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Judgment
,,
Revenue being aggrieved by the orders passed on 08.11.2011, 04.11.2011, 14.12.2011, 30.04.2012, 19.03.2012, 19.03.2012, 20.06.2012, 15.10.2012",,
and 12.11.2012 by ld. Commissioner (Appeals) setting aside the adjudication, which had imposed 5% Additional Custom Duty (ACD), has come in",,
appeals before the Tribunal.Â,,
2.1 Ld. Commissioner (Appeals) analysing section 3 of Customs Tariff Act, 1975 (hereinafter referred to as “the 1975 Actâ€)read with section 5A",,
of Central Excise Act, 1944 (hereinafter referred to as “the 1994 Actâ€) was of the opinion that not extending the benefit of Notification",,
No.30/2004 and No.1/2011 shall be violation of Article 14 of Constitution of India. He held that homeopathy medicines manufactured in India and sold,,
in the domestic market, attracts 1% CVD whereas, the imported homeopathy medicines attracts 5% of duty at the time of import thereof. Point of",,
taxation under Section 5A of the Central Excise Act, 1944, is the removal of goods from factory which is similar to import of goods filing Bill of Entry",,
for home consumption. Both are identical situations and there is no material difference between the two in sum and substance as well as,,
nomenclature. Not granting uniform treatment in a like situation vitiates the right to equality principle guaranteed under Article 14 of the Constitution.,,
Support was drawn by him from the case of K.T. Moopil Nair Vs. State of Kerala [AIR 1961 (SC) 552 ]w, herein the Constitutional Bench of",,
Hon’ble Supreme Court had examined the legality of the levy of land tax and its constitutionality.,,
2.2 Ld. Commissioner further held that the principles evolved in the above referred judgement have been consistently followed in various judicial,,
decisions and the core issue in the present case is as to whether there is any discrimination of duty which sought to be charged on the imported,,
homeopathy medicines vis-a-vis indigenously manufactured homeopathy medicines and sold in India and if there is any discrimination, whether such",,
discrimination has satisfied the test of reasonability and has any object to be achieved and serve larger public interest under the Constitution of India.,,
He further recorded in his order that admittedly, as per the Department, there is discrimination in charging the different rates of duty between the",,
imported homeopathy medicines and indigenously manufactured medicines. There is no object likely to be achieved by discrimination. On the contrary,",,
levy of additional duty will be against the spirit of providing affordable medicine to the common man of this country. As interpreted and held by the,,
Hon’ble Supreme Court, right to life guaranteed Article 21 of the Constitution includes right to health and right to health includes right to affordable",,
medicines also. Levy of discriminatory duty definitely denies the right to get medicine at an affordable price and that is detrimental to public or,,
common interest.,,
3.1 Revenue’s preliminary objection is that ld. commissioner (Appeals) is not a writ court but being a statutory authority should have acted within,,
the frame work of law without deciding the appeal as if that was a writ petition before him. Deciding the appeal by him as unconstitutional under,,
section 3 of Customs Tariff Act, 1975 is not the power of ld. commissioner (Appeals). He allowed major exemption to the respondent from ACD",,
directing to pay 1% against imported goods while levy @ 5% was legitimate to provide level playing field to the domestic players against the imports.,,
Decision of ld. commissioner (Appeals) is contrary to law. A statutory authority being a creature of the statute should not usurp powers of a,,
constitutional authority and convert the appeal before him into a Writ. He has also no power to criticise the vires of the statute.,,
3.2 According to Revenue, the goods imported by respondent was granted exemption in terms of Notification No.1/11/-CE dated 01.03.2011 by ld.",,
commissioner (Appeals) while ld. adjudicating authority directed the levy of ACD @ 5% in terms of that Notification. Ld. Adjudicating Authority,,
rightly opined that the goods imported has availed equal treatment of credit in foreign country for which no concession in duty ought to have been,,
allowed under the Notification. Ld. commissioner (Appeals) interpreted section 3 of Customs Tariff Act, 1975 in a manner to grant undue advantage",,
to the respondent disturbing the level playing to the domestic players. His interpretation resulted in granting exemption of duty to the extent of 4%,,
towards Additional Customs Duty (ACD) imbalancing the level playing field and domestic manufacturers were adversely placed, which is contrary to",,
law. Ld. commissioner (Appeals) in essence frustrated the spirit of the levy on imports.,,
Revenue’s emphasis was that the decision of Apex Court in the case of Eagle Flask Industries Ltd. [2004 (171) ELT 296 (SC) ]holds the field,,
being a latest one subsequent to the decision in the case of Hyderabad Industries Ltd. [1999 (108) ELT 321 (SC)]. Repeatedly all the courts in this,,
country beginning from Motiram Tolaram [1999 (112) ELT 749 (SC)] judgement have held that the assessee who claims benefit of a Notification has,,
