2007 (2) TMI 64 - AT - Customs

Demand(Customs) Alleged that appellant were suppressed the facts and made willful mis-statements in order to avail the benefit of Notification No.165/86-Cus as amended and accordingly larger period invoked on him

Summary

Issues:
1. Applicability of extended period for duty demand.
2. Denial of benefit of Notification for imported components.
3. Allegation of suppression of facts and wilful mis-statement.
4. Justification for imposition of duty demand.
5. Interpretation of the exemption Notification conditions.
6. Bona fide belief of the appellants regarding component usage.
7. Invocation of longer period for duty demand.
8. Appeal against the Commissioner's order.

Analysis:
The appeal in question was filed against an Order-in-Original passed by the Commissioner of Customs, Chennai, following a remand by CESTAT's Final Order. The appellants imported insulated electrical cable lengths as components for ECG machines but used them as spares/warranty replacements. The Commissioner confirmed duty demand of Rs. 8,77,124 under Section 28(2) of the Customs Act, 1962, citing suppression of facts and wilful mis-statement. However, no penalty was imposed, leaving room for separate proceedings. The appellants argued that the components were intended for ECG machine manufacture and were later sold as spares to already manufactured machines, thus claiming exemption under Notification No. 165/86-Cus. They also emphasized their bona fide belief in component usage compliance and cited relevant case laws to support their stance.

The Commissioner's order was challenged on the grounds that the appellants acted in good faith and believed the components would be used solely for ECG machine manufacture. The appellants contended that the benefit of the exemption Notification should extend to the components sold as spares. However, the Commissioner found the appellants' belief unsubstantiated, especially considering the subsequent amendment to the Notification. The Tribunal upheld the Commissioner's decision, noting that the appellants should have adhered strictly to the Notification's conditions and not cleared goods as spares to avail exemption benefits. The Tribunal agreed with the Commissioner's invocation of the extended period for duty demand, ultimately dismissing the appeal.

The Tribunal's detailed analysis focused on the appellants' failure to meet the conditions of the exemption Notification, leading to the denial of benefits and imposition of duty demand. The judgment underscored the importance of strict compliance with Notification requirements and rejected the appellants' argument of bona fide belief. The decision highlighted the significance of clear interpretation of legal provisions and upheld the Commissioner's findings regarding suppression of facts and wilful mis-statement. The Tribunal concurred with the Commissioner's justification for invoking the extended period for duty demand, emphasizing the need for adherence to statutory provisions. Consequently, the appeal was dismissed, affirming the Commissioner's order.