2013 (9) TMI 64 - AT - Customs

Tribunal upholds duty demand with interest, penalty set aside.

The Tribunal upheld the duty demand of Rs. 11,71,180.60 with 24% p.a. interest but set aside the penalty under Section 112 of the Customs Act. - 2013 ... Burden to Prove - Conditional exemption notification that the importer shall not avail input stage duty credit of the additional duty leviable under Section 3 of the Customs Tariff Act (CVD in short) - The conduct of the assesse in not submitting satisfactory documentary evidence complete in all respects in respect of their claims coupled with the enormous delay in their submission for verification was highly unsatisfactory, to say the least - Since it was the appellant who had claimed the benefit of duty exemption, the onus of leading evidence to prove eligibility to exemption lies on the appellant and not on the Revenue – MYSORE METAL INDUSTRIES Versus COLLECTOR OF CUSTOMS, BOMBAY [1988 (5) TMI 42 - SUPREME COURT OF INDIA] - the burden was on the party who claimed exemption, to prove the facts that entitled to him to exemption - the assesse had miserably failed to discharge this onus – Decided against assesse. Whether reversal of credit would amount to non availment of credit - Held that:- under Notification No. 203/92-Cus., there was a condition that the importer shall not avail of input stage credit on the goods exported. Therefore, it is difficult to accept the contention that reversal of credit amounts to non-availment of credit, especially when the reversal was made long after the exports have been made and there is no satisfactory proof that the reversal was done correctly. Benefit of duty exemption under Notification No. 203/92-Cus - Duty Demand - Interest – Held that:- The confirmation of duty demand made in the order along with interest thereon was upheld - the assesse claimed to have reversed the input stage credit - However, they did not pay the interest and the interest liability was discharged only in June, 2000, that was, after a lapse of more than 3 years from the due date stipulated in the Amnesty Scheme –COMMISSIONER OF CUSTOMS, CHENNAI Versus SHASUN DRUGS & CHEMICALS [2004 (4) TMI 156 - CESTAT, CHENNAI] and COMMISSIONER OF CUSTOMS, CHENNAI Versus AKSA POLY BAGS LTD. [2003 (8) TMI 430 - CESTAT, CHENNAI] - the demand of duty was uphled by denying the benefit under Notification No. 203/92 – Decided against assesse. Imposition of Penalty u/s 112 – Held that:- No penalty can be imposed under Section 112 and accordingly the penalty imposed on the assesse was set aside - A penalty under Section 112 can be imposed on when goods were held liable to confiscation under Section 111 - There was no proposal in the show cause notice for confiscation of the goods under Section 111 nor was there any finding in the order to that effect – Decided in favor of assesse. Issues Involved:1. Whether the demand raised in the show cause notice is time-barred.2. Whether the reversal of credit amounts to non-availment of credit.3. Validity and binding nature of the certificate issued by the jurisdictional Range Superintendent.4. Applicability of the 1997 circular at the time of reversal of credit in 1995.5. Adequacy of the reconciliation statement correlating the reversal of input stage credit with the shipping bills.6. Requirement of showing particulars of reversal as per the Amnesty scheme.7. Interest payment on Modvat credit and its timing.8. Imposition of penalty under Section 112 of the Customs Act.Detailed Analysis:1. Time-barred Demand:The appellant argued that the demand raised in the show cause notice dated 20-6-1998 is time-barred as the Modvat credit was reversed on 12-7-1995. They relied on the Tribunal's decision in AMC Coated Fabrics Pvt. Ltd., which was upheld by the High Court of Bombay. However, the Tribunal found that since the exports were undertaken in 1992-93 and imports in April 1994, the appellant's declaration at the time of import that no input stage credit was availed was false. Thus, the demand was not considered time-barred.2. Reversal of Credit:The appellant contended that the reversal of credit amounts to non-availment of credit, citing decisions in Chandrapur Magnet Wires (P) Ltd. and Hellow Mineral Water (P) Ltd. The Tribunal, however, noted that the appellant's reversal of credit in 1995, after the exports in 1992-93, did not satisfy the condition of non-availment of credit at the time of export. The Tribunal referred to the Cheviot Company Ltd. case, holding that subsequent reversal does not equate to non-availment of credit.3. Certificate Issued by Range Superintendent:The appellant submitted a certificate from the jurisdictional Range Superintendent showing the reversal of credit. The adjudicating authority rejected this certificate, stating it was issued eight years after the exports and did not correlate with the shipping bills. The Tribunal upheld this rejection, noting the certificate lacked details necessary for verification.4. Applicability of 1997 Circular:The appellant argued that the 1997 circular was not applicable as the reversal occurred in 1995. The Tribunal dismissed this argument, stating that the appellant's reversal did not meet the conditions of the Amnesty Scheme introduced in 1997, which required interest payment by 31-1-1997.5. Reconciliation Statement:The appellant's reconciliation statement was found inadequate as it did not correlate the credit reversed with the shipping bills. The Tribunal noted that the appellant failed to provide satisfactory documentary evidence to support their claims.6. Particulars of Reversal as per Amnesty Scheme:The Tribunal observed that the appellant did not pay the interest by 31-1-1997 as required by the Amnesty Scheme. The interest was paid only in June 2000, violating the scheme's terms.7. Interest Payment on Modvat Credit:The appellant claimed there was no provision for interest payment at the time of reversal in 1995. The Tribunal rejected this, stating that the interest payment was a condition under the Amnesty Scheme, which the appellant failed to meet.8. Imposition of Penalty:The Tribunal set aside the penalty imposed under Section 112 of the Customs Act. It noted that for a penalty to be imposed, goods must be liable for confiscation under Section 111, which was neither proposed in the show cause notice nor found in the impugned order.Conclusion:The Tribunal upheld the demand of duty amounting to Rs. 11,71,180.60 along with interest at 24% p.a. However, it set aside the penalty imposed under Section 112 of the Customs Act. The appeal was disposed of accordingly.