to satisfy the condition of that Notification strictly. To avail the concession, Respondent failed to discharge burden of proof and failing to show that the",,
imported goods were manufactured from inputs on which no credit of duty paid on raw material was availed, it fails to get concession of 4% ACD.",,
Levy should have been 5% on the imported goods.,,
Revenue further submitted that section 3 of Customs Tariff Act, 1975 specifically mandates that quantum of ACD shall be to the extent of excise",,
duty imposed on like articles if processed and manufactured in India. Input credit being allowed as set off in India, similar benefit is also allowed",,
abroad. Allowance of such treatment in the exporting country cannot be ignored. Therefore, duty of the respondent is to satisfy that no credit was",,
enjoyed abroad in order to claim rate of ACD to be @ 1% instead of 5% against the imports made. To support its contention, Revenue relied on the",,
decision of Tribunal in the case of Howrah Ispat Pvt. Ltd. [2008 (227) ELT 136 (Tri.-Kol)] proposing that levy of 5% ACD would be justified.,,
According to Revenue, if the Notification in question is interpreted in the manner ld. commissioner (Appeals) has done that shall be a threat to",,
indigenous industries and shall defeat purpose of law as well as grant undesirable benefit to respondent severely competing with the like goods,,
manufactured in India. Revenue’s further emphasis was that if paras 3, 7 and 8 of the said judgement is considered along with five judges",,
judgement in the case of Hyderabad Industries (supra), adjudication orders need to be restored setting aside the appellate order.",,
6.1 Rebutting the contentions of Revenue, ld. counsel for Respondent submitted that in the case of Mapsa Tapes Pvt. Ltd. [2009 (247) ELT 188",,
(Tri.)] it has been held that goods imported are entitled to exemption from ACD what an indigenously manufactured goods enjoys. His emphasis was,,
that where it is not possible to determine as to whether the imported goods has enjoyed CENVAT credit, respondent cannot be denied the exemption",,
in terms of Notification No.1/11-CE dated 01.03.2011. It was also argued that Section 3 of the Customs Tariff Act, 1975 is analogous to Section 4 of",,
the Central Excise Act, 1944. Hence levy and exemption as notified under Section 5A of the Central Excise Act, 1944 are equally applicable to the",,
goods imported and covered by Section 3 of the Customs Tariff Act, 1975.",,
6.2 Respondent contended that the basic condition of the Notification to be satisfied is that the importer should not avail any CENVAT or Input credit.,,
When the importer is neither registered with the Service Tax Department nor with the Central Excise Department, the question of availing of the",,
credit under the CENVAT Credit Rules, 2004 does not arise and for this “Obvious Reasonâ€, the exemption benefit has to be extended.",,
6.3 It was further contention of the Respondent that as per the settled position of law that parity has to be maintained between the imported goods and,,
indigenously manufactured goods for the purpose of charging of duty on the imported goods and granting exemption. Section 3 of the Customs Tariff,,
Act, 1975 and Section 4 of the Central Excise Act, 1994 are analogous to each other. Any discrimination between the imported goods and",,
domestically manufactured goods while charging additional duty and granting exemption without any object would be treated as unreasonable,,
classification and action of the State shall be arbitrary in the context of Article 14 of the Constitution of India, 1950.",,
6.4 The Respondent further argues that the decision of the ld. Original Authority was based on the ratio of the judicial decision in the case of M/s.,,
S. No.,"Chapter or
heading or sub-
heading or tariff
item of the First
Schedule",Description of the excisable goods
(1),(2),(3)
37,30,"Medicaments (including those used in Ayurvedic, Unani, Siddha,
Homeopathic or Bio-chemic systems), manufactured exclusively in
accordance with the formulae described in the authoritative books
specified in the First Schedule to the Drugs and Cosmetics Act,
1940 (23 of 1940) or Homeopathic Pharmacopoeia of India or the
United States of America or the United Kingdom or the German
Homeopathic Pharmacopoeia, as the case may be, and sold under
the name as specified in such books or pharmacopoeia
time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any,,
percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value",,
of the imported article :,,
Provided that in case of any alcoholic liquor for human consumption imported into India, the Central Government may, by notification in",,
the Official Gazette, specify the rate of additional duty having regard to the excise duty for the time being leviable on a like alcoholic liquor",,
produced or manufactured in different States or, if a like alcoholic liquor is not produced or manufactured in any State, then, having",,
regard to the excise duty which would be leviable for the time being in different States on the class or description of alcoholic liquor to,,
which such imported alcoholic liquor belongs.,,
Explanation. - In this sub-section, the expression “the excise duty for the time being leviable on a like article if produced or",,
manufactured in India†means the excise duty for the time being in force which would be leviable on a like article if produced or,,
manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of",,
articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty.â€",,
8.4 Reasoning of the provision enacted in section 3(1) of the 1975 Act shows that a parity mechanism is prescribed to levy ACD on imported,,
homeopathy medicine, which is equal to the amount of excise duty for the time being leviable on a like article if produced or manufactured in",,
India. That is levied under the premises that an article imported into India can be produced or manufactured in India and exigible to the levy,,
of excise duty in terms of Section 3(1) of 1975 Act. Such levy is made even if the goods imported into India are not capable of being manufactured in,,
India or are not in fact manufactured in India. The expression “excise duty for the time being leviable on a like article if produced or,,
manufactured in Indiaâ€, which occurs in Section 3(1) of the Tariff Act, 1975 means excise duty for the time being in force which would be leviable",,
on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or",,
description of articles to which the imported article belongs.,,
8.5 According to the agreement between member countries of WTO, the members are required to extend input duty remission on the final goods and",,
there shall be no levy of local taxes and duties on the goods meant for export from the exporting countries. Not only CENVAT credit is granted or,,
rebate of excise duty is allowed on finished goods meant for export, but duty draw back, if any, is also allowed on the goods exported. Such practice is",,
followed by member countries as mandate. Therefore, the goods entering into India from outside India do not come with local tax, levies or duty",,
component therein, whereas like goods indigenously manufactured suffer from excise duty in India @ 5% ad velorem availing input tax credit.",,
8.6 To the stage of availing input tax credit on manufacture, both foreign goods and Indian goods are in par. But situation differs when the goods are",,
meant for export duty free from exporting countries. The goods manufactured in India suffer excise duty when cleared for domestic consumption.,,
Burden of excise duty @ 5% is borne by such goods. Therefore, to bring both the goods to par, imported goods are prescribed by section 3(1) of 1975",,
Act to suffer burden of ACD in addition to basic customs duty. This trade remedy measure prescribed by law is to bring equilibrium to both the goods,,
so as to ensure fair trade and make them competitive. Without ACD, the foreign goods would be cheaper by 4% or 3% as the case may be (5% - 1%",,
or 2%) and indigenously manufactured goods bearing duty burden of 5% shall go out of market. Levy of ACD in addition to basic customs duty is a,,
mechanism to provide level playing field under WTO regime. This is provided to protect indigenously manufactured goods to be free from threat of,,
foreign competition. Such a level playing being intention of section 3(1) of 1975 Act, there cannot be a plea that the homeopathy goods have entered",,
into India without input tax concession and not liable to ACD @ 5% but shall be liable to concessional duty of 1% or 2% as the case may be during,,
material period.,,
8.7 Germany being a member of WTO, it has obligation to provide input tax credit to its manufacturers against liability on finished goods and no output",,
duty is payable by them against the goods meant for export. It may also be stated that law of member countries provide refund of input tax if that is,,
not possible to be set off against any duty liability. Accordingly, the medicines imported by Respondent from Germany being without levy of duty",,
thereon, is liable to ACD equal to excise duty levied in India on like goods which is @ 5% at the material time.",,
8.8 It is settled position that goods are only exported by exporting countries but not taxes thereon. Accordingly, the homeopathic medicine imported",,
from Germany without input tax component therein and export thereof duty free, is an advantageous for that product which adversely affects the",,
domestic goods suffering 5% excise duty cleared for domestic consumption. Accordingly, the levy of ACD @ 5% on the imported goods is meant to",,
offset the burden of excise duty on the domestic goods. Therefore, no levy of ACD @ 5% defeats the object of fair trade making Indian goods",,
costlier by 4% or 3% as the case may be than the imported goods. Tribunal had occasion to deal with similarly situated case in the case of Howrah,,
Ispat Pvt. Ltd. Vs. CC (Prev), Patna [2008 (227) ELT 136 (Tri. -Kol.)] in following terms:-",,
“6. Shri Bagaria, learned Sr. Advocate, in the above context, states that the cited decisions of the Hon’ble Supreme Court in J.K.",,
Synthetics (supra) and Hyderabad Industries (supra) were not brought to the notice of the Larger Bench which had decided earlier the,,
appellants’ own case. Hence, he urges this Bench to examine the matter afresh and allow the exemption in question.",,
After considering the arguments from both sides as well as the case records and cited decisions, we find that the same issue was the",,
subject matter of the Tribunal in the appellants’ own case in the case of M/s. Howrah Ispat v. CC(P), West Bengal reported in 2003",,
(160 ) E.L.T. 1022. The appellants have not gone in further appeal, but have accepted the said decision. Moreover, the Tribunal in that",,
