Vardhman Textiles Cannot Claim Customs Duty Exemption As Bills Of Entry Were Filed Before Notification: CESTAT New Delhi

Ruling that a notification granting nil customs duty on cotton imports cannot be applied to Bills of Entry filed before it came into force, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has rejected Vardhman Textiles' claim for exemption.

A coram comprising Judicial Member Binu Tamta and Technical Member Hemambika R. Priya dismissed the appeal filed by M/s Vardhman Textiles Ltd., affirming the order of the Commissioner (Appeals).

The tribunal observed:

“The appellant is not entitled to avail the benefit of the Notification No.21/2022, as the same was non-existent on the date of filing of the B/Es.”

The appellant imported raw cotton and filed five Bills of Entry in April 2022 claiming exemption under an earlier notification. Subsequently, a new exemption notification No. 21/2022-Cus dated April 13, 2022 came into effect from April 14, 2022, granting full exemption from basic customs duty and additional duty on cotton imports.

To avail this benefit, the textile company sought reassessment and cancellation/substitution of the already filed B/Es. However, the Department rejected the request, which was upheld by the commissioner (Appeals), leading to the present appeal before the Tribunal.

The issue before the Tribunal was whether the appellant could claim exemption under Notification No. 21/2022-Cus when the Bills of Entry were filed prior to the notification coming into force.

The Tribunal held that as per Section 15(1)(a) of the Customs Act, the relevant date for determining the rate of duty is the date of filing of the Bill of Entry. Since the exemption notification came into effect after the filing of the B/Es, the benefit could not be extended.

Rejecting the company's plea that the relevant date should be the date of clearance, the Tribunal clarified that the statutory scheme clearly fixes the date of filing of the Bill of Entry as the determinative date for duty.

The Tribunal further held that the substitution of Bills of Entry from home consumption to warehousing under Section 46(5) is discretionary and cannot be used merely to avail a subsequent exemption, especially where it may prejudice revenue.

For Appellant: Advocate Rupender Singhmar

For Respondent: Rajesh Singh, Authorised Representative