2015 (10) TMI 1532 - HC - Customs

Court rules loss of imported Palmolive oil in transit as excisable goods use, overturns denial of concessional duty rates.

The court ruled in favor of the appellant, holding that the loss of imported Palmolive oil in transit due to sticking to containers fell within the scope ... Import of Palmolive oil - Exemption under Rule 8 of the Customs (Import of goods to concessional rate of duty for manufacture of excisable goods) Rules 1996 – Appellant contends that loss of .07% was on account of the fact that some of the oil remained stuck on the side of the container which was transporting the oil and they are entitled for the exemption – Held That:- the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage - Impugned order is quashed and appeal allowed - Decision made in the case of BPL Display Devices Ltd [2004 (10) TMI 92 - SUPREME COURT OF INDIA] followed - Decided in favour of the Appellant. Issues:1. Interpretation of Customs rules regarding exemption for imported goods lost in transit.2. Application of the principle of 'intended for use' in exemption notifications.3. Justification of denying concessional rate of duty for lost imported goods.Analysis:1. The judgment revolves around the interpretation of Rule 8 of the Customs (Import of goods to concessional rate of duty for manufacture of excisable goods) Rules 1996. The case involved the transportation of Palmolive oil from Calcutta Port to the petitioner's factory at a distance of over 1200 kms, where a loss of 0.07% occurred due to oil sticking to the container. The appellant claimed exemption under Rule 8, which applies when goods are intended for use by the manufacturer for a specific purpose.2. The court referred to the decision in BPL Display Devices Ltd. 2004 (174) E.L.T. 5 (S.C.) where the Supreme Court clarified the meaning of 'intended for use' in exemption notifications. The court emphasized that the purpose of granting exemptions is to prevent importers/manufacturers from diverting products for other purposes. Applying this principle, the court found that the loss due to oil sticking to the container falls within the scope of intended use for manufacturing excisable goods.3. The question of law framed in the case was whether the Tribunal was justified in denying the concessional rate of duty for the quantity of imported Palmolive oil lost in transit due to viscous material sticking to the containers. The court ruled in favor of the appellant, stating that the loss was a result of the oil being intended for use in manufacturing, aligning with the purpose of the exemption notification. Consequently, the impugned orders were quashed, and the appeal was allowed in favor of the appellant.This judgment clarifies the application of Customs rules regarding exemptions for imported goods lost in transit and underscores the importance of the 'intended for use' principle in determining eligibility for concessional rates of duty.