COMMISSIONER OF CUSTOMS, MUMBAI-IversusM/S SEIKO BRUSHWARE INDIA

                    [2015] 9 S.C.R. 395


        COMMISSIONER.OF CUSTOMS, MUMBAI-I                        A
                              v.
              M/S SEIKO BRUSHWARE INDIA
               (Civil Appeal No. 216 of 2007)
                  SEPTEMBER 04, 2015                             B

           [A.K. SIKRI AND R. F. NARIMAN, JJ]

      Delhi Sales Tax Act, 1975 - ss. 7, 3 - Customs Tariff
Act, 1975-s. 3A(1)-ExemptionNotificationNo. 34198-Cus.           C
dated 13.06. 1998- Benefit of exemption - On facts, sale of
imported pig hair bristles by importer - Denial of benefit of
e"<emption Notification since the pig hair bristles were sold
\vithout any sales tax beir.g paid- Challenge to- Importer's
case that pig hair bristles may be exempted from sales tax
                                                                 0
but that did not mean that they were not chargeable to sales
tax - Commissioner held that Exemption Notification
exempting pig hair bristles from tax would amount to a case
where no tax is chargeable on the sale of goods, thus, the
benefit of the Notification would not be available to the        E
impo11er - However, tribunal held in favour of assessee - On
appeal, held: On a reading of ss. 3 and 7 of the 1975 Act, it
becomes clear that no sales tax is charged on the imported
item-pig bristles - Proviso to the Notification dated
 13. 06. 1998 gets attracted and since no tax is chargeable on   F
the sale of such goods, the Ex£1mption Notification would not
apply -- Judgment of tribunal set aside and that of the
Commissioner restored - Notification - Exemption
Notification No. 34198-Cus. dated 13.06.1998.
                                                                 G
    CIVIL.APPELLATE JURISDICTION: Civil Appeal No. 216
of2007.

    Frorn the Judgment and Order Nos. 260-261/2005 -
                            395                                  H
396         SUPREME COURT REPORTS                     [2015] 9 S.C.R.


A     NB(C) No. 1343 dated 22.02.2005 of the Customs, Excise
      and Service TaxAppellate Tribunal, New Delhi in Appeals Nos.
      E/225-226 of 2004- NB(C).

          Arijit Prasad, Baldev, B. Krishna Prasad for the Appellant.
B
          Rajesh Kumar for the Respondent.

          The Judgment of the Court was delivered by

            R. F. NARIMAN, J. 1. Despite service, nobody appears
C     for the respondent.

         2. We have heard Shri Arijit Prasad, learned counsel
      appearing on behalf of the Revenue.

D         3. The issue in this appeal relates to the denial of the
      benefit of Exemption Notification No. 34/98-Cus. dated
      13.06.1998 which reads as follows:-

          "In exercise of the powers conferred by sub-section (1) of
          Section 3AofCustoms Tariff Act, 1975 (51of1975), the
E         Central Government having regard to the maximum sales
          tax, local tax or any other charges for the time being
          leviable on the like goods on their sale or purchase in India,
          hereby specifies the rates of special additional duty as
          indicated in column (3) in table below in respect of goods,
F
          when imported into India, specified in corresponding entry
          in column(2) of the said table and falling within First
          Schedule to the said Customs Tariff Act:" Against the
          relevant entry 'Nil' rate has been specified for All goods
          falling under the said First Schedule which are imported
G
          for sale as such, other than by way of high sea sale and
          the importer at the time of importation or at the time of
          clearances of warehoused goods for home consumption
          under the provisions of Section 68 of the Customs Act,
H         1962 (no. 52 of 1962), as the case may, makes a
       COMMNR.OF CUSTOMS, MUMBAI-Iv. SEIKO                             397
         BRUSHWARE INDIA[R. F. NARIMAN, J.]

    specified declaration to that effect in the Bill of Entry in the    A
    manner specified below.

    Provided that rate specified therein shall not apply if the
    importer sells the said imported' goods from a place
    located in an area where no tax is chargeable on sale or            B
    purchase of goods."

     4. A reading of this Notification would sh0w that exemption
is granted only in respect of such goods which the importer
sells post importation from a place located in an area where            c
no tax is chargeable on sale of goods.

     5. The facts of the present case are that pig hair bristles
that were imported were sold in the years 1998-1999 and 1999-
2000. Revenue issued a show cause notice dated 26.03.2003
                                                                 0
stating that since these pig hair bristles were, in fact, sold
without any sales tax been paid thereon, the benefit of
Exemption Notification dated 13.06.1998 would not be
available to the importer in the present case.

    6. By a reply dated 17 .10.2003, the importer essentially E
contended that pig hair bristles may be exempted from sales
tax but that did not mean that they were not chargeable to sales
tax.

