2026-VIL-1023-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Entitlement to concessional Countervailing Duty on imported mobile phones under Notification No. 12/2012-CE - Respondents importing mobile phones initially discharged CVD at 12.5% on MRP basis at the time of import. Subsequently, claimed the benefit of concessional rate of CVD at 1% under Notification No. 12/2012-CE on the condition of non-availment of CENVAT credit - The original authority rejected the benefit contending that imported goods cannot fulfil the condition relating to non-availment of credit on inputs used in manufacture. On appeal, the Commissioner of Customs (Appeals) allowed the benefit relying on the Supreme Court judgment in SRF Ltd., holding that importers are entitled to exemption as long as conditions are not violated - Whether the Respondent-importer is entitled to concessional Countervailing Duty under Notification No. 12/2012-CE – HELD - The Additional Customs Duty under Section 3 of the Customs Tariff Act is levied to counterbalance the excise duty leviable on like goods manufactured in India, thereby ensuring parity and maintaining a level playing field. The Hon'ble Supreme Court in the binding judgment of SRF Ltd. has categorically held that for the purpose of levy of Additional Customs Duty, imported goods are to be imagined as manufactured in India and the rate of duty, including exemption, has to be determined accordingly. The Court created a legal fiction under Section 3 whereby imported goods are treated as if manufactured in India for determining duty and exemption. Since like goods manufactured in India are eligible for concessional rate subject to non-availment of CENVAT credit, the same benefit cannot be denied to the importer merely on the ground that such condition cannot be demonstrated in a literal sense - The condition relating to non-availment of CENVAT credit, when applied to importers, must be interpreted consistently with the legal fiction under Section 3 and cannot be enforced so as to defeat the exemption. The Department's reliance on the principle that exemption notifications are to be strictly construed is distinguishable because in the present case, the condition is inherently linked to the manufacturing process, which is not applicable to an importer who is a trader and could not have availed any CENVAT credit. Further, the importer was prevented from availing the benefit at the time of import due to limitations of the EDI system and lack of permission for manual filing by the Department - The substantive benefit cannot be denied on account of procedural or technical limitations, particularly when the assessee is not at fault. The Department's contention that the SRF Ltd. judgment had not attained finality is found to be factually and legally untenable - The impugned order is upheld and the Revenue appeal is dismissed
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