2017 (3) TMI 911 - AT - Customs

Appeal granted for concessional duty on lost Crude Palm Oil; ruling favors appellant

M/s NCML Industries Ltd. Versus Commissioner of Central Excise, Meerut-II

M/s NCML Industries Ltd. Versus Commissioner of Central Excise, Meerut-II - TMI Issues: Whether the Ld. Commissioner (Appeals) was justified in denying the benefit of concessional rate of duty under Notification No.12/2012-CUS dated 17.03.2012 on the quantity of imported Crude Palm Oil lost in transit due to various reasons.Analysis:The appellant, a manufacturer of Vanaspati & Refined Oil, imported Crude Palm Oil for manufacturing excisable goods under Notification No.12/2012-Cus. The appellant faced shortages in transit due to leakage/spillage, difference in weighment methods, and accidents. The appellant informed the Revenue about the shortages, which were approximately 0.267% and 0.33% during specific periods. Revenue issued show-cause notices considering the shortages as raw material not used for manufacturing, thus demanding full duty payment.The Tribunal considered the duty issue in light of a precedent ruling by the Hon’ble High Court of Allahabad in a similar case. The High Court's decision in Jhunjhunwala Vanaspati Ltd. Vs. CCE, Allahabad clarified that the Customs rules apply when goods are intended for specific use by the manufacturer. Referring to the Supreme Court's interpretation of the term 'for use' in BPL Display Devices Ltd., the High Court emphasized that exemptions aim to prevent diversion of imported products for other purposes. Consequently, the High Court allowed the manufacturer's appeal against Revenue's duty demand.Based on the High Court's ruling and considering the normal loss in transit, the Tribunal allowed the present appeal. Acknowledging that the lost material was utilized for manufacturing despite the transit losses, the Tribunal set aside the Commissioner's decision. The appellant was granted consequential benefits as per the law.In conclusion, the Tribunal's decision aligned with the High Court's interpretation of the Customs rules and exemption notifications, emphasizing the intended use of imported goods for manufacturing purposes. The Tribunal's ruling favored the appellant, recognizing the normal losses in transit and confirming that the lost material was indeed utilized for manufacturing excisable goods.