Post-export shifting of capital goods treated as a technical lapse, supporting waiver of pre-deposit and stay of recovery.

Imported capital goods that were installed in the importer's factory, used to manufacture exports, and shifted only after the export obligation had been fulfilled were treated as having complied with the concessional customs duty conditions on a prima facie basis. The later movement of the goods to a group company's premises, without prior intimation to the Regional Authority and the jurisdictional Central Excise Authority, was viewed as a technical lapse because the notification did not expressly prohibit post-obligation shifting and the Handbook of Procedures contemplated such movement on intimation. On that interim view, the duty demand and penalties were considered unsustainable, and waiver of pre-deposit with stay of recovery was granted pending appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery in respect of the duty demand and penalties arising from denial of concessional customs duty under Notification No. 55/2003-Cus. on the ground of shifting of imported capital goods to another premises after fulfilment of export obligation.

Analysis: The imported capital goods were found to have been installed initially in the importer's factory, where they were used for manufacture and export, and the export obligation had been discharged. The subsequent shifting of the goods to a group company's premises occurred after fulfilment of the export obligation. Although prior intimation to the Regional Authority and the jurisdictional Central Excise Authority was not given, the lapse was treated as technical in nature. The notification did not expressly deal with such post-obligation shifting, while the Handbook of Procedures contemplated such movement on intimation. On this prima facie view, the demand and penalties were held not to be sustainable at the interim stage.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellants pending disposal of the appeals.

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