CX - Unit set up in backward area - however, tractors not exempted under the Maharashtra VAT Act, 2002 – Prima facie benefit of Notfn. 23/2003 available - case made for waiver of adjudged dues – Stay granted: CESTAT
By TIOL News Service
MUMBAI, MAR 28, 2013: BY denying the benefit of notification 23/2003-CE dated 31.03.2003, a demand of more than Rs.210 Crores has been confirmed along with interest and penalties against the applicant (a 100% EOU) by the Commissioner of Central Excise, Pune-III.
Incidentally, many of the assessees have realized by now that there is no reason for getting overawed by such ballooning demands for they almost always have a very short shelf life in their records and only help the officers win some brownie points during its lifespan.
Take a look at the extract from the notification in question -
"In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) (hereinafter referred to as the Central Excise Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below, and falling within the Chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, produced or manufactured in an export oriented undertaking or an Electronic Hardware Technology Park (EHTP) Unit or a Software Technology Park (STP) Unit and brought to any other place in India in accordance with the provisions of Export and Import Policy and subject to the relevant conditions specified in the Annexure to this notification, and referred to in the corresponding entry in column (5) of the said Table, from so much of the duty of excise leviable thereon under section 3 of the Central Excise Act as specified in the corresponding entry in column (4) of the said Table.
Table
Sr.No. | Chapter or heading No. or sub-heading No. | Description of Goods | Amount of Duty | Conditions |
(1) | (2) | (3) | (4) | (5) |
1. | Any Chapter | All goods | Duty of excise leviable thereon as is equivalent to the special additional duty of customs leviable on such goods under section 3 A of the Customs Tariff Act, 1975 (51 of 1975) read with proviso to sub-section (1) of section 3 of the said Central Excise Act, 1944. | 1 |
……….
ANNEXURE
Sr. No. | Conditions |
1. | If the goods being cleared into Domestic Tariff Area are not exempted by the State Government from payment of sales tax. |
It is the allegation leveled by the Revenue that the applicants are manufacturing and clearing the tractors to DTA without paying any Sales Tax or VAT and hence they are not entitled for the benefit of the notification 23/2003-CE as the condition 1 in the notification is not satisfied.
Before the CESTAT with a Stay application, the applicant submits as under -
+ The tractors are not exempted under the Maharashtra Value Added Tax Act, 2002. The tractors are liable to sales tax @4% upto 31.3.2012 and thereafter @5% as per Schedule ‘C' to the Maharashtra Value Added Tax Act, 2002.
+ The state government granted a special concession to the unit under the Package Scheme of Incentives 1993 as the applicants set up unit in the backward area.
+ Under that scheme, the liability to pay VAT under the State Act is exempted. The unit is exempted from payment state tax liability. As the tractors are not exempted from payment of VAT under the State Act, therefore the benefit of Notification is wrongly denied.
+ VAT under the State Act is leviable at every point when tractors sold by the dealers sales tax is paid. In view of this, the contention is that the benefit is available to the applicant.
The Revenue representative reiterated the findings of the lower authority and also brought to the notice of the Bench that the Duty Exemption Certificate issued by the State Government is in the previous names of the applicant and the constitution of the present applicant undergone so many changes.
The Bench after extracting the relevant portion of the notification in question observed -
"9. The contention of the applicant is that the goods in question i.e. tractors are not exempted under the State Sales Tax. The applicants submitted that as per Schedule "C" of the State Act, tractors are liable to pay state tax @ 4% upto 31.3.2012 and thereafter @ 5%. The state government has granted exemption to the unit from their sales tax liability under the Package Scheme of Incentive 1993.
10. The fact that the tractors which are cleared to DTA by the applicants are not exempted from payment of sales tax or VAT under the Act. Therefore, prima facie the applicant has made out a case for waiver of the dues. Pre-deposit of the dues is waived and recovery thereof stayed for hearing of the appeals."
Considering the sky-high amount of Tax involved, the Bench directed the Registry to list the appeal on the 4th April.
We will keep you posted…
(See 2013-TIOL-520-CESTAT-MUM)
