EPCG exemption and limitation: disclosed catalysts imports justified prima facie relief against duty demand and extended period.

Catalysts imported for an existing plant were treated as separately recognised under the EPCG framework, so a prima facie case existed for exemption under Notification No. 97/2004-Cus. despite the amendment omitting consumables. The description of the goods as catalysts in the bills of entry, and their clearance under the licence without objection, also made the allegation of suppression and the extended limitation period prima facie unsustainable. On that basis, recovery of duty, interest, and penalty was stayed and pre-deposit was waived pending the appeal.

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Issues: (i) Whether catalysts imported for an existing plant were prima facie eligible for exemption under Notification No. 97/2004-Cus. notwithstanding the amendment omitting consumables; and (ii) whether the demand was prima facie barred by limitation in view of the disclosed description of the goods and clearance without objection.

Issue (i): Whether catalysts imported for an existing plant were prima facie eligible for exemption under Notification No. 97/2004-Cus. notwithstanding the amendment omitting consumables.

Analysis: The Notification granted exemption to goods covered by a valid EPCG licence. The policy distinguished catalysts from consumables and separately referred to catalysts both in relation to capital goods for initial charge and as part of the spares for an existing plant. The allegation in the show cause notice and the adjudication order proceeded on the footing that catalysts were consumables, but the materials on record showed that catalysts were separately identifiable under the EPCG framework. On that basis, the claim to exemption raised a strong prima facie case.

Conclusion: The assessee had a prima facie case on the exemption issue.

Issue (ii): Whether the demand was prima facie barred by limitation in view of the disclosed description of the goods and clearance without objection.

Analysis: The bills of entry disclosed the goods as catalysts and the goods were cleared under the EPCG licence without objection. In these circumstances, the allegation of suppression with intent to evade duty was not strong at the interim stage, and the invocation of the extended period did not appear sustainable on a prima facie view.

Conclusion: The assessee had a prima facie case on limitation as well.

Final Conclusion: Recovery of duty, interest, and penalty was stayed and pre-deposit was waived pending disposal of the appeal.

Ratio Decidendi: For interim relief, where the imported goods are separately recognised under the governing export promotion scheme and the goods were disclosed in the import documents, a prima facie case may exist against both denial of exemption and invocation of the extended limitation period.

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