of the Customs Act. Mere omission to mention specified in the First Schedule to the Tariff Act after Duty of customs in the conditions set out in column (3) of the Table for Serial No. 2 cannot lead to an inference that duty of customs would include integrated tax and compensation cess. Column (3) of the Table refers to Duty of customs which would be leviable. Section 2(15) of the Customs Act defines duty to mean a duty of customs leviable under the Customs Act. It is section 12 of the Customs Act which provides that the duties of customs shall be levied at such rates as may be specified under the Tariff Act. Section 2 of the Tariff Act also provides that the rates at which duty of customs shall be levied under the Customs Act are specified in the Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excises Salt Act, 1944 . The Supreme Court observed that it is not uncommon that at times the Legislature, with a view to making its intention clear beyond doubt, uses words which may not be strictly necessary to be added since without them the same intention can be spelt out as a matter of judicial construction and this would be more so in the case of subordinate legislation by the executive. It often happens that the officer may employ words with a view to leaving no scope for possible doubts or even for greater completeness, though these words may not add anything to the word or scope of the subordinate legislation. Therefore, even if the words duty of excise leviable under the Central Excises and Salt Act, 1944 did not find place, as in some of the exemption notifications, it would not necessarily lead to an inference that the expression duty of excise was intended to refer to all duties of excise, including the special auxiliary duties of excise. The Supreme Court emphasised that the expression duty of excise has to be interpreted bearing in mind the context in which it occurs. The Supreme Court, therefore, concluded that the expression duty of excise must bear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne bearing in mind the context in which it occurs. We have already pointed out that these notifications having been issued under Rule 8(1), the expression `duty of excise in these notifications must bear the same meaning which it has in Rule 8(1) and that meaning clearly is excise duty payable under the Central Excises and Salt Act, 1944 as envisaged in Rule 2 clause (v). It cannot in the circumstances bear an extended meaning so as to include special excise duty and auxiliary excise duty. (emphasis supplied) 39. What also needs to be kept in mind is that mention of duty of customs, integrated tax and compensation cess in the main body of the Exemption Notification implies that the Government was conscious of the distinction between the three. What is also important to notice is that after the phrase duty of customs levied thereon which is specified in the said First Schedule , there is a comma before and the integrated tax, compensation cess leviable thereon . This also clearly shows that duty of customs, integrated tax and compensation cess are three different entities. Above all, all the three, namely, duty of customs, integrated tax and compensation cess have been use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited and the relevant paragraph is reproduced below: 32. The learned counsel for respondent rightfully pointed out that the legislature has consciously used the expression may and shall at different places in the same Section, i.e., Section 9A of the Act. In such a scenario, it has to be presumed that different expressions were consciously chosen by the Legislature to be used, and it clearly understood the implications thereof. Therefore, when the word may is used in the same Section in contradistinction to the word shall at other places in that very Section, it is difficult to interpret the word may as shall . Therefore, it is difficult to read the word may as shall . 44. The Andhra Pradesh High Court in Madhucon Projects Limited also observed that two different expressions in a statute must be construed to carry different meanings and the observations are as follows: IX. Two Different expressions in a statue must be construed to carry different meanings : 49 . As Parliament has used two different expressions in the Explanation to two distinct provisions, this Court cannot presume the effect of both the Explanations to be the same. If both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Duty (1) (2) (3) 1. xxxx xxxx xxx xxxx xxxx xxxx 2. Goods, other than those falling under Sl No. 1 exported for repairs abroad Duty of customs which would be leviable if the value of re-imported goods after repairs were made up of the fair cost of repairs carried out including cost of materials used in repairs (whether such costs are actually incurred or not), insurance and freight charges, both ways. 47. It would be seen that the aforesaid Notification refers to the duties of customs leviable thereon which is specified in the said first schedule, the additional duty leviable thereon under section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act, whereas the instant Exemption Notification refers to duty of customs leviable thereon which is specified in the said First Schedule and the integrated tax, compensation cess leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. Thus, the additional duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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