Mystery of Confusing, Complicated and Controversial Notifications
YESTERDAY'S DDT covered the three complicated notifications, the essence of which read as:
If the said excisable goods are manufactured from inputs or capital goods on which appropriate duty of excise leviable under the First Schedule to the Excise Tariff Act or additional duty of customs under section 3 of the Customs Tariff Act, 1975 (51 of 1975) has been paid and no credit of such excise duty or additional duty of customs on inputs or capital goods has been taken by the manufacturer of such goods (and not the buyer of such goods) under rule 3 or rule 13 of the CENVAT Credit Rules, 2004.";
This buyer of such goods is a stranger in excise exemption notifications.
What was the Board's intention?
In a recent case of SRF Ltd and ITC Ltd - , the Supreme Court had allowed the benefit of exemption in CVD on imported goods, based on excise exemptions. The appellant had imported Nylon Filament Yarn and claimed exemption from CVD based on Excise Notification. No. 6/2002, which had a condition that no credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002, has been taken in respect of the inputs or capital goods used in the manufacture of these goods. It was alleged that since the importer cannot take CENVAT credit, he has not fulfilled the condition. The Supreme Court had held, "For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon."
Selective leaks from the CBEC suggest that the Government had brought in these amendments to undo the Supreme Court judgement - for the benefit of the domestic manufacturer against the importers. If this is tru, they have not undone the Supreme Court order, but just created hundreds of cases.
After all the evils of the world were released from Pandora's box, there was still one creature that could not get out - which also Pandora released later and that is HOPE. We hope the Board releases that clarification soon.