Commissioner Of Central Excise, ... vs M/S. Arvind Cotspin Kolhapur

[Arising out of Order-in- Appeal No. PII/BKS/448/2004 dated 8/10/2004 passed by the Commissioner (Appeals) Central Excise, Pune- II]

For approval and signature:

Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities? =======================================================

Commissioner of Central Excise, Pune-II : Appellants

VS

M/s. Arvind Cotspin Kolhapur : Respondent

Appearance

Shri. V. K. Agarwal Addl. Commissioner(A.R.) for the Appellants None for the Respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 4/3/2015 Date of decision 4/3/2015

ORDER NO.

Per : P.K. Jain

We find that there is request from the respondent for an adjournment as the concerned advocate, Shri. S.J. Vyas is suffering from flu. However we find that the issue is already decided by this Tribunal in appellants own case and therefore we are taking up appeal for final decision.

2. This appeal is filed by the Revenue. Brief facts of the case are that the respondent is 100% EOU. They cleared some consignment of cotton yarn in DTA against two Advance Release Orders to M/s. Arvind Mills. Revenues case is that the goods have been cleared in violation of Section 3 of Central Excise Act 1944 and Notification No. 82/92 CE dated 27/8/92 and the respondent assessee is required to pay central excise duty equal to the aggregate of the duties of customs leviable under the provisions of Customs Act, 1962 after deducting an amount of duty equal to the basic Custom duty specified in the first schedule to the Customs Tariff Act, 1975 but respondent assessee paid duty at the rate of 8%. The original authority confirmed demand, respondent filed appeal before first appellate authority. In this case respondent had cleared goods against two Advance Release Orders relating to two Advance Licences. The Commissioner (Appeals) allowed the benefit of Notification No 30/97-Cus dated 1/4/1997 in respect of one release order and denied the benefit in respect of other advance release order. Both the Revenue and respondent assessee filed appeal against the said order, appeal of the Revenue was decided by this Tribunal vide order reported in [2012(276)ELT 76(Tri Mum)] as far as respondents appeal is concerned, the matter was remanded back by this Tribunal vide order No. A/233/WZB/04/C.III dated 6/5/2004 wherein the matter was remanded to the Commissioner (Appeals) for considering amendment dated 17/4/2000 issued by DGFT in the Advance Licence which covers Notification No. 30/97-Cus dated 1/4/97. The Commissioner (Appeals) has passed the impugned order in pursuance of the said direction of the Tribunal. The Commissioner(Appeals) in his order has observed as under:

I have carefully gone through the case records and the various submissions made by the appellants. The present issue is with regard to the benefit of exemption from Additional duty under Section 3 of the Customs Tariff Act, 1975 and the Special Additional duty to the clearances made under the Advance Release Order No. 7/AM-2001 dated 17/4/2000 in respect of Advance Licence No. 0810001807 dated 29/3/2000. It is seen that in the concerned DEEC Book No. A 031442 dated 29/3/2000, the Licensing Authority had endorsed that imports under the Advance Licence NO. 0810001807 dated 29/3/2000 would be covered by Notification No. 31/97-Cus dated 1/4/97. However, I find that DGFT had issued Amendment Sheet No. ONE dated 17/4/2000 in respect of the said Advance Licence No. 0810001807 dated 29/3/2000, whereby the said licence was also endorsed for taking benefit of exemption under Notification No. 30/97-Cus dated 1/4/97. Accordingly, the clearances under the said advance Release Order No. 7/AM-2001 dated 17/4/2000 would be entitled for exemption in terms of the said Notiifcation No. 30/97-Cus dated 1/4/97. A perusal of the said notification shows that it provides for full exemption from Customs duty in the first Schedule to the Customs Tariff Act, 1975 as well as Additional duty under Section 3 of the Customs Tariff Act, 1975. As the above two duties are exempted, special Addl. duty will also be exempted. That being the case, the entire clearances in the Advances Release order No. 7/AM-2001 dated 17/4/2000 in respect of Advance Licence No. 0810001807 dated 29/3/2000 will be exempted from basic customs duty, Additional duty under Section 3 of the Customs Tariff Act, 1975 as well as Special Additional duty. Therefore, the demand of Rs. 62,31,646.31 in respect of clearances under the said Advance Release Order does not survive. As the demand does not survive, the penalty of Rs. 13,70,000/- also does not survive.