    7. In a detailed order dated 31.03.2004, the learned                F
Commissioner, after setting out the Notification dated
13.06.1998, and after hearing the importer, ultimately came to
the conclusion that an Exemption Notification exempting pig
hair bristles from tax would amount to a case where no tax is
chargeable on the sale of goods and therefore, the benefit of G
the said Notification would not be available to the importer in
the present case.

    8. In an appeal against the said order by the importer/
assessee, the Customs, Excise and Service Tax Appellate H
398          SUPREME COURT REPORTS                     [2015] 9 S.C.R.


A     Tribunal (hereinafter referred to as 'CESTAT') vide its judgment
      dated 22.02.2005 has held in favour of the assessee as follows:


          "We have heard both the sides and in our view, the
B         contention raised by the learned counsel deserves to be
          accepted. We find that the exemption Notification issued
          by the Sales-tax Department of Delhi and UP state
          opponent from where goods in question after import without
          payment of SAD under Notification No. 34/98 detailed
c         above, were sold only exempted the payment of tax on
          the sale and purchase of the goods at that time and but
          for these exemption notifications, the goods were
          othe1wise chargeable to Tax. It was only the payment of
          tax which was deferred/exempted under those notifications
D         for the period mentioned therein. The exemption
          notification did not render the goods non-chargeable to
          tax, but only allowed concession in the tax by way of
          exemption for some period. Therefore, the appellants
          cannot be said to have sold the goods from the places
E         where no tax was chargeable on the sale/purchase of the
          goods and thereby violated the condition contained in the
          above said exemption Notification No. 34/98-Cus.

           9. It was contended by Shri Arijit'Prasad, learned counsel
F     appearing on behalf of the Revenue, thatthe CESTAT has not
      taken note of Section 7 of The Delhi Sales Tax Act, 1975
      (hereinafter referred to as 'Act') by which pig hair bristles were
      said to be in the nature of tax free goods.

G          10. He further contended that in the present case, the
      CESTAT was not correct in referring to an Exemption
      Notification. What was, in fact, notified was the addition of Entry
      No. 67 to the Third Schedule of the Act vide Notification dated
      15.10.1996 which was wrongly referred to as an Exemption
H
       COMMNR.OF CUSTOMS, MUMBAI-Iv. SEIKO                           399
         BRUSHWARE INDIA[R. F. NARIMAN, J.]

Notification.                                                         A

      11. We find considerable force in the submission of Shri
Arijit Prasad.

   12. Section 7 of the Delhi Sales Tax Act, 1975 reads as            B
under:-

    "7. Tax-free goods.-(1) No tax shall be payable under this
    Act on the sale of goods specified in the Third Schedule
    subject to the conditions and exceptions, if any, set out
    therein.                                                   C

    (2) The lieutenant Governor may by notification in the
    Official Gazette, add to, or omit from, or otherwise amend,
    the Third Schedule either retrospectively or prospectively,
    and thereupon the Third Schedule shall be deemed to be            D
    amended accordingly:

    Provided that no such amendment shall be made
    retrospectively if it would have the effect of prejudicially
    affecting the interests of any dealer."                           E

     13. The imported goods, viz., pig hair bristles, find mention
in Entry 67 of the Third Schedule which reads as follows: -

    "Pig hair bristles and paint brushes made of pig hair             F
    bristles."

     14. It will be noticed that the charging Section itself, viz.,
Section 3 of the Act, speaks of a dealer whose turnover during
the year immediately preceding the commencement of this
Act exceeds the taxable quantum as also every registered G
dealer liable to pay tax under this Act on all sales effected by
him on or after such commencement. It will, thus, be seen C.A.
No. 216/2007 4"that even the charging Section uses the
expression "liable to pay tax".
                                                                      H
400          SUPREME COURT REPORTS                   [2015] 9 S.C.R.


A           15.Correspondingly, Section 7, whose marginal note
      indicates that the subject matter of the said section is tax free
      goods, also uses the same expression as is used in Section
      3, viz., "no tax shall be payable under this Act".

B          16. On a reading of Sections 3 and 7 of the Act, it becomes
      clear, therefore, that so far as the imported item, viz., pig
      bristles is concerned, no sales tax, in fact, is charged on the
      same. This being the case, it is obvious that the proviso to the
      Notification dated 13.06.1998 gets attracted and since no tax
C     is chargeable on the sale of such goods, the said Exemption
      Notification will therefore, not apply.

           17. We, accordingly, set aside the judgment of CESTAT
      and restore that of the Commissioner. The appeal is disposed
D     of accordingly.

      NidhiJain                                     Appeal disposed of.