Exemption if certificate/authorization produced later :
Sometimes, exemption or concession is subject to production of a certificate or permission from some authority. The assessee can only make application for getting such certificate or permission. However, actual getting permission is not in his powers. In such cases, it has been held that exemption/concession is available even if such certificate/permission is submitted subsequently. This would be so even if the exemption notification specifies that such permission/certificate is a pre-condition for granting the exemption/concession.
In this regard, judgment of Supreme Court in Mangalore Chemicals and Fertilisers Ltd. v. Deputy Commissioner 55 ELT 437 = 83 STC 234 = AIR 1992 SC 152 = 1992 (1) Supp SCC 21 is one of the best and well reasoned judgment. In this case, new industries set up in Karnataka were eligible for adjustment of sales tax refund for five years subject to condition that he should get permission from Deputy Commissioner of Commercial Taxes. Such permission was to be renewed every year. As per the notification, prior permission was necessary. A dealer, who was fulfilling all conditions, applied for the permission and in fact, was given permission for first year. In subsequent years, he applied for renewal for the permission in time. However, the permission was not granted as there was some dispute between Department of Sales Tax of Government of Karnataka and Department of Industries of Government of Karnataka regarding which department should absorb the financial impact of these concessions. The dealer had obviously nothing to do with the dispute. On the assumption that the permission will be granted the dealer adjusted the refund. However, the sales tax department issued demand and penalty was imposed, holding that since ‘prior permission’ was not obtained, the adjustment of sales tax refund is not permissible. Supreme Court described the attitude of the department as follows : “No doubt you were eligible and entitled to make adjustments.
There was no impediment in law to grant you such permission. But see language of notification. Since we did not give you the permission, you cannot be permitted to adjust.” Apex Court said ‘Is this the effect of the law?’. Apex Court observed : “Appellant is told ‘We are sorry. We should have given you permission. But now the period is over, nothing can be done’. The answer to this is in the words of Lord Denning : ‘A public authority cannot be estopped from doing its public duty, but it can be estopped from relying on a technicality’.” Apex Court quoted with approval a passage from Francis Bennion in ‘Statutory Interpretation’, which read : “Modern Courts seek to cut down the technicalities attendant upon a statutory procedure, where these cannot be shown to be necessary to the fulfilment of purpose of the legislation”. Apex Court granted full relief to the
dealer.
In ONGC Ltd. v. CC 2006 (201) ELT 321 (SC), appellant had applied for essentiality certificate but it was issued later. It was held that the certificate is valid till final assessment order is passed and appellant is entitled to benefit of exemption notification
In CC v. Tullow India Operations Ltd. 2005 (189) ELT 401 (SC), exemption was subject to production of essentiality certificate from Director General of Hydrocarbons at the time of import. The authority did not issue the certificate in time. It was held that exemption cannot be denied merely because certificates were required to be produced at the time of importation – followed in Mazgaon Docks v. CC 2006 (202) ELT 706 (CESTAT) * Enar Chemic v. CCE (2011) 274 ELT 221 (CESTAT)
In CCE v. MPV & Engg Industries (2003) 5 SCC 333 = AIR 2003 SC 4121 = 153 ELT 485 (SC) = 2003 AIR SCW 2108 also, it was held that assessee who is eligible for exemption should not be deprived of benefit simply because authorities concerned took their own time in disposing of the application. In Hindustan Machine Tools Ltd. v. CC – 1990 (46) ELT 434, exemption from duty was subject to production of a certificate from specified authorities recommending the grant of exemption on the basis of their satisfaction that parts are required for specified purpose. Though assessee (taxable person under GST) applied for certificate, the same was not obtained before clearance of imported goods. It was subsequently produced and it was held that refund can be granted in such a case. Similar view was expressed in Oil India Ltd. v. CC – 1992 (57) ELT 449 (CEGAT), where ‘Essentiality Certificate’ as required was applied for but could not be produced at the time of clearance but was received and produced later. This was followed in India Photographic Co. Ltd. v. CC, Bombay – 1994 (71) ELT 524 (CEGAT) – similar view in CC v. Integra Micro Systems 2005 (180) ELT 174 (CESTAT). In this case, it was also held that filing appeal for
claiming refund is not required.
Submitting certificate later is only a procedural lapse. Refund is admissible even if certificate is produced later – CC v. Regional Executive Dir AAI (2007) 217 ELT 298 (CESTAT) – same view in CCE v. Ircon International (2008) 228 ELT 587 (CESTAT).
Similarly, in Wockhardt Medical Centre v. CC – 1993 (66) ELT 522 (CEGAT- 3 member bench order). Importer applied to concerned authorities for required ‘Essentiality Certificate’, but the same was not received till the time of clearance from customs. It was no fault of the importer. The certificate was received later. It washeld that the importer is eligible for refund of excess customs duty paid. – similar order in case of ‘Duty
Exemption Certificate’ applied before import but issued later in Gujarat State Fertilisers v. CC 2003(153) ELT 163 (CEGAT) – similar view in Jagson International Ltd. v. CC 2006 (199) ELT 553 (CESTAT) * CCE v. Amara Raja Power Systems 2006 (201) ELT 599 (CESTAT) * CCE v. OEN India Ltd. 2006 (202) ELT 836 (CESTAT) * Hamilton Research v. CC (2007) 216 ELT 208 (CESTAT SMB).
In India Infusion Ltd. v. CC – 1994 (71) ELT 707 (CEGAT), the importer had applied for drug licence, but was not in possession of drug licence when actual import took place. It was held that concessional rate of duty is available even if the notification prescribed that the importer should have drug licence ‘at the time of importation’. Department cannot take a highly technical view in the matter, if conditions are fulfilled, though later. – Vaz Forwarding Pvt. Ltd., Bombay v. CC, Bombay – 1983 (14) ELT 2019 followed. – followed in SKF Bearings India Ltd. v. CC 1999(109) ELT 774 = 28 RLT 504 (CEGAT), where belated submission of Essentiality Certificate was held as only a procedural lapse. – followed in Jagson International v. CC 2001(132) ELT 247 (CEGAT).
In Burroughs Welcome v. CCE 2001(129) ELT 540 (CEGAT), it was held that failure to claim benefit of exemption notification cannot debar importer from claiming it later.
In Acrysil (India) v. CC 2001(132) ELT 221 (CEGAT), refund was granted when asses see did not execute bond at the time of clearance, though exemption notification required execution of bond before clearance.[Bond was not executed as he cleared with full payment of duty and hence bond was not required].In a contrary decision, in Airport Authority of India v. CC 2005 (180) ELT 223 (CESTAT), exemption was denied as required certificate was not produced at the time of clearance [It seems at the time of clearance, even a aplication for such certificate was not made. Hence, this decision may not apply in cases where asses see is not at fault in not submitting required certificate/permission].
Refund application can be by purchaser if required certificate was denied by authorities – In Oswal Chemicals v. CCE (2015) 50 GST 551 = 57 49 (SC), assessee applied for CT-2 certificate toprocure inputs without payment of duty, but it was not issued by department. Hence, he had to procure goods from supplier on payment of excise duty. It was held that he can file a refund claim.