2004 (2) TMI 399 - AT - Customs

Summary

Issues:
1. Demand of Customs duty confirmed by the Commissioner (Appeals) against the appellant.
2. Interpretation of Notification No. 16/2000-Cus. and Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996.
3. Application of Rule 8 of the Customs Rules, 1996 in case of short receipt of imported goods for intended use.

Analysis:

1. The appeal was filed against the demand of Customs duty confirmed by the Commissioner (Appeals). The Appellants, engaged in the manufacture of vanaspati, imported Crude Palm Oil under Notification No. 16/2000-Cus. The dispute arose as the Asstt. Commissioner confirmed the duty demand for a quantity of Palm Oil not received by the Appellants in their factory. The Commissioner (Appeals) upheld this decision.

2. The Appellants argued that they followed the required procedure under the Customs Rules, 1996, and the loss of quantity (0.7%) was due to the oil sticking to the walls of the tanker. They contended that Rule 8 of the Rules applies only when goods are not used for the intended purpose, not when there is a short receipt. The Appellants relied on a Tribunal decision and a Supreme Court judgment to support their position.

3. The Respondent, however, emphasized that the concessional duty rate is subject to fulfilling the conditions specified in the Notification and Rules. They argued that Rule 8 empowers recovery of duty for goods not used for the intended purpose, regardless of the reason for non-use. Referring to a Board's Circular, the Respondent contended that any short receipt at the factory should result in duty recovery.

4. The Tribunal analyzed the Notification and Rules, noting that the benefit of concessional duty is contingent on using the imported goods for the intended purpose. As a quantity of Palm Oil was not received by the Appellants in their factory, it was deemed not used for manufacturing vanaspati. Rule 8 mandates recovery of duty for goods not utilized as intended. The Tribunal rejected the Appellants' argument that Rule 8 only applies to goods received in the factory, not to short-received quantities. The decision in a previous case was deemed inapplicable due to factual differences. Consequently, the appeal against the duty demand was dismissed.

This detailed analysis of the judgment provides insights into the legal interpretation of Notification No. 16/2000-Cus., the Customs Rules, 1996, and the application of Rule 8 in cases of short receipt of imported goods for intended use.