2023-TIOL-45-SC-CUS
UoI Vs Cosmo Films Ltd
Cus - Revenue is in appeal against the Gujarat High Court judgment wherein mandatory fulfilment of a 'pre-import condition' incorporated in FTP and Handbook of Procedures by notification 33/2015-20 and 79/2017-Cus, both dated 13.10.2017 was set aside - According to the High Court, such fulfilment in order to claim exemption of IGST and GST Compensation Cess on inputs imported into India for the production of goods to be exported from India on the strength of an Advance Authorisation is arbitrary and unreasonable.
Held:
+ By the Notification No. 18/2015-Cus dated 01.04.2015, goods imported into India against valid AAs were exempted from the whole of the duty of customs leviable thereon and from the whole of the additional duty, safeguard duty, transitional product specific safeguard duty and anti-dumping duty leviable thereon, respectively, under Sections 3, 8B, 8C and 9A of the Act. The GST regime came into force with effect from 01-07-2017. However, no corresponding amendment was carried out to this notification but Section 3 of the Customs Tariff Act, 1975 was amended by substituting Sections 3 (7) and (9), whereby levy of integrated tax and levy of Goods and Service Tax compensation cess was incorporated. [para 44]
+ Section 3 of the Customs Tariff Act, 1975 was also amended after the coming into force of the GST regime. [para 45]
+ As there was no corresponding notification exempting the additional duties leviable under Sections 3 (7) and (9) CTA, exporters had to pay IGST and compensation cess and seek input tax credit as applicable under the GST Rules. [para 46]
+ The Union Government then issued an amending notification dated 13-10-2017 (Notification 79/2017 - dated 13.10.2017) inter alia exempting IGST leviable thereon under sub-section (7) of section 3 and compensation cess leviable under sub-section (9) of section 3.
+ However, the amending notification also introduced a proviso in condition (viii) and a condition (xii) which mandated that the exemption from integrated tax and the goods and services tax compensation cess leviable thereon under sub-section (7) and sub- section (9) of section 3 of the Customs Tariff Act shall be subject to pre- import condition. [para 47]
+ Thus, exemption from levy of IGST under Section 3 (7) and compensation cess leviable under Section 3(9) of Customs Tariff Act, 1975 were subject to the conditions that the export obligation shall be fulfilled by physical exports only and shall also be subject to 'pre-import condition'. [para 48]
+ At this stage, the exporters were made aware of the changes brought about due to the introduction of GST, through a trade notice, (DGFT Trade Notice 11/2017 , dated 30-06-2017). [para 49]
+ The public notice clearly forewarned that AAs and their utilisation would not continue in the same manner as the AA scheme was operating hitherto. This trade notice has escaped the attention of the High Court, since there is no advertence to it in the impugned order, or a discussion about it. Likewise, the HBP was amended, and paragraph 4.27 (d) was inserted, which stated that duty free authorisation for inputs subject to 'pre-import condition' could not be issued. [para 50]
+ By virtue of the trade notice, exporters were made aware of the fact that under the GST regime, no exemption from payment of IGST and compensation cess would be available for imports under AA. Importers had to pay IGST and take input tax credit as applicable under GST rules. [para 51]
+ The retention of the power to impose 'pre-import conditions' on articles other than those specified in Appendix-4J, meant that the DGFT could exercise it, in relation to any goods. The High Court has not discussed this aspect, and proceeded on the assumption that only specified goods were subject to the 'pre-import condition'. This omission, together with the High Court's failure to notice paragraph 4.27 (d) of the HBP are serious infirmities in the impugned judgment. [para 57]
+ The exemption was, however, not absolute. The conditions incorporated in the Notification (No. 79/2017), were one, that the exemption could only be extended so long as exports made under the AAs were physical exports in nature and the other that to avail such benefit, one was to follow the 'pre-import condition'. [para 58]
+ Introduction of the 'pre-import condition' may have resulted in hardship to the exporters, because even whilst they fulfilled the physical export criteria, they could not continue with their former business practices of importing inputs, after applying for AAs, to fulfil their overseas contractual obligations. Yet, that cannot be a ground to hold that the insertion of the 'pre-import condition', was arbitrary, as the High Court concluded. [para 62]
+ If one keeps in mind that there cannot be a blanket right to claim exemption, and that such a relief is dependent on the assessment of the State and tax administrators, as well as the state of the economy and above all, the mechanism for its administration, clearly the argument of discriminatory treatment of the two levies on the one hand, and the other taxes on the other, has to fail. [para 65]
+ When reform by way of new legislation is introduced, the doctrine of classification cannot be applied strictly, and that some allowance for experimentation, to observe the effect of the law, is available to the executive or legislature. [para 66]
+ Therefore, there is no constitutional compulsion that whilst framing a new law, or policies under a new legislation - particularly when an entirely different set of fiscal norms are created, overhauling the taxation structure, concessions hitherto granted or given should necessarily be continued in the same fashion as they were in the past. [para 67]
+ In this case, the disruption is in the form of exporters needing to import inputs, pay the two duties, and claim refunds. Yet, this inconvenience is insufficient to trump the legislative choice of creating an altogether new fiscal legislation, and insisting that a section of assessees order their affairs, to be in accord with the new law. Therefore, the exclusion of benefit of imports in anticipation of AAs, and requiring payment of duties, under Sections 3 (7) and (9) of Customs Tariff Act, 1975, with the 'pre-import condition', cannot be characterized as arbitrary or unreasonable.
