2013 (10) TMI 1318 - HC - Customs

Exemption from additional duty of customs u/s 3(5) of the Customs Tariff Act 1975 - unit situated at KASEZ - Revenue felt that the appellant had not followed the provisions of law correctly and was engaged in clearance of goods into DTA without carrying out any manufacturing activity as per Section 2(r) SEZ Act 2005 and as such they were not entitled for the benefit of exemption of additional duty of customs - Bar of limitation - Whether the CESTAT has committed any error in rejecting the appeal of the Revenue on the ground that invocation of the extended period of limitation by the lower authorities was unjustifiable - Held that - No flaw could be pointed out by the Revenue in the detailed reasonings given by the Tribunal while dismissing the appeal of the Revenue which has arisen from the order-in-original. As rightly pointed out by the Tribunal that the respondent had presented entire material before the concerned Customs authorities posted at KASEZ which also had sufficient opportunity to scrutinize the same and the benefit of Notification No. 45/2005-SEZ was also availed to the respondent. - Tribunal was justified in not once again deciding such issue as to whether the activities amount to manufacturing or not. - With regard to the dismissal on the ground of limitation the Tribunal was justified in not allowing the extended period to the Revenue in absence of any intention on the part of the respondent to evade duty particularly when there was neither any suppression nor any misdeclaration which would permit any extension of limitation beyond the period of six months. - Decided against Revenue.

Summary

Issues:
1. Appeal on the aspect of limitation in favor of the respondent.
2. Appeal decision without considering the aspect of "manufacture."
3. Consideration of relevant Supreme Court decision.
4. Waiver from confiscation and levy of duty.

Analysis:

Issue 1:
The appellant-Revenue appealed under Section 130 of the Customs Act, 1962, challenging the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) regarding the limitation aspect in favor of the respondent. The appellant argued that the Tribunal erred by dismissing the appeal solely on the ground of limitation without delving into the merits of the case. On the contrary, the respondent contended that there was no intention to evade duty, and thus, the Tribunal's decision was legally sound.

Issue 2:
The dispute revolved around the manufacturing activities of the respondent company within the Kandla Special Economic Zone (KASEZ) and the clearance of goods to the Domestic Tariff Area (DTA). The Revenue authorities alleged that the goods were cleared without manufacturing activities, leading to a demand for payment of differential duty. The respondent argued that their activities constituted manufacturing, as previously determined in a separate case, and that the show cause notice was time-barred.

Issue 3:
The appellant raised concerns about the Tribunal not considering a Supreme Court decision related to misdeclaration and suppression, which were alleged to be present in the case. However, the Tribunal found no grounds for extending the limitation period, as the respondent had provided all necessary information to the Customs authorities, and there was no evidence of suppression or misdeclaration.

Issue 4:
Regarding the waiver from confiscation and levy of duty, the Tribunal upheld its decision not to extend the limitation period, as there was no intention to evade duty on the part of the respondent. The Tribunal also noted that the issue of whether the activities constituted manufacturing had already been settled in favor of the respondent in a previous case, and therefore, there was no need to revisit that issue.

In conclusion, the High Court upheld the Tribunal's decision, finding no substantial question of law in the appeal. The Court dismissed the Tax Appeal, emphasizing that the respondent had complied with the necessary procedures and that there was no basis for extending the limitation period or imposing confiscation.