Anti-dumping duty survives notification expiry; EOU exemption, manufacture claim, and duty-equivalent penalty were rejected.

Anti-dumping duty remains recoverable on imports made while a valid notification is in force, even if the notice and adjudication occur after expiry, because liability accrues on import and is preserved by the Customs recovery provisions. Section 9A(2A) did not protect goods cleared into the Domestic Tariff Area by a 100% EOU where the claimed manufacturing activity was not proved. The Gujarat HC also upheld the finding that mere repacking or relabelling, without a new product emerging, did not amount to manufacture under the EXIM Policy. Penalty under Section 114A was restored at the duty-equivalent rate for wilful misstatement or suppression. Anti-dumping duty was excluded from the base for CVD and SAD, and duty paid on DTA clearances could not be adjusted against the customs demand.

---

---

Issues: (i) Whether anti-dumping duty could be demanded on imports made during the currency of the notification even though the show-cause notice and adjudication followed its expiry, and whether Section 9A(2A) of the Customs Tariff Act, 1975 exempted the goods on clearance into the Domestic Tariff Area by a 100% EOU; (ii) whether the imported goods were subjected to "manufacture" within the meaning of the EXIM Policy so as to retain the benefit of the EOU exemption; (iii) whether penalty under Section 114A of the Customs Act, 1962 was correctly imposed at the duty-equivalent rate; (iv) whether anti-dumping duty formed part of the assessable value for CVD and SAD; and (v) whether duty already paid on DTA clearances could be adjusted against the confirmed customs demand.

Issue (i): Whether anti-dumping duty could be demanded on imports made during the currency of the notification even though the show-cause notice and adjudication followed its expiry, and whether Section 9A(2A) of the Customs Tariff Act, 1975 exempted the goods on clearance into the Domestic Tariff Area by a 100% EOU?

Analysis: Liability to anti-dumping duty arose upon import during the subsistence of the notification issued under Section 9A(1) of the Customs Tariff Act, 1975. Section 9A(8) incorporates the recovery machinery of the Customs Act, 1962, and Section 159A of the Customs Act preserves liabilities already incurred. Expiry of the notification did not obliterate duty already attracted by imports made while it was operative. Section 9A(2A) did not assist the assessee because the goods were diverted to the Domestic Tariff Area contrary to the conditions of the exemption and without the requisite manufacturing activity.

Conclusion: The demand of anti-dumping duty was held valid in law, and the exemption under Section 9A(2A) was held inapplicable on the facts.

Issue (ii): Whether the imported goods were subjected to "manufacture" within the meaning of the EXIM Policy so as to retain the benefit of the EOU exemption?

Analysis: The definition of manufacture in the EXIM Policy is expansive, but the inclusive activities such as labelling or repacking cannot stand alone divorced from the core requirement that a new product with a distinctive name, character or use must emerge. On the evidence, the department's samples and reports showed the goods to be the same before and after the alleged processing, and the claim of repacking or relabelling was unsupported and raised belatedly. The factual findings of the adjudicating authority and the Tribunal that no genuine manufacturing or processing took place were not shown to be perverse.

Conclusion: The finding that no manufacturing process was undertaken was upheld against the assessee.

Issue (iii): Whether penalty under Section 114A of the Customs Act, 1962 was correctly imposed at the duty-equivalent rate?

Analysis: Penalty under Section 114A follows where non-levy or short-levy results from wilful misstatement or suppression of facts. The record supported a finding that the assessee had misrepresented the nature of the activity and cleared the imported goods into the Domestic Tariff Area without the required process. In such a case, the penalty is mandatory and not discretionary. The reduction of penalty by the Tribunal to 10% was unsupported by reason and contrary to the statutory scheme.

Conclusion: The equal penalty under Section 114A was restored, while the assessee was given the statutory option to avail the reduced-penalty regime on compliance within the prescribed time.

Issue (iv): Whether anti-dumping duty formed part of the assessable value for CVD and SAD?

Analysis: The levy of anti-dumping duty is distinct from customs duty and, after the relevant amendments, is excluded from the computation base for additional customs duties. The Supreme Court authority on the point establishes that anti-dumping duty is not to be included while computing CVD or SAD.

Conclusion: The exclusion of anti-dumping duty from the assessable value for CVD and SAD was upheld.

Issue (v): Whether duty already paid on DTA clearances could be adjusted against the confirmed customs demand?

Analysis: The amount paid at the time of DTA clearance was excise duty, whereas the confirmed demand was customs duty/anti-dumping duty. No statutory basis was shown for cross-adjustment between the two distinct levies, and the claim for abatement was unsupported on the record.

Conclusion: Adjustment of the duty already paid on DTA clearances against the confirmed demand was rejected.

Final Conclusion: The assessee's challenge failed on the core liability issues, the Revenue's challenge succeeded on the post-11.05.2001 anti-dumping duty and penalty issues, the computation of CVD and SAD remained undisturbed, and the writ seeking set-off of duty paid on DTA clearances was dismissed.

Ratio Decidendi: Anti-dumping duty attracted on import during the currency of a valid notification remains recoverable notwithstanding subsequent expiry, and penalty under Section 114A follows mandatorily where non-levy is caused by wilful misstatement or suppression of facts.

---