2006 (2) TMI 359 - AT - Customs

Summary

Issues:
1. Demand of duty under Customs Notification No. 32/97-Cus.
2. Availment of DEPB credit and duty drawback in relation to duty-free imported raw materials.
3. Applicability of circulars issued by the Board on DEPB benefit and duty drawback.
4. Challenge of duty demand based on Customs Rules, 1996.
5. Prima facie case on merits regarding DEPB credit and duty drawback.
6. Requirement of deposit for waiver of pre-deposit and stay of recovery.

Analysis:
1. The case involves a demand of duty amounting to Rs. 20,72,511/- from the appellants, rejecting the benefit of Customs Notification No. 32/97-Cus. The notification permitted duty-free import of raw materials for jobbing purposes, with a condition of exporting the final product to the overseas supplier of raw materials.

2. The appellants utilized both imported raw materials and indigenously procured inputs for job work, resulting in a value addition. They claimed DEPB credit for four shipping bills and duty drawback for the remaining eight bills out of a total of 12 shipping bills covering exports under the said notification. The lower authorities contended that availing these benefits breached the notification's conditions, leading to the duty demand.

3. The defence presented by the appellants relied on circulars issued by the Board regarding DEPB benefit and duty drawback, which were deemed retrospective in operation. The circulars supported the arguments of the Respondent, indicating a breach of conditions by the appellants.

4. The appellants challenged the duty demand based on Customs Rules, 1996, on a jurisdictional ground. However, the Tribunal did not delve into this aspect at the preliminary stage of determining the prima facie case on merits.

5. While the lower authorities found the DEPB credit and duty drawback availed by the appellants to be illegal, the Tribunal noted the contentious nature of the case. Due to doubts regarding the appellants' case and the absence of evidence of financial hardships, the Tribunal directed them to deposit Rs. 5,00,000/- within four weeks for waiver of pre-deposit and stay of recovery.

6. In conclusion, the judgment highlighted the complexities arising from the appellants' actions in availing benefits against the conditions of the Customs notification, leading to the demand of duty. The Tribunal's decision emphasized the need for deposit to proceed with the case, considering the lack of a clear case free from doubt or financial constraints.