2009 (8) TMI 893 - AT - Customs

Tribunal Rules No Prima Facie Case, Appellant Must Pre-Deposit Duty to Avoid Penalty

ARKEMA CATALYST INDIA PVT. LTD. Versus COMMR. OF CUS. (EXPORT), MUMBAI

The Tribunal found no prima facie case for the appellant against the duty or penalty. They directed the appellant to pre-deposit the entire duty amount ... Waiver of pre-deposit - Benefit of N/N. 43/02 - denial on the ground that the benefit of the above Notification was not available to that part of the imported material which was not physically incorporated in the final products - Held that: - the appellant is entitled to claim exemption under the above Notification in respect of the entire quantity of Aluminium ingots imported by them inasmuch as such quantity was recognized by SION norms as the quantity consumable in the entire quantity of Aluminium Chloride exported. Extended period of limitation - suppression of facts - Held that: - The fact is that any quantity of the imported raw material which was not actually contained in the export goods was not disclosed to the department. Prima facie, there is suppression - extended period rightly invoked. Appellant is directed to pre-deposit the entire amount of duty within a period of four weeks and report compliance on 11-9-2009 - appeal dismissed - decided against appellant. Issues Involved:Waiver of pre-deposit and stay of recovery in respect of Customs duty and penalty for imported raw material under Customs Notification No. 43/02.Analysis:Issue 1: Exemption Claim under Notification No. 43/02-CusThe appellant imported Aluminium ingots under Advance Licences and claimed duty-free clearance under Customs Notification No. 43/02. The department alleged that the benefit of the Notification was not available for the portion of imported material not used in the export product. The Commissioner found that the appellant did not use the entire quantity of imported raw material in the manufacture of the export product, leading to a demand of duty and penalty. The Tribunal noted discrepancies in the consumption of Aluminium ingots as per SION norms and the actual usage by the appellant, leading to the demand of duty on the differential quantity.Issue 2: Interpretation of Foreign Trade PolicyThe appellant argued that they were entitled to exemption for the entire quantity of Aluminium ingots imported, citing provisions of the Foreign Trade Policy. However, the Tribunal found that the policy clearly stated that duty-free import of goods should be physically incorporated in the export product, subject to actual user condition. As the unutilized raw material was not incorporated in the export product, the Tribunal held that the appellant was not entitled to exemption from duty on that quantity.Issue 3: Comparison with Previous Notifications and Case LawsThe appellant referenced Notification No. 77/98-Cus. under the DEEC Scheme, which had provisions for unutilized raw material. However, the Tribunal found that the absence of a similar provision in Notification No. 43/02-Cus. meant that exemption was not admissible to unutilized raw material. The Tribunal also examined case laws cited by the appellant but found them irrelevant to the current case.Issue 4: Limitation and Financial HardshipsThe appellant pleaded limitation against the demand of duty, claiming that the demand was beyond the prescribed period. The Tribunal noted that the extended period of limitation was invoked due to suppression of crucial facts by the appellant. Additionally, the appellant raised financial hardships, providing financial statements up to 2008, but failed to present updated information for 2009.ConclusionThe Tribunal found no prima facie case for the appellant against the duty or penalty. They directed the appellant to pre-deposit the entire duty amount within four weeks. Compliance would result in a waiver of pre-deposit and stay of recovery for the penalty and fine amount.This detailed analysis covers the issues of exemption claim, interpretation of policy, comparison with previous notifications and case laws, limitation plea, and financial hardships raised in the judgment.