2008 (7) TMI 629 - AT - Customs

Summary

Issues:
1. Waiver of demand of Customs duty and penalties based on the denial of benefit of Notification No. 39/96.
2. Validity of the certificate issued for claiming the benefit of the notification.
3. Interpretation of the requirement for the certificate issuer to be equivalent to a Joint Secretary in the Ministry of Defence.
4. Consideration of the operational control of Assam Rifles under the Indian Army in relation to the benefit of the notification.

Issue 1: Waiver of demand of Customs duty and penalties
In Appeal No. C/442/08, the applicant sought waiver of demand of Customs duty and penalties after the denial of the benefit of Notification No. 39/96. The applicant imported goods for Assam Rifles, claiming the notification's benefit with a necessary certificate. Subsequently, a show-cause notice was issued challenging the certificate's compliance with the notification's provisions. The applicant argued that the denial of the notification's benefit was unjustified due to Assam Rifles' operational control by the Indian Army during active counter-insurgency operations. It was emphasized that there was no suppression, diversion of goods, or use of a bogus certificate.

Issue 2: Validity of the certificate
The Revenue contended that the certificate required for the notification's benefit should be issued by a person equivalent to a Joint Secretary in the Ministry of Defence. However, in this case, the certificate was issued by an authority equivalent to a Joint Secretary but not in the Ministry of Defence. The Tribunal noted that the certificate was issued by an authority equivalent to a Joint Secretary, and considering Assam Rifles' operational control by the Indian Army at the time of import, the applicant had a strong case. Consequently, the pre-deposit of duty and penalties was waived, and the stay petition was allowed.

Issue 3: Interpretation of the certificate issuer requirement
The Tribunal analyzed the requirement for the certificate issuer to be equivalent to a Joint Secretary in the Ministry of Defence. It was observed that the certificate issuer's equivalence to a Joint Secretary sufficed, even if not specifically from the Ministry of Defence, especially when Assam Rifles was under the operational control of the Indian Army during the relevant period.

Issue 4: Operational control of Assam Rifles under the Indian Army
Considering Circular No. 57/2002/Cus. dated 10-9-2002, which indicated Assam Rifles being under the operational control of the Indian Army, the Tribunal found that the applicant had a strong case for the waiver of duty and penalties. In Appeal No. C/441/08, where the duty had already been deposited, the pre-deposit of penalties was waived, and stay petitions were allowed. The Tribunal's decision was based on the operational relationship between Assam Rifles and the Indian Army during the import period, supporting the applicant's claim for the notification's benefit.

Conclusion
The judgment by the Appellate Tribunal CESTAT, New Delhi, highlighted the importance of considering the operational context and equivalence of certificate issuers in cases involving the waiver of Customs duty and penalties under specific notifications. The decision emphasized the need for a strong prima facie case and compliance with relevant provisions to warrant the waiver of duties and penalties in customs matters.