Can two exemption Notifications be simultaneously allowed - CBEC Clarifies
UNDER notification No.12/2012-Customs, dated 17-03-2012 (S. No. 123 of the Table), Steam Coal falling under sub-heading 27011920 attracts basic customs duty (BCD) at 2% and countervailing duty (CVD) at 2%.
Steam Coal imported from Indonesia enjoys preferential BCD @ 0% under S. No. 207 of notification No. 46/2011-Customs, dated 1st June 2011 (India-ASEAN FTA). This notification does not specify the CVD rate. So, as per this notification, CVD would be the CVD payable as per the Central Excise Tariff. Now the Central Excise duty is 6% when CENVAT credit is taken and 2% when no CENVAT credit is taken.
So, what is the CVD payable on steam coal imported from Indonesia? Is it 2% as per Notification No. 12/2012-Customs or 6% as per the Central Excise rate? The Department's view is that you cannot avail Notification No. 46/2011 for BCD and another Notification No. 12/2012 for CVD. If one exemption is availed it has to be availed fully and he cannot avail two notifications, each one partly.
This issue was discussed in a conference of Chief Commissioners of Customs in Vizag on 5.6.2013. The conference could not decide the issue and referred the matter to the CBEC. (Isn't it a little surprising that 20 odd Chief Commissioners with a Member present could not take a decision on this simple issue and referred it to the Board's wisdom?)
In the meantime, the case reached the Bombay High Court where an importer filed a writ even before the Adjudicating Authority passed an order. Normally a High Court would not interfere at that stage, but Bombay High Court did, as the Deputy Commissioner of Customs filed an affidavit emphatically stating that only the benefit of Notification No.46/2011 dated 1 June 2011 for coal imported from Indonesia is available.
The High Court noted that CESTAT has consistently taken a stand that in the absence of any bar in the notification itself, it is open to an assessee to take benefit of more than one notification. []
For example Commissioner of Central Excise vs. Premier Mushroom Farms ().
Similarly the Apex Court in the matter of Super Cassettes Industries Ltd () benefit of more than one exemption notification was extended.
Board has now issued the much sought after clarification without mentioning the reference from Chief Commissioners or the decided case law on the subject. But thankfully Board has come to the correct clarification though the reasons given appear to be a little flawed.
Board clarifies that an importer while availing of BCD exemption on steam coal under notification No. 46/2011-Cus can simultaneously avail of concessional CVD at 2% under notification No. 12/2012-Cus .
In this otherwise wise, correct, fair and just clarification, there is unfortunately a jarring note.
In the Circular, it is mentioned, or he has to pay the CVD at 6%, which is the rate of excise duty applicable on Steam Coal when Cenvat facility has not been availed of . Sir, this is the rate when CENVAT facility is availed, not when it is not availed. As rightly mentioned in para 4 of the circular, "In the present case, the excise duty applicable on Steam Coal is 6%, if CENVAT benefit is availed of and 1% if the CENVAT benefit is not availed of."
Any way what the Board finally clarifies is that an importer can avail Notification No. 46/2011-Cus for Basic Customs Duty (0%) and Notification No. 12/2012-Cus for CVD (2%) - maybe we should ignore the rest of the Circular.
CBEC Circular No. 41/2013-Cus, Dated : October 21, 2013