case followed the decision of the 5 Members Larger Bench in the case of Priyesh Chemicals (supra), which also has not been appealed",,
against. The cited decisions of the Hon’ble Supreme Court were very much available to the appellants, but these were not cited.",,
Moreover, we find that the learned Advocate appearing for the department brings to our notice that a 3 Judges Bench of the Hon’ble",,
Supreme Court in the case of CCE, Navi Mumbai v. Amar Bitumen & Allied Products Pvt. Ltd. - 2006 (202) E.L.T. 213 (S.C.) has held that",,
when the Order of the Tribunal on the same question is not appealed against, the issue attains finality and questioning its correctness later",,
on, is not permissible.â€",,
8.9 The Board circular relied by Revenue subscribes to the aforesaid proposition of law. In view of the mandate of the law that the goods imported,,
shall be treated as like article, produced and manufactured in India, there cannot be plea that such goods are excluded from availing CENVAT credit.",,
Hon’ble apex court in the case of Hyderabad Industries Vs. Union of India [1999 (108) ELT 321 (SC)] has held that the levy of ACD is justified,,
if the goods are capable of manufacture in India and are not in fact manufactured in India. The levy of ACD shall be equal to the excise duty leviable,,
on the imported goods as if that is manufactured in India. When the duty remission by way of CENVAT credit is admissible to the output, the goods",,
imported into India shall be treated as manufactured in India and the respondent shall fail to succeed on the plea that the imported goods have not,,
availed the duty remission for exports under WTO regime.,,
8.10 Respondents’ reliance in the case of Mapsa Tapes Pvt. Ltd. Vs. CCE, Delhi-IV [2009 (247) ELT 188 (Tri. -Del.)] and in the case of",,
Prashray Overseas Pvt. Ltd. Vs. CC, Chennai [2008 (232) ELT 63 (Tri. -Chennai)] is misplaced for the reason that the case of Priyesh Chemicals",,
and Metals was decided in 2005 and the case of Mapsa Tapes Pvt. Ltd. was decided on 26.05.2009 without considering the decision of the Larger,,
Bench of the Tribunal in the case of Priyesh Chemicals and Metals. In the case of Mapsa Tapes Pvt. Ltd., the goods imported was woven fabrics and",,
such woven fabric being manufactured out of silk yarn and waste silk yarn, which are not liable to excise duty in India were exempted from CVD.",,
But in the present case of the respondents, there was no import of the input, which are duty free under central excise law in India nor the homeopathy",,
goods is duty free under Central Excise Tariff Act, 1985. Law is well settled that if excise duty is not leviable on the manufacture of goods, the",,
question of import of like goods to suffer any additional customs duty does not arise as has been held in the case of CCE, Amritsar Vs. M/s. Malwa",,
Industries Ltd. [2009 (235) ELT 214 (SC)]. Therefore, the respondents are liable to ACD equal to central excise duty as if the goods imported were",,
manufactured in India with all remissions, concessions and impositions. The facts and circumstances of M/s. Dhana Exim Vs. CC, Chennai [2006",,
(193) ELT 565 (Tri. - Chennai)] and CCE, Madras Vs. Sudharsan Pine Products Ltd. [1999 (111) ELT 78 (Tribunal)] relied by respondent are",,
altogether different from the present context of the case.,,
8.11 When an exemption or concession in duty is granted on certain goods, the Notification so granting or exempting is read strictly and not casually to",,
ascertain the intention, scope and object thereof. The Notification No.01/2011-C.E., dated 01.03.2011 prescribing concessional duty is available to the",,
goods exported without availing CENVAT credit. The plea of no CENVAT credit availed by the homeopathic medicines exported is contrary to the,,
WTO agreement made between the member countries in absence of satisfaction of conditions of the Notification by the respondent who has failed to,,
discharge the burden of proof in this regard.,,
8.12 It may be reiterated that the levy of ACD having been settled by apex court in the case of Hyderabad Industries Vs. Union of India [1999 (108),,
ELT 321 (SC)] holding that the goods coming to India are liable to ACD, which is equal to the excise duty on the premises that such goods come into",,
existence as a result of production, manufacture of like article in India, the levy of ACD @ 5% to counter-balance the excise duty leviable is justified.",,
8.13 An exemption Notification is read strictly. The claimant of such benefit has to prove that conditions of the Notification have been satisfied,,
discharging burden of proof following the ratio laid down in the case of Motiram Polaram Vs. Union of India [1999 (112) ELT 749 (SC) ]and the ratio,,
laid down in the case of Eagle Flask Industries Ltd. Vs. CCE, Pune [2004 (171) ELT 296 (SC.) ]The respondents failed to discharge the burden of",,
proof to the effect that the goods imported did not avail remission of CENVAT in the exporting country under WTO agreement.,,
8.14 For the reasoning stated above, it is not desirable to burden this order with further citations made by both the sides, which shall be a redundant",,
exercise. Accordingly, all the appeals filed by Revenue are allowed upholding the adjudication and the orders passed by ld. commissioner (Appeals)",,
are set aside.,,
(Pronounced in the open Court on 23.09.2014),,