2019 (8) TMI 691 - AT - Customs

Appeal allowed against customs duty demand for imported goods, in favor of EOU manufacturing wax candles.

M/s. Primacy Industries Ltd (Earlier known as M/s. Primacy Industries Pvt. Ltd.) Versus The Commissioner of Customs

The appeal was allowed by the Judicial Member, setting aside the order of the lower authority and Commissioner (A) rejecting the appellant's appeal ... 100% EOU - import of Fully Refined Paraffin Wax - production of re-warehousing certificate as proof of receipt of goods in the bonded premises - HELD THAT:- The appellants have imported ‘Fully Refined Paraffin Wax’ but he supplier has not supplied the said goods and has supplied ‘Paraffin White Powder’ which is unfit for use by the appellant in the manufacture of wax candles. Immediately, on receipt of the goods and its examination, the appellant informed the department and sought their guidance. The Department advised the appellant to follow the procedure in terms of Circular No. 60/1999 and also to follow the procedure in terms of Circular No.19/2006-Cus. The appellant have followed the procedure prescribed in Circular No.19/2007 wherein it is clarified that the self-warehousing / bonding procedure need not be followed if any discrepancy is found at the time of examination of the imported goods. Further, I find that once the appellant lodged the complaint to the police and the impugned goods were seized and was auctioned by the order of the Jurisdictional Magistrate on 26.8.2017 and also the sale proceeds of ₹ 10,000/- were deposited in the court. Since the goods have already been auctioned by the order of the Court, it was not possible for the appellant to comply the conditions of re-warehousing certificate and further, it was not possible for the appellant to submit re-warehousing certificate as the goods imported was not ‘Fully Refined Paraffin Wax’. The appellant has been cheated / duped by the supplier and the appellant immediately inform the Department regarding the conditions of the impugned goods and followed the procedure as per the guidance given by the Department - Appeal allowed. Issues:1. Rejection of appeal by Commissioner (A) against demand of customs duty foregone on imported goods.2. Appellant's claim of receiving defective goods and abandonment of imported goods.3. Compliance with Circulars issued by CBEC regarding discrepancy in imported goods.4. Demand of duty under Section 72(1)(d) of the Customs Act.5. Proper clearance of imported goods and payment of customs duty.Issue 1: Rejection of Appeal by Commissioner (A)The appeal was directed against the order passed by the Commissioner (A) rejecting the appellant's appeal regarding the demand of customs duty foregone on imported goods. The appellant, a 100% EOU manufacturing and exporting wax candles, faced a demand for customs duty foregone on imported 'Fully Refined Paraffin Wax' valued at USD 174375. The lower authority issued a show-cause notice due to the appellant's failure to produce a re-warehousing certificate as per the conditions of the B-17 Bond. The Original Authority confirmed the duty demand, leading to the appeal and subsequent rejection by the Commissioner (A).Issue 2: Appellant's Claim of Receiving Defective Goods and AbandonmentThe appellant claimed to have ordered 'Fully Refined Paraffin Wax' but received 'Paraffin White Powder' instead, which was unsuitable for manufacturing wax candles. They argued that the goods were defective and unfit for use, leading them to abandon the imported goods. The appellant informed the department about the discrepancy and followed the prescribed procedures. The appellant cited various decisions to support their claim that duty liability cannot be imposed on them due to the abandonment of the goods.Issue 3: Compliance with Circulars Issued by CBECThe appellant contended that they followed the procedures outlined in Circular No.19/2007-Cus. and Circular No.7/2006 after intimating the department about the discrepancy in the imported goods. They argued that re-warehousing was not possible due to the nature of the goods received, and they complied with the guidance provided by the department.Issue 4: Demand of Duty under Section 72(1)(d) of the Customs ActThe appellant questioned the demand of duty under Section 72(1)(d) of the Customs Act, stating that the goods were duly accounted for. They relied on legal decisions to support their argument against the duty demand.Issue 5: Proper Clearance of Imported Goods and Payment of Customs DutyAfter considering the submissions and evidence, the Judicial Member found that the appellant had imported 'Fully Refined Paraffin Wax' but received 'Paraffin White Powder,' rendering the goods unsuitable for their intended use. The Judicial Member noted that the appellant promptly informed the department, followed prescribed procedures, and abandoned the goods. The Judicial Member concluded that the impugned order was not sustainable in law, setting it aside and allowing the appeal of the appellant.This detailed analysis covers the key issues raised in the legal judgment, providing a comprehensive overview of the case and the arguments presented by both parties.