2021 (8) TMI 391 - AT - Customs

Tribunal remands matter for compliance determination under Customs Act

Commissioner of Customs Versus M/s. India Land and Properties Limited with M/s. India Bulls Real Estate Limited [IBREL] Versus Commissioner of Customs (Chennai-IV)

Commissioner of Customs Versus M/s. India Land and Properties Limited with M/s. India Bulls Real Estate Limited [IBREL] Versus Commissioner of Customs ... Issues Involved:1. Fulfillment of condition (ii) of the exemption notification.2. Proportionate exemption based on the usage of goods.3. Applicability of depreciation benefits under the exemption notification.4. Interpretation of exemption notifications and relevant legal principles.5. Authority of the adjudicating officer to modify exemption notifications.Detailed Analysis:1. Fulfillment of Condition (ii) of the Exemption Notification:The primary issue revolves around whether M/s. India Land and Properties Ltd (ILPL) fulfilled condition (ii) of the exemption notification 153/93-Cus, which mandates that 'the goods shall only be used for the purpose of export of software by the STP units located in the premises of ISP.' The Commissioner observed that ILPL used the imported goods for both STP and non-STP units, thus not strictly adhering to the condition. ILPL argued that despite using the goods for non-STP units, they met the Net Foreign Exchange requirement and did not use the goods outside the STP area.2. Proportionate Exemption Based on the Usage of Goods:The Commissioner had granted partial exemption on a proportionate basis, considering the area used by STP and non-STP units. However, the Tribunal noted that the exemption notification does not provide for partial exemptions. The Tribunal emphasized that the Commissioner does not have the authority to convert a full exemption into a proportionate partial exemption.3. Applicability of Depreciation Benefits Under the Exemption Notification:ILPL applied for de-bonding of the goods, invoking condition (v) of the exemption notification, which allows for the calculation of duty on a depreciated value. The Revenue contended that since ILPL did not fulfill the condition (ii), they should not be entitled to the depreciation benefits. The Tribunal highlighted that the benefit of depreciation is contingent upon the eligibility for the exemption notification.4. Interpretation of Exemption Notifications and Relevant Legal Principles:The Tribunal referred to the Supreme Court judgment in Commissioner of Customs, Mumbai vs Dilip Kumar, which clarified that exemption notifications must be interpreted strictly. The burden of proving eligibility for the exemption lies with the assessee, and any ambiguity must be resolved in favor of the Revenue. The Tribunal reiterated that once the threshold of applicability is crossed, the notification should be construed liberally.5. Authority of the Adjudicating Officer to Modify Exemption Notifications:The Tribunal concluded that the adjudicating authority does not have the power to modify the exemption notification. The role of the adjudicating authority is limited to determining whether the benefit of the exemption notification is available to the importer. If the conditions are not met, the authority cannot sanction non-fulfillment unless explicitly allowed under section 111(o) of the Customs Act, 1962.Conclusion:The Tribunal set aside the impugned order dated 03.03.2020 and remanded the matter to the Adjudicating Authority. The Authority is directed to pass an order citing specific provisions of the exemption notification regarding the availability of benefits and depreciation. If any conditions of the exemption notification are not fulfilled, the Authority must indicate whether non-fulfillment is sanctioned as per section 111(o). Any confiscation or penalties must be supported by relevant provisions. Both appeals were disposed of accordingly.