2023 (7) TMI 667 - AT - Customs

Customs Duty Exemption Upheld in Appeal Decision

The Tribunal dismissed the Department's appeal, upholding the order that dropped proceedings against the respondent for allegedly wrongly availing Basic ... Exemption from basic customs duty - actual user condition / 'use of the goods for specified purpose - BCD concession towards import of blades / towers and foundation mounting parts etc denied - N/N. 21/2002-Cus. dated 01.03.2002 read with Notification No.12/2012-Cus. dated 17.3.2012 - Violation of the condition of notification, as the imported blades were sold and were not put to use by the respondent for the specified purpose - HELD THAT:- The very same issue was considered by the jurisdictional High Court in the case of NORDEX INDIA PRIVATE LIMITED, (FORMERLY KNOWN AS ACCIONA WINDPOWER INDIA PRIVATE LIMITED) REP. BY ITS DIRECTOR MR. PRASHANTH PANDARISH VITTAL VERSUS COMMISSIONER OF CUSTOMS [2022 (8) TMI 1214 - MADRAS HIGH COURT] wherein the Hon’ble High Court has considered the practical difficulties of the importer to transport blades from the port to the factory and thereafter to the customer’s site, where it was held that The exemption cannot be denied unless it is seen that it has been made to evade duty, it leads to evasion of duty. In this case, it is not so. The Rotor Blades has been fixed in the Windmill, which is a vital component for completion of the Windmill project. After considering the facts of the case and perusing the records, the judgment of the Hon’ble Jurisdictional High court in the case of Nordex India Pvt. Ltd. is squarely applicable to the instant case. Following the same, the demand proposed in the SCN is on misconception of facts and law - the appeal filed by the department is dismissed. Issues Involved:1. Denial of benefit of Basic Customs Duty (BCD) exemption under Notification No.21/2002-Cus. and Notification No.12/2012-Cus.2. Alleged violation of condition No.45(ii) of the notification by the respondent.Summary:Issue 1: Denial of BCD ExemptionThe appeal was filed by the Department against the order passed by the Commissioner, who dropped the proceedings initiated by the show cause notice alleging that the respondent wrongly availed BCD exemption under Notification No.21/2002-Cus. dated 01.03.2002 read with Notification No.12/2012-Cus. dated 17.3.2012. The respondent imported Wind Operated Electricity Generator (WOEG) parts and availed BCD concession, which required furnishing a certificate from an officer of the Ministry of Non-Conventional Energy Sources and an undertaking to use the goods for the specified purpose.Issue 2: Alleged Violation of Condition No.45(ii)The Department argued that the respondent violated the condition by selling the imported parts instead of using them for the specified purpose. The original authority observed no violation of conditions and dropped the proceedings. The Department contended that the respondent should have used the goods themselves and not sold them to customers.Respondent's DefenseThe respondent argued that they entered into two separate agreements with customers: one for supply of WOEG parts and another for erection and commissioning. They claimed that they fulfilled the conditions of the exemption notification by assembling the parts at the customer's site. The respondent cited a High Court judgment in the case of Nordex Pvt. Ltd. vs CC Tuticorin, which supported their interpretation that transporting parts directly to the customer's site does not violate the conditions of the notification.Tribunal's AnalysisThe Tribunal noted that the adjudicating authority found that the imported parts were utilized for the specified purpose of manufacturing WOEG, fulfilling the condition No.35(ii) and 45(ii). The Tribunal also referred to the High Court's judgment in Nordex India Pvt. Ltd., which addressed the practical necessity of transporting parts directly to the customer's site for assembly. The High Court held that the condition of using the goods for the specified purpose was met even if the parts were transported to the customer's site.ConclusionThe Tribunal concluded that the demand proposed in the show cause notice was based on a misconception of facts and law. The judgment of the High Court in Nordex India Pvt. Ltd. was found to be squarely applicable. Therefore, the appeal filed by the Department was dismissed, and the impugned order was upheld.(Pronounced in court on 17.07.2023)