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TMI Blog2023 (9) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... ties in Coimbatore regarding clearance of parts of Switches to Una unit till the time of the audit of unit took place - The Notification No. 21/2002-Cus. dated 01.03.2002 allows the benefit of concessional rate of duty only if the imported goods are used for the manufacture of Switches, Relays and Connectors. Whereas the manufacture of Switches not done in the Coimbatore unit but only the parts and sub-assembly of Switches. Reference made to the decision of the Apex Court in the case MIHIR TEXTILES LTD. VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1997 (4) TMI 75 - SUPREME COURT ], wherein it was held that when concessional relief of duty is made dependent of satisfaction of certain conditions, the relief cannot be granted in the absence of satisfaction of the conditions even if the conditions are only directory. Any Notification has to be interpreted strictly and the benefit of the Notification is not extendable when the conditions are not complied with. In the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL [ 2010 (11) TMI 13 - SUPREME COURT ], the Hon ble Apex Court has held that in respect of exemption notification, the conditions of the notification have to be complied with if exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 316/2013 dated 20.09.2013 of the Commissioner of Customs and Central Excise (Appeals), Trichy rejecting the appellant's appeal filed against the Order-in-Original No. 01/2013-ADC dated 21.03.2013. 2. The Additional Commissioner of Customs, Coimbatore vide order dated 21.03.2013 has ordered for recovery of Rs.36,94,921/- being an amount equal to the difference between the duty leviable on the goods imported and the concessional rate of duty availed in terms of Notification No. 25/99-Cus dated 28.02.1999 in terms of Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 (herein after this Rules will be called as Customs Rules, 1996) read with Section 28 (5) of Customs Act, 1962 along with interest. 3.1 Brief facts of the appeal are that the appellant is engaged in the manufacture of Modular Switches and Parts falling under Central Excise Tariff Heading No. 85369090 and 85389000 of the Central Excise Tariff Act. The appellant imported parts of Relays, Switches and Connectors availing the benefit of concessional rate of duty as per Notification No. 25/99-Cus dated 28.02.1999. In order to avail the above concession, the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962. Consequently, investigation carried out also revealed that the appellant failed to maintain proper accounts to reflect the quantity of imported inputs used in the manufacture of Switches and parts of Switches contravening the Rule 7 of the Customs Rules, 1996 for non-observance of the conditions of the Notification and Customs Rules, 1996 in respect of permission granted. A Show Cause Notice came to be issued to the appellant which was resulted in demand of duty along with interest, confiscation of goods and imposition of fine and penalty as mentioned in paragraph 2 above. 4.1 The Ld. Advocate Shri T. Ramesh has submitted that the appellant has complied with all the conditions of Notification No. 25/99-Cus dated 28.02.1999 read with the Customs Rules, 1996 and there was no dispute regarding receipt of the imported goods in their factory premises, and required manufacturing activities were carried out for manufacture of final product Switches and Modular Plates. He has submitted that all the manufactured sub-assemblies/parts of switches in SKD/CKD condition from Samichettypalayam unit at Coimbatore were cleared on payment of Central Excise duty to their unit at Una, Himachal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search [2005 (187) ELT 495 (Tri. Bang.)] iv) FCD Ltd. vs. Commissioner of Central Excise, Belapur [2017 (357) ELT 464 (Tri. Mumbai)] 4.5 The Ld. Advocate for the appellant has contended that the demand raised under Rule 8 of the Customs Rules, 1996 is not sustainable as the recovery of Customs duty for short payment and non-payment can be made only under Section 28 of the Customs Act, 1962. 4.6 It has been put forth that the period involved is from 2005-06 to 2010-11 (upto 01.11.2010) whereas the Show Cause Notice was issued on 14.07.2011 only. It is argued that the Show Cause Notice has not been issued under Section 28 of the Customs Act, 1962 and extended period has not been invoked. There is no suppression with an intent to evade payment of duty and the appellant has complied with all the conditions of the Notification No. 25/99-Cus dated 28.02.1999. The Department had full knowledge of the activities of the appellant and the goods cleared from one unit of the appellant to other unit at Himachal Pradesh was on payment on Central Excise duty. The appellant has filed periodically statutory returns declaring the use of imported materials for the manufacture and clearance of par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any security for an amount of Rs. 50,00,000/- for the purpose of import of goods at concessional rate of duty for manufacture of excisable goods. In the Registration Certificate, the importer manufacturer's address was given as M/s. Salzer Electronics Ltd. Unit-III, Samichettipalayam, Coimbatore - 641 047. The Notification No. 25/99-Cus dated 28.02.1999 allows concessional rate of duty for import of parts of Relays, Switches and Connectors to be used for manufacture of Relays, Switches and Connectors. The appellant in this Case has manufactured not complete Relays/Switches/Connectors but parts of these products which were admittedly cleared entirely to their unit at Una, Himachal Pradesh. 8.2 The contention of the Revenue is that the appellant has contravened the provisions of the Notification read with the Customs Rules, 1996 by not manufacturing the Switches in the declared premises. As a result, in terms of Rules 8 of the Customs Rules, 1996, a demand was raised for recovery of concessional rate of duty availed by the appellant on imported goods. For ease of reference the relevant part of the Notification is extracted below: - Sl. No. Chapter Description of Impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate obtained under Customs Rules, 1996 indicate that the appellant has declared only the factory premises at Samichettipalayam, Coimbatore as a manufacturing premises. The Notification No. 21/2002-Cus. dated 01.03.2002 allows the benefit of concessional rate of duty only if the imported goods are used for the manufacture of Switches, Relays and Connectors. Whereas the manufacture of Switches not done in the Coimbatore unit but only the parts and sub-assembly of Switches. 8.5 An elaborate procedure is prescribed in the Customs Rules, 1996 for availing either exemption or concessional rate of duty in order to ensure that the imported goods are used in manufacture of specified goods and duly accounted for. These Rules are framed so that the jurisdictional authority could monitor the utilization of the goods imported at concessional rate of duty. The appellant by not intimating the Department regarding clearance of not the final products as envisaged in the Notification but by clearing only parts of Switches to their another unit located in another state, has contravened the provisions of the said Notification and the Customs Rules, 1996. The decisions of the lower adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. In Novopan Indian Ltd. (supra), this Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. A Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave - (1996) 2 SCR 253, held that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption." 9.2 Further, the Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company [2018 (361) ELT 577 (SC)] has also held that the words in a statute when clear, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in terms of the Customs Rules, 1996. The issue involved in this dispute is whether semi-finished goods which were cleared and used in the manufacture of the specified finished goods in another manufacturing unit of the appellant can be extended the concessional duty benefit of the Notification ibid. 10.3 Whereas in the case of Tamil Trading Corporation supra, the issued involved was interpretation of the expression 'his factory' and it was held that the importer need not be the owner of the factory for availing the benefit of the notification prescribing the end use as a condition. 10.4 In the case of Electronic Research Ltd. supra, the goods imported with duty concession for use at one factory were transferred to another unregistered factory located at another place after informing the jurisdictional officers. Whereas in this case, such an intimation has not been made. The appellant must be aware of the fact that complete switches are not scheduled to be made in their Coimbatore factory. During the entire period of dispute, complete switches are never made and only parts/sub-assemblies were made and transferred to their unit at Una, Himachal Pradesh for completing the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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