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TMI Blog2023 (11) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... re not part of the taxable turnover as per the provisions of this Section 7. The transactions in respect of sample do not fall under the category of exempt goods as defined by the U P Vat Act, 2008. These clearances were not subjected to the VAT in view of the provisions contained in Section 7. The wordings of proviso of the notification No No 23/2003-CE dated 31.03.2003 as amended by Notification No 22/2006-CE dated 01.03.2006 are unambiguous and they refer to exempt goods under VAT Act. In the present case the goods are not specified as exempt goods as defined under the VAT Act, but are not the part of taxable turnover. The impugned order is without any merits - appeal allowed. - HON BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) AND HON BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) APPEARANCE: For the Appellant : None for the Respondent : Shri Manish Raj, Authorised Representative SANJIV SRIVASTAVA: This appeal is directed against Order-in-Appeal No. 70/APPL/NOIDA/13 dated 22/03/2013 passed by Commissioner (Appeals) Customs, Central Excise Service Tax, Noida. By the impugned order following has been held:- 4.8 Here the referred notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 It was assumed that on clearances of the samples vide Invoice No. AGLD 9922 dated 01.02.2008 under the numbers of CDRs were cleared/marked as sample and they had not charged CST/VAT in respect of these goods, this indicating that they were not charge VAT in respect of these clearances. 2.3 From the scrutiny of the ER-2 returns for the period January, 2011 to June, 2011, it was observed that appellant had paid additional duty of SAD @ 4% adv. amounting to Rs. 73,565/- under protest on clearances effected from their EOU against the samples during the period 01.01.2011 to 30.06.2011. 2.4 Show cause notice dated 16.09.2011 was issued to the appellant asking them to show as to why- i) Central Excise duty, i.e. SAD @ 4%, amounting to Rs. 73,565/-(Rs seventy three thousand five hundred sixty five only) - involved on free samples cleared from E.O.U. to DTA during the period 01.1.2011 to 30.6.2011, as detailed in Annexure - A, to the show cause notice should not be demanded and recovered from them under first proviso to Section-11A(1) of the Central Excise Act, 1944 read with provisions of Notification no 23/2003-CE dated 31.03.2003 as amended. Since M/s MBIL, has paid 4% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening of sale of goods and the sale tax is ultimately passed on to the consumer. Notfn. No. 23/2003-CE dt. 31.03.2003 grants exemption from SAD provided Sales Tax/ VAT is paid on the goods cleared in D.T.A. In this case party has cleared samples from their unit and no VAT 'is paid by theft. Here the crucial aspect for consideration of inclusion of SAD is payment of sales tax as pre-condition 15. As per section 3(5) of Customs Tariff Act, 1975, the Central Government levies the Addl. Duty on the imported goods to counterbalance Sales Tax / VAT etc. The levy of SAD is applicable to all cases at the time of clearance of goods in D.T.A., if the goods do not suffer the burnt of Sales Tax. Thus in the absence of levy of sales tax/VAT, the SAD is applicable on all the goods cleared under D.T.A. Therefore I am of the view the samples cleared by M/s MBIL during the period 01.1.2011 to 30.6.2011, without payment of VAT is liable for 'Payment of SAD as per provision of para 6.8 of Foreign Trade Policy read with Notfn. No. 23/2003-CE dated 31.03.2003 as amended and Section 11A of Central Excise Act, 1944. 16. Further I find that M/s MBIL were well aware of the fact that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). 4.4 For interpreting the above notification as amended by Notification No. 22/2006 dated 01.03.2006 Commissioner (Appeals) has observed as follows:- 4.8 Here the referred notification should not only be confined to its grammatical or ordinary parlance, but it should also be construed in the light of the contest. In the instance case the intention of the legislation to tax or to counterbalance the sales tax, VAT/CST or local tax in case the imported goods are not subjected to sales tax, VAT/CST or in other words plainly exempted from sales tax, VAT/CST as held by the Hon'ble CESTAT larger bench in appellant's own case vide Misc. Order No. 411/09-EX (DB) dated 26.06.2009. 4.9 In view of the above, the impugned order of the Adjudicating Authority has no infirmity and is correct based on the law for demanding the SAD on the goods cleared from the factory in the shape of sample quoting not for sale in DTA. The clearance in the shape of Sample cannot be denied as clearance of goods from the factory. The contention of the appellant that the goods has been cleared in the DTA as Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned or described in column 2 of Schedule-IV; (an) taxable turnover of sale means turnover obtained after deducting from the gross turnover of sale such amounts as may be prescribed; (aq) turnover of sale means the aggregate of amount of sale prices of goods, sold or supplied or distributed by way of sale by a dealer, either directly or through another, whether on his own account or on account of others; 7. Tax not to be levied on certain sales and purchases No tax under this Act shall be levied and paid on the turnover of (a) sale or purchase where such sale or purchase takes place (i) in the course of inter-state trade or commerce; or (ii) outside the State; or (iii) in the course of the export out of or in the course of the import into, the territory of India; (b) sale or purchase of any goods named or described in column 2 of the Schedule I or; (c) such sale or purchase; or sale or purchase of such goods by such class of dealers, as may be specified in the notification issued by the State Government in this behalf: Provided that while issuing notification under clause (c), the State Government may impose such conditions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the benefit of the exemption under the notification, the goods must be made from raw material on which excise duty has, as a matter of fact, been paid, and has been paid at the appropriate or correct rate. Unless the manufacturer has paid, the correct amount of excise duty, he is not entitled to the benefit of the exemption notification. 7. Where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it. To goods made out of such material the notification will not apply. 8. The notification is intended to give relief against the cascading of excise duty - on the raw material and again on the goods made therefrom. There is no cascading effect when no excise duty is payable upon the raw material and the hardship that the notification seeks to alleviate does not arise. 4.6 The decision of larger bench of Tribunal referred in the impugned order is in respect of conditional exemption given to certain clearance of goods under VAT Act and is not applicable to the facts of present case. In our view impugned order is without any merits. 5.1 Appeal is allowed. (Dictated and pronounced in open court) - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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