2023 (5) TMI 205 - AT - Customs

Tribunal allows appeal, sets aside Order-in-Original on duty rate & limitation grounds.

The Tribunal allowed the appeal filed by the Appellant, setting aside the Order-in-Original (OIO) on the grounds of both merits and limitation. It ... EPCG Scheme - Concessional rate of Customs duty - condition No.8 in the condition sheet to the EPCG licenses clearly specified the place of installation of the imported pipes to be Jajpur or Barbil, whereas the pipelines were installed outside these approved premises - extended period of limitation - suppression of facts or not - HELD THAT:- The Appellant has set up and integrated Iron Ore Pellets manufacturing facility consisting of beneficiation plant at Barbil, Odisha and pellets making facility at Jajpur, Odisha. The two Plants are located at a distance of 217 Kms. In the beneficiation Plant, at Barbil, the raw ore fines were processed and impurities were removed and converted into a concentrate. It is transported in a slurry form to the Pellet manufacturing Plant at Jajpur through pipeline. The pipes required for transporting the concentrate were imported under EPCG Scheme - the notification requires the imported capital goods are to be installed in the ‘factory or premises’ of the EPCG license holder. The Notification does not mention that the installation has to be made within the Central Excise Registered factory. The word “premises’ mentioned in the Notification is wide enough to cover the entire stretch where the pipelines were installed in this case. It is an integrated factory to manufacture Iron Ore Pellets from raw material. The EODCs were issued by the DGFT only after satisfying themselves that all the conditions specified in the Licence have been fulfilled. We also find that after issue of EODC, the Custom Department cancelled the Bond and bank guarantee executed by the Appellant. The Department has cancelled bond and bank guarantee after satisfying that the Export Obligation was fulfilled and EODC was produced and the Appellant has satisfied all the conditions of the Notification or the licence. Hence, both DGFT and Customs Department has come to the conclusion that the Appellant has fulfilled all the conditions of the Notification or the Licence. Extended period of limitation - Suppression of facts or not - HELD THAT:- There is no suppression involved in this case. Consequently the demand confirmed in the OIO as well as penalties imposed are not sustainable on the ground of limitation also. However, on merits itself it is held that the demand of customs duty and the interest and penalty demanded in the OIO are not sustainable. Accordingly, the OIO set aside on merits and the appeal filed by the Appellant are allowed. The Appellant has installed the pipelines within the factory or premises of the assesse and hence, they are eligible for concessional rate of duty as specified in Notification No. 64/2008-Cus. dated 09/05/2008 - Appeal allowed. Issues Involved:1. Installation Location of Imported Pipelines2. Interpretation of 'Factory or Premises'3. Compliance with EPCG Scheme and Notification No. 64/2008-Cus4. Limitation Period under Section 28 of the Customs ActSummary of Judgment:1. Installation Location of Imported Pipelines:The primary issue was whether the imported pipelines installed outside the Central Excise registered factories at Barbil and Jajpur violated the conditions of Notification No. 64/2008-Cus and Para 5.3.2 of the Handbook of Procedures of FTP. The Department alleged that the pipelines were not installed at the specified 'premises' mentioned in the EPCG licenses, thus denying the benefit of the concessional rate of Customs duty.2. Interpretation of 'Factory or Premises':The Appellant argued that the Barbil and Jajpur plants constituted an integrated manufacturing unit and that the pipeline connecting these two facilities should be considered within the 'factory' itself for EPCG benefits. The Tribunal found that the term 'premises' in the Notification is broad enough to include the entire stretch where the pipelines were installed. The pipelines were essential for the continuous manufacturing process, transporting slurry from Barbil to Jajpur, and the Appellant had obtained the right of way for the land on which the pipelines were installed.3. Compliance with EPCG Scheme and Notification No. 64/2008-Cus:The Tribunal noted that the DGFT had issued Export Obligation Discharge Certificates (EODCs) after verifying that the Appellant met all conditions of the EPCG Scheme. The Customs Department had also cancelled the Bonds and bank guarantees, indicating compliance with the Notification. The Tribunal held that the Appellant fulfilled all conditions stipulated in Notification No. 64/2008-Cus, and the integrated facility's pipelines were considered within the 'premises' for extending the benefit of the concessional duty.4. Limitation Period under Section 28 of the Customs Act:The Appellant contended that the demand raised in April 2017, almost 8-9 years after the import date, was beyond the extended limitation period under Section 28 of the Customs Act. The Tribunal agreed, stating there was no suppression of information, and the extended period was not invocable. The Tribunal found that the Appellant had disclosed all relevant information to the Customs Authorities, including the installation locations outside the factory premises.Conclusion:The Tribunal set aside the Order-in-Original (OIO) on merits and on the ground of limitation, allowing the appeal filed by the Appellant. The judgment concluded that the Appellant was eligible for the concessional rate of duty as specified in Notification No. 64/2008-Cus, and the pipelines were considered installed within the factory or premises of the Appellant.