2007 (5) TMI 392 - AT - Central Excise

EXIM - Import of moulds and dies, capital goods - Held that - N/N. 53/97-Cus provides for levy of duty only on raw materials, components, spares and consumables for failure to achieve NFEP and there is no provision in the Notification for demand of duty on capital goods in the event of unit failing to achieve NFEP - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Challenge of dropping demand of Customs duty on moulds and dies imported on loan basis
- Interpretation of Notification No. 53/97-Cus. regarding levy of duty on capital goods
- Finding on dropping demand of Customs duty on capital goods
- Dismissal of cross-objection challenging duty demand on air-conditioners

Analysis:
The judgment of the Appellate Tribunal CESTAT, Mumbai involved a challenge by the Revenue regarding the dropping of a demand of Customs duty on moulds and dies imported on a loan basis. The Revenue contended that the importers violated Chapter 9 of the Exim Policy 1997-2002 by initially projecting the transaction as a loan basis and later converting it into a purchase, without revising or redetermining the Net Foreign Exchange Earning as a Percentage of Exports (NFEP) based on additional imports. The Commissioner, in the impugned order, found that the conditions of Notification No. 53/97-Cus. were not violated as the capital goods were installed and used in the factory for manufacturing export articles. The Notification specified conditions for levy of duty on capital goods if not installed or utilized within a specified period, but did not provide for duty demand on capital goods for failing to achieve NFEP, as clarified in a previous Tribunal decision (Evergreen Synthetics Ltd. v. CC&E, Surat [2002 (147) E.L.T. 907]). Consequently, the Tribunal upheld the Commissioner's finding and rejected the Revenue's appeal.

Regarding the duty demand on air-conditioners, the cross-objection filed by the respondents challenging the confirmation of duty demand was dismissed as not pressed due to the small amount involved. The Tribunal's decision provided a comprehensive analysis of the interpretation of Notification No. 53/97-Cus. and the conditions for levy of duty on capital goods, emphasizing the importance of compliance with the specified requirements. The judgment highlighted the significance of utilizing capital goods for the intended purpose within the prescribed timeframe to avoid duty demands, as outlined in the relevant Notification.