J.C.T. Ltd. Vs. Commissioner of Customs, - Court Judgment

Excerpt:
2. in the order impugned in the appeal, the commissioner has confirmed the demand for duty issued to the appellant on the ground that the benefit of notification 203/92 has been wrongly availed of. the commissioner finds that modvat credit had been availed of in the manufacture of the exported goods, thus contravening the conditions contained in clause (v)(b) of the notification.3. we have read the memorandum of appeal. the first contention in the appeals is that the credit referred to in paragraph 5 of the notification refers to credit taken of the additional duty of customs paid on the imported goods used in the manufacture of the export product, and would apply to credit of excise duty. we do not find this proposition acceptable. the condition refers to "input stage credit" under rule 56a or rule 57a. going by the plain meaning of these words, both kind of credits i.e. the central excise duty as well as the additional duty of customs would be covered. it would not be correct to say that solely because the notification exempts import goods from customs duty, it cannot prescribed condition with regard to taking credit of excise duty. the pivot of the duty exemption is that the imported goods should either be themselves used in the manufacture of the product to be exported, or that they are required to replenish of other material, indigenous or other material used in the manufacture of exported product. the benefit of the notification is available, irrespective of whether the export has taken place prior to the import of the exempted material, or subsequently. on consideration these aspect, it is clear that the condition of the notification is violated, if the credit is taken on the customs duty or excise duty paid on the raw material used in the manufacture of exported product.4. it is next contended that the credit in that case has been reversed in 1998. the commissioner has considered this aspect and held that since the reversal was after the last date provided in the amnesty scheme promulgated by the government, it cannot be accepted. no reason is advanced as to why we should interfere with his finding. the mere fact that the departmental authority has permitted such reversal is irrelevant. if a manufacturer decides to reverse the credit that he taken, it is not open to the department to stand in his way.5. it is next urged that while duty has been demanded on the entire quantity of goods mentioned in the import licence, the import was only to the extent of 1228.1 kilograms of raw material, and that therefore there has been an incorrect calculation of duty. sufficient material has not been produced to enable us to come a clear finding. we think that the commissioner should be asked to consider this aspect.6. the appeal is accordingly allowed and the impugned order set aside.the appellant may furnish before the commissioner within two months from the receipt of this order, evidence in support to show what, according to it, the duty actually payable would be. the commissioner shall, after consider its claim and giving the appellant a reasonable opportunity of being heard pass orders on this aspect in accordance with law.

Judgment:
2. In the order impugned in the appeal, the Commissioner has confirmed the demand for duty issued to the appellant on the ground that the benefit of notification 203/92 has been wrongly availed of. The Commissioner finds that modvat credit had been availed of in the manufacture of the exported goods, thus contravening the conditions contained in clause (v)(b) of the notification.

3. We have read the memorandum of appeal. The first contention in the appeals is that the credit referred to in paragraph 5 of the notification refers to credit taken of the additional duty of Customs paid on the imported goods used in the manufacture of the export product, and would apply to credit of excise duty. We do not find this proposition acceptable. The condition refers to "input stage credit" under Rule 56A or Rule 57A. Going by the plain meaning of these words, both kind of credits i.e. the Central Excise duty as well as the additional duty of Customs would be covered. It would not be correct to say that solely because the notification exempts import goods from Customs duty, it cannot prescribed condition with regard to taking credit of excise duty. The pivot of the duty exemption is that the imported goods should either be themselves used in the manufacture of the product to be exported, or that they are required to replenish of other material, indigenous or other material used in the manufacture of exported product. The benefit of the notification is available, irrespective of whether the export has taken place prior to the import of the exempted material, or subsequently. On consideration these aspect, it is clear that the condition of the notification is violated, if the credit is taken on the Customs duty or Excise duty paid on the raw material used in the manufacture of exported product.

4. It is next contended that the credit in that case has been reversed in 1998. The Commissioner has considered this aspect and held that since the reversal was after the last date provided in the Amnesty Scheme promulgated by the Government, it cannot be accepted. No reason is advanced as to why we should interfere with his finding. The mere fact that the departmental authority has permitted such reversal is irrelevant. If a manufacturer decides to reverse the credit that he taken, it is not open to the department to stand in his way.

5. It is next urged that while duty has been demanded on the entire quantity of goods mentioned in the import licence, the import was only to the extent of 1228.1 kilograms of raw material, and that therefore there has been an incorrect calculation of duty. Sufficient material has not been produced to enable us to come a clear finding. We think that the Commissioner should be asked to consider this aspect.

6. The appeal is accordingly allowed and the impugned order set aside.

The appellant may furnish before the Commissioner within two months from the receipt of this order, evidence in support to show what, according to it, the duty actually payable would be. The Commissioner shall, after consider its claim and giving the appellant a reasonable opportunity of being heard pass orders on this aspect in accordance with law.