Re-imported goods exported for exhibition within six months qualify for exemption under Notification 45/2017

CESTAT New Delhi held that re-imported goods exported for exhibition or consignment within six months qualify for exemption under Notification No.45/2017. The tribunal found no supply of goods occurred as ownership remained with the appellant, and no consideration was paid upon re-import. The court applied the principle that one cannot sell to oneself, extending this to supply transactions. While confirming duty liability for one bill of entry, CESTAT set aside penalty imposition due to lack of evidence showing intent to evade customs duty. Appeal was partly allowed.

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Issues Involved:
1. Applicability of Notification No.45/2017-Cus dated 30.6.2017 for re-imported goods.
2. Eligibility for exemption under Sr.No.5 of the Notification.
3. Imposition of penalty on the appellant.

Summary:

Issue 1: Applicability of Notification No.45/2017-Cus dated 30.6.2017 for re-imported goods:
The appellant, a jeweler with Import and Export Code, re-imported goods initially exported for exhibition or consignment. The department argued that the appellant was eligible for exemption under Sr.No.1 (c) or 1 (d) of the Notification, but the appellant claimed exemption under Sr.No.5, which exempts goods from the whole of customs duty and IGST. The adjudicating authority denied the exemption under Sr.No.5, leading to a demand for customs duty amounting to Rs.1,20,17,423/- along with penalties.

Issue 2: Eligibility for exemption under Sr.No.5 of the Notification:
The appellant contended that the re-imported goods were not supplied, as they were exported for exhibition and not sold. The ownership remained with the appellant, and thus, the re-import did not constitute a "Zero rated supply" under Section 16 of the IGST Act, 2017. The appellant argued that Sr.No.1(d) of the Notification applies only to goods exported under the claim of refund of IGST, and since the goods were re-imported within six months, they rightly claimed the benefit under Sr.No.5. The Tribunal agreed, noting that the goods exported under LUT/bond were re-imported within six months, and thus, the demand was wrongly confirmed for these entries.

Issue 3: Imposition of penalty on the appellant:
The appellant argued that there was no act or omission rendering the goods liable to confiscation under Section 111(o) of the Customs Act, 1962, and no mens rea to evade customs duty. The Tribunal observed that the issue was one of interpretation of the notification, and there was no evidence of intent to evade duty. Consequently, the penalty imposed was set aside.

Conclusion:
The Tribunal set aside the order under challenge except for the duty to be paid with reference to one bill of entry where re-import was not effected within six months. The appeal was partly allowed, and the penalty on the appellant was removed.

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