TaxTMI 
TaxTMI 
2025 (11) TMI 1213
X X X X Extracts X X X X
X X X X Extracts X X X X
....The impugned order also imposes penalty upon the appellant under section 112 (a) (ii) of the Customs Act. 2. The appellant claims that it is engaged in the assembly/ manufacturing of various types of printed circuit boards [PCB] and printed circuit boards assembly [PCBA]. According to the appellant the PCB's that are manufactured by the appellant by using Surface Mounting Technology are sold and are also used by the appellant for manufacture/ assembling of mobile phones, set-top boxes and other electronic goods. 3. During the period from 18.07.2019 to 30.08.2019, the appellant imported various machines such as fuji scalable placement platform model NXT III (M3IIIX4), VI Automatic Optical Inspection System Model: 8K Spectro, Mini Loader/LD-250, High Accuracy Screen Printer/GPX-CS [the goods] for assembly of PCBs. According to the appellant, the goods are machinery used to mount components like micro resistors, capacitors, diodes, triodes, integrated circuits and other similar components on the PCB using Surface Mounting Technology by which different components of PCBs are attached and connected on the surface of the board using batch solder-reflow. 4. The appellant had impo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ule Lenses; Filtering Units for Chemical Solutions; Pollution Control Equipment; Automatic Opti- PCB * ******** ********* 51. Pick and place, component mounting machine PCB assemblies * ******** ********* 57. Precision solder paste printer; adhesive dispensing machine; conveyor belt system; high speed chip shooter; fine pitch placement machine; feeders; reflow oven; auto wave soldering machine; [Automatic/Semi-automatic PCB Loader and Unloader falling under tariff item 8428 90 90]; PCB insertion conveyor system PCB Assemblies * ******** ********* 68. (i) PCB Coating machine falling under fub-heading 8424 89; (ii) PCBA Loader & Unloader falling under sub-heading 8479 89 (iii) Surface Colour/Gloss/Roughness Measurement Machine falling under tariff item 9031 80 00; (iv) Force Measurement Machine falling under tariff item 9031 80 00; (v) Magnetism and Weight Measurement Machine falling under sub-heading 9016 00 or heading 9031; (vi) Vibration Machine falling under tariff item 9031 80 00; (vii) Torsion Machine falling under tariff item 9031 80 00; (viii) Barcode Printer (300 DPI and 600 DPI) falling under sub-hea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eans the information provided by the manufacturer who intends to avail the benefit of an exemption notification; (d) "Jurisdictional Custom Officer" means an officer of Customs of a rank equivalent to the rank of Superintendent or an Appraiser exercising jurisdiction over the premises where either the imported goods shall be put to use for manufacture or for rendering output services; (e) "manufacture" means the processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term "manufacturer" shall be construed accordingly; (f) "output service" means supply of service with the use of the imported goods. RULE 4. Information about intent to avail benefit of exemption notification. - An importer who intends to avail the benefit of an exemption notification shall provide the information to the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service, the particulars, namely:- (i) the name and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmation under clause (b) of sub-rule (1), the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs at the Custom Station of importation shall allow the benefit of the exemption notification to the importer who intends to avail the benefit of exemption notification. RULE 6. Importer who intends to avail the benefit of an exemption notification to give information regarding receipt of imported goods and maintain records.-(1) The importer who intends to avail the benefit of an exemption notification shall provide the information of the receipt of the imported goods in his premises where goods shall be put to use for manufacture, within two days (excluding holidays, if any) of such receipt to the jurisdictional Customs Officer. (2) The importer who has availed the benefit of an exemption notification shall maintain an account in such manner so as to clearly indicate the quantity and value of goods imported, the quantity of imported goods consumed in accordance with provisions of the exemption notification, the quantity of goods re-exported, if any, under rule 7 and the quantity remaining in stock, bill of entry wise and shall produc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble to the items imported vide the impugned Bills of Entry." (emphasis supplied) 11. It needs to be mentioned that