2014 (5) TMI 827 - AT - Customs

Tribunal allows appeal, rules in favor of appellant on Customs Notification issue, emphasizing prospective application of law.

RATNAMANI METAL & TUBES LTD. Versus COMMR. OF CUS. (EP), MUMBAI

The Tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant. It ruled that the appellant's ... Denial of benefit of Notification No. 93/2004 - Diversion of material - violation of the conditions of Notification No. 93/2004 - Held that:- It is a fact on record that in this case diversion of the material to their own unit took place in June, 2008 and the Notification was amended on 16-7-2008. The effect of the Notification is to be given prospectively and not retrospectively. Therefore, the demand on the basis of amended Notification is not sustainable against the appellant - Decided in favour of assessee. Issues:1. Interpretation of Customs Notification No. 93/2004-Cus. regarding diversion of imported material.2. Impact of amendment to Foreign Trade Policy on diversion of surplus material to own unit.3. Applicability of amended Customs Notification on diversion of material to own unit.4. Validity of demand based on amended Notification.5. Decision on appeal against the impugned order.Analysis:1. The appellant imported seamless steel wide coils/strips under Customs Notification No. 93/2004-Cus. with the condition to use the material for manufacturing finished goods for export. The Foreign Trade Policy allowed diversion to another unit of the same manufacturer. The appellant diverted surplus material to their own unit in June 2008. However, an amendment to the Foreign Trade Policy made the restriction on diversion applicable to own units as well. The Customs Notification was also amended. The impugned order held the appellant liable for duty, confiscation of goods, redemption fine, and penalty for non-fulfillment of conditions.2. The appellant argued that the diversion in June 2008 did not violate the conditions of Notification No. 93/2004 as the amendment making own units subject to diversion restrictions occurred in July 2008. The appellant contended that any violation would fall under the Foreign Trade Policy, not the Customs Act. The Tribunal considered this argument and noted that the diversion occurred before the amendment to the Notification. Thus, the demand based on the amended Notification was deemed unsustainable against the appellant.3. The Tribunal held that the effect of the Notification should be prospective, not retrospective. As the diversion took place before the amendment, the appellant could not be penalized based on the amended Notification. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief. The Tribunal's decision clarified that the appellant was not in violation of the Customs Notification due to the timing of the diversion in relation to the subsequent amendments.4. The judgment emphasized the importance of interpreting legal provisions in a manner that upholds the principle of prospective application. By considering the timeline of events and the specific wording of the Customs Notification, the Tribunal ensured that the appellant was not unfairly penalized for actions taken before the relevant amendments came into effect. This approach safeguarded the appellant's rights and prevented unjust consequences arising from retrospective application of regulatory changes.5. In conclusion, the Tribunal's decision highlighted the significance of adherence to legal provisions and the need for clarity in interpreting notifications and policies. By examining the sequence of events and the specific language of the relevant regulations, the Tribunal provided a fair and reasoned judgment that protected the appellant's interests while upholding the integrity of the regulatory framework.