2016 (12) TMI 1270 - AT - Customs

Tribunal overturns order, grants appeal on customs rules interpretation.

M/s FDC Ltd. Versus Commissioner of Central Excise, Belapur

The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. The decision was based on the interpretation of ... Denial of benefit of N/N. 17/2001-Cus. dated 01.03.2001 - import of the bulk drug i.e. PSS - denial on the ground that the imported goods was not used by the appellant in their own factory, there is a violation of the condition of said notification - the goods were used on behalf of the appellant in their loan licensee (job work factory) on behalf of the appellant only - whether denial justified? - Held that: - In the case of G.R. International [2006 (11) TMI 450 - CESTAT, CHENNAI], the Tribunal held that following common law principal that what is done by duly constituted agent will be treated as having done by the principal and thus the condition as to manufacturer set out in Customs (import of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996 will include the premises of loan licensee. Even though the factory is of the loan licensee but use is on behalf the appellant therefore there is no violation of condition of the Customs Rules, 1996 - appeal allowed - decided in favor of appellant. Issues:- Interpretation of exemption notification under serial no. 81(B) of Notification No. 17/2001-Cus.- Compliance with condition no. 7 of the notification regarding the use of imported goods.- Applicability of Customs (import of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996.- Jurisdictional concerns regarding the demand raised by the Deputy Commissioner at Malad.- Violation of principles of natural justice and time-barred demand.Analysis:1. Interpretation of Exemption Notification:The appellant imported Pipracillin Sodium Sterile (PSS) under the benefit of Notification No. 17/2001-Cus. The issue revolved around whether the appellant's use of the imported goods for manufacturing piprapen injection at a loan licensee's premises complied with the conditions of the notification. The dispute centered on the interpretation of the end-use condition under serial no. 81(B) of the notification.2. Compliance with Condition No. 7:The Customs Rules, 1996 required the importer to follow specific procedures for importing goods at a concessional rate of duty for manufacturing excisable goods. The appellant argued that the use of imported goods at the loan licensee's factory was permissible under the rules and cited precedents like the case of Tamil Trading Corporation Ltd. The Tribunal agreed that the ownership of the goods by the appellant and their use for the specified purpose fulfilled the end-use condition.3. Applicability of Customs Rules, 1996:The Tribunal analyzed the provisions of the Customs Rules, 1996 in light of the appellant's case and the precedents cited. It was established that the rules did not mandate the importer to use the goods only in their own factory, but allowed for utilization in a job worker's factory. The Tribunal emphasized the importance of liberal interpretation in line with the government's policies on customs and excise.4. Jurisdictional Concerns:A jurisdictional issue arose regarding the demand notice issued by the Deputy Commissioner at Malad, where the registration certificate was obtained, instead of the Deputy Commissioner at Andheri. The appellant argued that the demand was lacking jurisdiction, further complicating the procedural aspects of the case.5. Violation of Principles of Natural Justice and Time-Barred Demand:The appellant raised concerns about the violation of natural justice principles, highlighting the lack of a show-cause notice and personal hearing before the demand was raised directly. Additionally, the appellant contended that the demand was time-barred, adding another layer of complexity to the procedural irregularities in the case.In conclusion, the Tribunal, after considering the submissions and relevant precedents, ruled in favor of the appellant, setting aside the impugned order and allowing the appeal based on the interpretation of the exemption notification, compliance with the end-use condition, and the application of the Customs Rules, 1996. The decision highlighted the importance of considering the specific circumstances of the case and adopting a liberal approach in customs and excise matters.