+ The exporter respondents' argument that there is no rationale for differential treatment of BCD and IGST under AA scheme is without merit. The impugned notifications, therefore, cannot be faulted for arbitrariness or under classification. [para 69]
+ The High Court was persuaded to hold that the subsequent notification of 10.01.2019 withdrew the 'pre-import condition' meant that the Union itself recognized its unworkable and unfeasible nature, and consequently the condition should not be insisted upon for the period it existed, i.e., after 13.10.2017. This court is of the opinion that the reasoning is faulty.
+ It is now settled that the FTPRA contains no power to frame retrospective regulations. Construing the later notification of 10.01.2019 as being effective from 13.10.2017 would be giving effect to it from a date prior to the date of its existence; in other words the court would impart retrospectivity. [para 70]
+ To give retrospective effect, to the notification [01/2019-Cus] of 10.01.2019 through interpretation, would be to achieve what is impermissible in law. [para 71]
+ In the process of unification, if a certain section of the business is inconvenienced, and would have to pay taxes and conditions are imposed upon their ability to freely import inputs (for the purpose of export), this alone cannot lead the court to conclude that such a change is unreasonable or arbitrary. [para 74]
+ The impugned judgment and orders of the Gujarat High Court are hereby set aside. However, since the respondents were enjoying interim orders, till the impugned judgments were delivered, the Revenue is directed to permit them to claim refund or input credit (whichever appliable and/or wherever customs duty was paid).
+ Revenue shall direct the appropriate procedure to be followed, conveniently, through a circular, in this regard [para 75]
- Appeals allowed :SUPREME COURT OF INDIA
2023-TIOL-314-CESTAT-AHM
Hindustan Petroleum Corporation Ltd Vs CC
Cus - The issue involved is that whether valuation of bulk liquid cargo has to be taken on quantity actually received i.e shore tank receipt quantity or quantity mentioned in bill of lading/ invoice - One more issue involved is, whether the refund claim is maintainable without challenging assessment of bill of entry - As regard the issue that which quantity should be taken for purpose of assessment in case of import of liquid bulk cargo, this issue is no longer res integra , as same is settled by various Tribunals judgments and by Apex Court in case of Manglore Refinary 2015-TIOL-199-SC-CUS - Therefore, on merit of case issue is settled, hence for the purpose of assessment of Bulk liquid Cargo in present case the duty is payable on quantity received in shore tank and not the quantity mentioned in Bill of Leading/invoice - As regard the appeal which is in respect of refund of differential duty between shore tank quantity and quantity mentioned in bill of lading in respect of 9 bills of entry, it is admitted fact that these bills of entry were not challenged by filing appeal before Commissioner (A) - However, it is a claim of appellant that bills of entry were not finally assessed - Appellant has opportunity to challenge, if they aggrieved with, reassessment or final assessment of bills of entry - However, neither by department nor by appellant, made it clear that whether assessment of bills of entry is still provisional or final, therefore matter of refund needs to be remanded to Adjudicating Authority: CESTAT
- Matter remanded: AHMEDABAD CESTAT
2023-TIOL-313-CESTAT-MAD
CGST & CE Vs Nelcast Ltd
CX - Assessee is engaged in manufacture of castings - It was noticed that they have availed credit on service tax paid on freight charges for outward transportation of goods upto port for export of the same - Assessee had also availed credit of service tax paid on CHA charges - Department was of the view that said credit is not admissible for the reason that factory gate is place of removal - SCN was issued proposing to deny credit and to recover the same along with interest and for imposing penalty - Department has argued that issue has been referred to Larger Bench - On perusal of interim order, it is found that issue that is referred to Larger Bench is whether the factory gate or buyer's premises can be considered as place of removal for purposes of availing credit on outward transportation charges - The goods having been exported, there is no doubt that place of removal is the port of export as clarified by Board circular 999/6/2015-CX - No grounds found to interfere with impugned order passed by Commissioner (A): CESTAT
- Appeals dismissed: CHENNAI CESTAT
2023-TIOL-312-CESTAT-MUM
Parthenon India Pvt Ltd Vs CCGST
ST - Appellant had filed a refund application claiming refund of accumulated CENVAT Credit available in Books of Accounts - Same were adjudicated upon by original authority in sanctioning refund benefit in certain cases and in some of the cases refund benefit was denied - On appeal, Commissioner (A) has also allowed refund benefit in some of the cases and denied such benefit to appellant on the ground that invoices were addressed in old address of appellant and thus, benefit of refund was not available - The issue regarding mention of wrong address in disputed invoices has not been agitated by Department at the time of availment of CENVAT Credit by appellant - Since the Department has failed to invoke such provisions at the relevant point of time, benefit of refund provided under Rule 5 ibid, cannot be curtailed on the issues, like invoices mentioned some other address and there is no nexus with exportation of output service - Authorities below have not discussed the issue regarding entitlement of appellant to the benefit of refund inasmuch as, there is no specific discussion as to whether the procedures laid down under Rule 5 ibid as well as notification have not been complied with by appellant - In absence of such specific findings being recorded, rejection of refund benefit cannot be sustained - Denial of refund benefit by Department will not stand judicial scrutiny as per the authoritative decisions rendered by judicial forum - No merits found in impugned order, in so far it has denied CENVAT benefit to appellant - Therefore, impugned order is set aside: CESTAT
- Appeal allowed: MUMBAI CESTAT |