the show cause notice refers to only one intimation letter, whereas the appellant had provided intimation letters each time the goods were cleared and these intimation letters are in connection with the Serial No's. 51, 57 and 68 also. 12. The appellant filed a reply to the show cause notice and specifically mentioned that the products imported by the appellant through the 11 Bills of Entry were used in the manufacture of PCB/ PCBA as would be clear from the description of the product in the Bills of Entry. The appellant also pointed out that on arrival of the goods at the ports, the appellant paid the applicable custom duty and the Officer of Customs posted at the ports scrutinized the documents submitted by the appellant, verified them and after finding that the appellant was eligible for benefit of the Exemption Notification, allowed clearance. The appellant also categorically mentioned that the show cause notice did not allege that the goods imported by the appellant through the 11 Bills of Entry were not used by the appellant for manufacturing of PCB and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ost respectful submissions of the Noticee is a bonafide mistake only. The Noticee fulfils all the conditions of Notification No. 25/2002- Customs dated: 1st March, 2002 and mistake in filing intimation letters at the most can be termed as a procedural lapse only. The Noticee submits that for such bonafide mistake and procedural lapse, benefit of Notification No. 25/2002- Customs dated: 1st March, 2002 cannot be denied to the Noticee as it is a settled law that substantial benefit cannot be denied on the basis of processional lapse if any. They placed reliance on the following judgments:- (i) 2009 (240) E.LT. 161 (S.C.) SAMBHAJI Versus GANGABAI (ii) 2010 (260) E.L.T. 106 (Tri. - Del.) DHAMPUR SUGAR MILLS LTD. Versus COMMISSIONER OF C. EX., MEERUT 40.2 I do not find any force in the above arguments for the reason that to avail of exemption under Notification No. 25/2002- Customs dated 01.03.2002, it is a primary condition that the claimant follows the procedure set out in the Customs Import of Goods at Concessional Rate of Duty, 1996. The claimant is legally bound to declare the end use of the goods sought for exemption." (emphasis supplied) 14. Shri ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....missions advanced by the learned counsel for the appellant and the learned special counsel for the department have been considered. 17. The only allegation that has been made against the appellant in the show cause notice is that in the declaration which was required to be submitted by the appellant under rule 4 of the 2017 Rules, the appellant described the goods produced in the factory as smart phones and so the appellant would not be entitled to the benefit of the Exemption Notification. Rule 4 of the 2017 Rules requires the importer to provide information to the Deputy Commissioner of Customs about the goods produced at his manufacturing facility. 18. It is seen from a perusal of the Bills of Entry that the appellant had not only specified the product that was being imported but had also stated that they would be used for the manufacture of PCB of mobile phones or PCBA of mobile phones. There is no allegation in the show cause notice that such a declaration was not made in the Bills of Entry. What has been emphasized in the show cause notice is that the declaration submitted by the appellant under rule 4 of the 2017 Rules does not mention the product specification in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-out in rule 5 of the 2017 Rules. Rule 5 specifically deals with the procedure to be followed and there is no allegation in the show cause notice that the procedure contemplated under rule 5 of the 2017 Rules had not been followed. 22. Even while considering rule 4 of the 2017 Rules, the explanation offered by the appellant that not mentioning ‗smart phones' instead of PCB and PCBAs was an honest mistake deserves to be accepted. The appellant could have been under an impression that Serial No. 2 required the appellant to mention the goods finally produced in the factory and not the goods which the appellant had produced from the imported goods. In any case, the appellant had specifically stated in the Bills of Entry that the goods imported were used for the manufacture of PCB/ PCBAs. 23. The explanation offered by the appellant in the reply to the show cause notice has been rejected by the Principal Commissioner merely stating that to avail the benefit of the Exemption Notification it was necessary for the appellant to have followed the procedure set-out in the 2017 Rules and the appellant was "legally bound to declare the end use of the goods sought for exemptio....