The Commissioner Of Customs vs. M/S. Nayara Energy LTD.

Held

The Court held that NCCD is a duty of customs, answering question (i) in the affirmative. It reasoned that Section 12 of the Customs Act, read with Section 134 of the Finance Act, 2003, establishes NCCD as a duty of customs. Furthermore, Section 134(4) of the Finance Act, 2003, explicitly states that provisions of the Customs Act and rules thereunder, including those relating to refunds and exemptions, shall apply to the levy and collection of NCCD. This aligns with CBEC Circular No. 4/2019-Cus., which mandates factoring in elements of such cesses into Brand Rate of drawback duty. Consequently, the Court held that drawback is allowable on NCCD as it is a duty of customs chargeable under the Act, and its inclusion for computing brand rate eligibility under the Drawback Rules is permissible. The Court agreed with the Commissioner (Appeals) and found the Additional Commissioner's view incorrect. The appeal was dismissed.

Facts

The Commissioner of Customs (appellant) challenged an order of the Customs, Excise and Service Tax Appellate Tribunal (Tribunal) which had dismissed the revenue's appeals. The respondent, M/s. Nayara Energy Ltd., sought fixation of brand rate of duty drawback for exported goods. The Additional Commissioner rejected the inclusion of National Calamity Contingent Duty (NCCD) in the brand rate calculation, holding it was not specified for brand rate fixation. The Commissioner (Appeals) allowed the respondent's appeals. The Tribunal dismissed the revenue's appeals, finding them not maintainable on the issue of including NCCD for brand rate computation. The High Court admitted the appeal and formulated substantial questions of law regarding NCCD being a duty of customs and its eligibility for brand rate drawback.

Key Issues

1. Whether National Calamity Contingent Duty (NCCD), levied under Section 134 of the Finance Act, 2003, is a duty of Customs? The appellant argued that Section 2 of the Customs Act defines 'duty' as duty of customs leviable under that Act, implying NCCD, levied under the Finance Act, is not a customs duty. The respondent contended that Section 12 of the Customs Act, read with Section 134 of the Finance Act, 2003, clearly indicates NCCD is a duty of customs. 2. Whether the Tribunal was right in holding that appeals on the issue of including NCCD for computation of Brand rate of Drawback are not maintainable under the first proviso to Section 129A(1)(b) of the Customs Act, 1962? The Tribunal dismissed the revenue's appeals on maintainability grounds. 3. Whether inclusion of NCCD for computation of Brand rate of Drawback has anything to do with "payment of drawback" as appearing at exception clause (C) of the first proviso to Section 129A(1)(b) of the Customs Act, 1962? This question relates to the Tribunal's jurisdiction. 4. Whether any appeal arising out of the order of Commissioner (Appeals) relating to "inclusion of NCCD for computation of Brand rate of Drawback" lies before the Tribunal in terms of Section 129A of the Customs Act, 1962, particularly when NCCD is not considered as a duty of Customs? This question also concerns the Tribunal's jurisdiction. 5. Whether NCCD of customs leviable under section 134 of the Finance Act, 2003 can be considered for computing brand rate eligibility under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995? This was an additional question formulated by the Court.