Revenue is in the appeal against the said order. Revenues main contention is that the Commissioner (Appeals) has incorrectly extended the benefit of exemption Notification Nos. 30/97-Cus and 31/97-Cus both dated 1/4/1997.

3. Heard Learned A.R.

4. We find that the issue involved is already decided by this Tribunal in appellants own case Commissioner of Central Excise, Kolhapur Vs. Arvind Cotspin [2012(276) E.L.T. 276 (Tri-Mumbai)]. In the said order, this Tribunal has held as under:

4.?The learned advocate appearing for the respondents has submitted that the issue involved in the present appeal has already been decided by the Tribunal in the case of Lipy Lisy Pharmaceuticals P. Ltd. v. CCE, Mumbai-VII reported in 2004 (171)E.L.T. 118 (Tri.-Del.) and this order has already been confirmed by the Supreme Court on 18-7-2005 as reported in 2005 (187) E.L.T. A152 (S.C.).

5.?After hearing both sides, we find that the short question involved in the present appeal is whether the clearance made against the Advance Release Order, additional duty as well as special additional duty are required to be recovered from the respondents. We find that the Tribunal in the case of Lipy Lisy Pharmaceuticals P. Ltd.v. CCE, Mumbai-VII (supra) has held as under :-

4.?Notification No. 82/92 which relates to supplies by EOU etc. against Advance Release Orders in terms of Paragraphs 7.15 or 7.17 of the Export-Import Policy does not grant exemption from additional duty of customs. Revenue, therefore, contends that the exemption Notification must be construed strictly and duty collected on all supplies effected against Advance Release Orders irrespective of whether the Advance Release Order related to advance licences issued under Para 7.3 or 7.4 of Export-Import Policy. As against this, the appellant contends that since the Customs Notification (30/97) and Excise Notification (82/92) have been issued to complement supplies of imports under Scheme, Notification No. 82/92 is required to be construed so as to implement that Policy and not to disrupt the Policy. It is their submission that when Notification is interpreted harmoniously with the different provisions of Para 7.3 and 7.4 of Advance Licence Policy, it would be clear that in the appellants case since the Advance Release Orders had been issued under Para 7.4, no additional duty of customs was leviable. They also point out that a contrary interpretation so as to levy additional customs duty only creates obstacles to an advance licence holder in the sourcing of import, without in any way benefiting the treasury.

5.?We find merit in the contention of the assessee appellant. Its buyer was an advance licence holding export manufacturer. Advance Release Orders were issued to him so as to enable him to procure from Indian producers as well. Since the advance licence was issued under Para 7.4 any import under that licence was eligible for customs duty exemption, including additional duty of customs. The status of advance release order is the same as advance licence. Therefore, supplies against advance release order had also to be on same terms, if domestic supply was to match imports. Therefore, in this scheme of Export-Import Policy and Excise and Customs taxation, it is essential to construe provisions in harmony so that the overall scheme of duty free supply of inputs for export production is rendered effective. We are, therefore, of the opinion that the provisions of Notification No. 30/97 and 82/92 should be read harmoniously and supplies against Advance Release Order issued under Para 7.4 of Export-Import Policy should be treated as eligible for exemption from additional duty of customs also. A contrary construction would disrupt the supplies under Advance Licence Scheme, would create difficulties for advance licence holders and domestic producers by creating a bias in favour of imports. Such an interpretation of notification so as to close the door for domestic supplies and to promote imports is to be avoided. No such bias in favour of imports is to be observed in the Export-Import Policy.

6.?We find that this order has also been confirmed by the Supreme Court. In view of the findings given by the Tribunal, the status of advance release order is the same as that of advance licence and Notification No. 30/97 and 82/92 both are to be read harmoniously, and, therefore, supply made against advance release order should be treated as eligible for exemption from additional duty of customs also. Following the ratio of the said decision, we find that the findings given by the Commissioner (Appeals) are sustainable and accordingly, we uphold the Order-in-Appeal passed by the Commissioner (Appeals) and dismiss the Revenues appeal.

In view of above position we do not find any merit in the appeal of the Revenue and accordingly the same is dismissed.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial) P.K. Jain Member (Technical)

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