COMMISSIONER OF CUSTOMS, MUMBAI-I  versus M/S SEIKO BRUSHWARE INDIA
[2015] 9 S.C.R. 395, Supreme Court of India, 2015
Outcome: Disposed off
Segment: Facts
[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 
[A.K. SIKRI AND R. F. NARIMAN, JJ] 
B 
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. 
CIVIL.APPELLATE JURISDICTION: Civil Appeal No. 216 
of2007. 
Frorn the
Judgment and Order Nos. 260-261/2005 -
G 
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). 
B 
Arijit Prasad, Baldev, B. Krishna Prasad for the Appellant. 
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:-
E 
F 
G 
H 
"In exercise of the powers conferred by sub-section (1) of 
Section 3AofCustoms Tariff Act, 1975 (51of1975), the 
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, 
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 
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, 
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: 
B 
c 
D 
E 
"We have heard both the sides and in our view, the 
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 
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 
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 
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 
H 
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
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.