2015 (10) TMI 2262 - AT - Customs

Tribunal rules for Appellants, granting CENVAT Credit and overturning penalties and confiscation.

The Tribunal ruled in favor of the Appellants, allowing their appeals and rejecting the Revenue's appeal. The judgment emphasized the absence of imported ... Import of plastic granules under exemption scheme (Target Plus Scheme) to be used for manufacturing of final products - Goods sent to Job Work – Appellant contends that there is no prohibition to send goods to job worker for manufacture of final goods - Goods sent to job worker under provisions of Notification No.214/86 and were cleared on payment of Central Excise duty – Revenue contends that notification prohibits goods to be transferred or sold thus notification has been violated – Contravention of provisions of FTP as goods imported should be for own use. Held That:- Goods were sent to job worker under terms of Notification No.214/86-CE and a list of job workers were also submitted to the Central Excise authorities - There is no transfer of imported plastic granules as appellant is sending plastic granules to job worker and buyer is purchasing plastic films - Appellants are eligible for availing CENVAT Credit and interest and penalties are liable to be set aside - Confiscation of goods and redemption fine are also set aside – Decided in favour of assessee. Issues:1. Interpretation of Customs notification regarding duty exemption under the Target Plus Scheme.2. Whether sending imported goods to job workers for further manufacturing violates the notification.3. Compliance with Foreign Trade Policy provisions.4. Applicability of conditions for duty exemption under the Target Plus Scheme.5. Ownership and transfer of imported goods to job workers.6. Impact of Public Notice 113/2007 on the case.Issue 1: Interpretation of Customs notification regarding duty exemption under the Target Plus SchemeThe case involved the Appellants operating under the Target Plus Scheme, seeking exemption from Customs duty on imported goods. The Customs notification allowed duty-free import for goods used in manufacturing final products subject to payment of applicable duty upon clearance. The Department alleged a violation, stating the Appellants sent imported goods to job workers for further manufacturing, contrary to the notification.Issue 2: Violation of Customs notification by sending goods to job workersThe Appellants argued that the Customs notification did not prohibit sending imported goods to job workers for manufacturing final products. They contended that they followed procedures under Notification No.214/86-CE and cleared final goods by paying Central Excise duty. The Revenue contended that transferring imported goods to job workers breached the notification's provisions, citing restrictions on transfer/sale of imported goods.Issue 3: Compliance with Foreign Trade Policy provisionsThe Revenue highlighted Foreign Trade Policy provisions requiring imported goods for 'own use' and contended that sending goods to job workers did not fulfill this requirement. They argued that transferring goods to job workers violated the Policy, coupled with the Customs notification restrictions.Issue 4: Applicability of conditions for duty exemption under the Target Plus SchemeThe Tribunal analyzed the Target Plus Scheme under the Foreign Trade Policy, which incentivized duty credit for exports. The duty exemption was governed by Notification No.32/2005-Cus, emphasizing conditions for duty credit certificates issued to eligible exporters for incremental export growth.Issue 5: Ownership and transfer of imported goods to job workersThe Tribunal examined the condition prohibiting transfer/sale of imported goods under the Customs notification. It found that the Appellants retained ownership when sending goods to job workers for further processing. The Tribunal observed that ownership only transferred upon final sale of processed goods, not during the manufacturing process by job workers.Issue 6: Impact of Public Notice 113/2007 on the caseThe Tribunal referenced Public Notice 113/2007, emphasizing the role of job workers in converting imported goods into final products. The Notice clarified that job workers could be used for processing imports under the Scheme, allowing sale of resultant products in the market post-conversion. This supported the Appellants' utilization of job workers for manufacturing without violating transfer restrictions.In conclusion, the Tribunal ruled in favor of the Appellants, allowing their appeals and rejecting the Revenue's appeal. The judgment emphasized the absence of imported goods transfer, enabling the Appellants to avail CENVAT Credit and setting aside penalties and confiscation of goods.