2017 (3) TMI 911 - AT - Customs

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

The Tribunal allowed the appeal, overturning the Ld. Commissioner's decision to deny the concessional rate of duty on imported Crude Palm Oil lost in ... Loss in transit - normal loss or not? - import of Crude Palm Oil - benefit of N/N. 12/2012-CUS dated 17.03.2012 - Held that: - the duty issue is squarely covered by the precedent ruling of Hon’ble High Court of Allahabad in the case of Jhunjhunwala Vanaspati Ltd. Vs. CCE, Allahabad [2015 (10) TMI 1532 - ALLAHABAD HIGH COURT], wherein the Hon’ble High Court under similar facts and circumstances held that the said Rule of the Customs (import of Concessional rate of duty for manufacture of excisable goods), Rules 1996, comes into operation only when the goods are intended to be used by manufacturer for the specific purpose - the loss in the given facts and circumstances is a normal loss and in such case, the material lost in transit have been definitely put to use for manufacture - benefits allowed - appeal allowed - decided in favor of appellant. 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.