2011 (5) TMI 288 - AT - Customs

Confiscation - Demand - Diversion of goods imported under advance licence - Goods (coils) removed after cutting and slitting into sheets - Notification Nos.51/2000 dated 27/04/2000 and 43/2002 dated 19/04/2002 - Held that - it is evident that the ground on which duty has been demanded is that the cutting and slitting of coils into sheets does not amount to manufacture and, therefore, the imported materials have been diverted as such albeit they have been subjected to the process of cutting and slitting and, therefore, the appellant is not entitled for the benefit of duty exemption under the various Customs notifications applicable to goods imported under the advance licensing scheme - the matter has to be go back to the adjudicating authority for denovo consideration in the light of the additional ground and evidences submitted by the appellants - appeal is allowed by way of remand

Summary

Issues:
1. Confiscation of HR and CR Coils under Customs Act, 1962
2. Duty demand and penalty imposition
3. Alleged diversion of imported materials
4. Interpretation of exemption notification
5. Cutting and slitting of coils into sheets as manufacturing
6. Transfer of materials to different units
7. Legality of the Commissioner's order

Analysis:
The appeal was against the order-in-original passed by the Commissioner confiscating HR and CR Coils under the Customs Act, 1962, and imposing fines and penalties. The appellant contested the grounds of diversion of imported materials, arguing that they had not violated the terms of the advance licenses under which the goods were imported. The Commissioner's order was based on the importer clearing the materials as such, but the appellant claimed they had undergone manufacturing processes as per the Circular issued by the Central Board of Excise & Customs. The issue of whether cutting and slitting of coils amounted to manufacturing was crucial in determining the eligibility for duty exemption under the relevant notifications.

The appellant maintained that they had detailed records to prove the correct utilization of imported materials, including those imported under the advance licensing scheme and the DFRC scheme. They argued that the materials had been cleared after manufacturing processes and not as imported, contrary to the Commissioner's findings. The appellant also highlighted the withdrawal of the Circular in 2005 as a point of contention in the case.

The respondent contended that the transfer of materials to a different unit violated the terms of the notification, making the appellant ineligible for duty exemption. Additionally, they referenced a previous judgment by the Delhi High Court regarding the classification of cutting and slitting of coils into sheets as manufacturing, suggesting that the appellant should have been aware of the legal implications.

The Tribunal noted discrepancies between the grounds in the show-cause notice and the basis for the demands confirmed in the order. As the Commissioner did not fully consider the evidence presented by the appellant regarding the utilization of imported materials, the matter was remanded for fresh consideration. The appellant was granted the opportunity to present their defense and evidence, emphasizing the need for a thorough review by the adjudicating authority. The Tribunal set aside the original order and allowed the appeal for a remand.