We are sharing with you an important judgement of the Hon’ble Supreme Court, in the case of AIDEK Tourism Services (P.) Ltd Vs. Commissioner of Customs, New Delhi  56 taxmann.com 404 (SC)] on following issue:
Whether Excise exemption available to Indian manufacturers has to be extended to CVD payable by importers?
Facts & Background:
AIDEK Tourism Services (P.) Ltd (“the Assessee”) is in the business of tourism, which operates taxis to ferry the tourists from one place to another. Way back in the year 1995, the Assessee had imported Honda Accord cars and filed refund claim on the ground that it was eligible for concessional rate of Countervailing duty (“CVD”) in terms of Notification No. 64/93-CE dated February 28, 1993 (“Exemption Notification”).
The Exemption Notification exempted goods falling under Heading 87.03 of the Central Excise Tariff Act, 1985 and consequently, duty payable was 40%. However, proviso to the Exemption Notification gives exemption of duty of 10% to the manufacturer of particular goods, namely, saloon cars, if such saloon cars are used solely as taxis. This exemption was further subjected to the other conditions as was specified in the Exemption Notification.
The refund claim of the Assessee was rejected by the Assistant Commissioner of Customs, Refund Department, Mumbai, as well as Delhi, against which the Appellant approached the Ld. Commissioner (Appeals) at both the places. The Ld. Commissioner (Appeals) in Mumbai granted the benefit of the Exemption Notification to the Assessee, however, the Ld. Commissioner (Appeals) in Delhi rejected the refund claim.
On appeal being filed to the Hon’ble Tribunal, Delhi, refund claim was rejected by denying exemption on the ground that Central Excise exemption by way of refund was subject to condition that “the manufacturer at the time of clearance of such saloon car has paid excise duty …” and importer cannot be regarded as ‘manufacturer’.
On the other hand, the Hon’ble Tribunal, Mumbai upheld refund on ground that levy of CVD pre-supposes that importer is the manufacturer and, therefore, said exemption was available to the Assessee.
In view of the conflicting decisions of the Tribunals, the matter reached to the Hon’ble Supreme Court.
The Hon’ble Supreme Court discussed at length the decision laid down in Thermax (P.) Ltd. Vs. Collector of Customs [(1992) 4 SCC 440] (“Thermax case”) which was further followed in Hyderabad Industries Ltd. Vs. Union of India [(1999) 5 SCC 15] and Collector of Central Excise Vs. J.K. Synthetics [(2000) 10 SCC 393]. Relying upon the same, the Hon’ble Apex Court held as under:
The second limb to the explanation deals with the situation where ‘a like article is not so produced or manufactured’. The use of the word ‘so’ implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India;
Accordingly, the Hon’ble Supreme Court held that the Assessee is rightly eligible for refund of 10% CVD paid.
Here it would not be out of place to mention another recent judgment of the Hon’ble Supreme Court in the case of SRF Ltd. Vs. Commissioner of Customs, Chennai [2015-TIOL-74-SC-CUS], wherein also the Hon’ble Apex Court relied upon the decision in the Thermax case and held that since the manufacturer of imported goods situated outside India is not entitled to take Cenvat credit, hence, it shall be treated that the condition of non-availment of Cenvat credit in terms of the Exemption Notification stands satisfied.
By virtue of this judgment also, it is implied that levy of CVD as per Section 3(1) of the Customs Tariff Act is leviable at a rate equal to the existing Excise duty for the time being leviable on a like article, if produced or manufactured in India.
Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Email: email@example.com)