2023 (9) TMI 418 - AT - Customs

Appellant's Duty Eligibility Appeal Partially Allowed with Reduced Penalty

M/s. Salzer Electronics Ltd. (Unit III) Versus Commissioner of GST and Central Excise, Coimbatore

M/s. Salzer Electronics Ltd. (Unit III) Versus Commissioner of GST and Central Excise, Coimbatore - TMI Issues Involved:1. Eligibility for concessional rate of duty under Notification No. 25/99-Cus dated 28.02.1999.2. Liability for confiscation of imported goods and resultant products.3. Justification of fine and penalty imposed.Summary:Issue 1: Eligibility for Concessional Rate of DutyThe appellant, M/s. Salzer Electronics Limited, imported parts of relays, switches, and connectors availing concessional duty under Notification No. 25/99-Cus dated 28.02.1999. The appellant argued compliance with the Customs Rules, 1996 by manufacturing sub-assemblies/parts at their Coimbatore unit and transferring them to their Una unit for final assembly. The Tribunal noted that the appellant did not manufacture the final products (switches) at the Coimbatore unit, which was the declared manufacturing premises. The Tribunal emphasized strict compliance with the notification conditions, citing the Supreme Court's stance in Mihir Textiles Ltd. and Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri Gopal. The Tribunal concluded that the appellant did not meet the notification's conditions, thus ineligible for the concessional duty.Issue 2: Liability for ConfiscationThe Tribunal found that the appellant contravened the Customs Rules, 1996 by not informing the jurisdictional authorities about the inter-unit transfer of parts and not maintaining proper accounts. The Tribunal upheld the lower authorities' decision that the imported goods were not used for the intended purpose, making them liable for confiscation under Section 111(O) of the Customs Act, 1962.Issue 3: Justification of Fine and PenaltyThe Tribunal acknowledged that the imported parts were cleared to the Una unit and used for manufacturing switches. However, it noted that some parts were sold directly from the Una unit without further manufacturing. The Tribunal, adopting a liberal approach and relying on Shiv Kripa Ispat Pvt. Ltd., set aside the confiscation and fine since the goods were not available for confiscation. However, it upheld the imposition of a penalty under Section 112 (a)(ii) of the Customs Act, 1962, reducing it to Rs. 3,60,000/-.Conclusion:The appeal was partly allowed, confirming the demand for duty and interest but setting aside the confiscation and reducing the penalty.