2011 (7) TMI 367 - AT - Customs

Exemption - Notification No. 32/97-Cus. dated 1.4.1997 - import of unit soles (for shoes) - In the case of M/s. Sierra Trading Pvt. Ltd. (Final Order Nos.449 & 450/2011 dated 9.3.2011) on an identical issue of import of shoe soles under the same notification, the denial was set aside by the Tribunal holding that the assessees are eligible for customs duty exemption under Notification No. 32/97 even where drawback was claimed and the Bench has noted that the DGFT authorities had clarified that imports made under Customs Notification No. 32/97 are for jobbing and exports made using such imports cannot be given DEPB benefits and therefore at the most, the Department could have taken action not to allow the drawback or DEPB benefits to the appellants but could not deny the benefit of Notification No. 32/97.

Summary

Issues:
Denial of exemption under Notification No. 32/97-Cus. for imported unit soles used in job work due to claiming drawback on some Shipping Bills.

Analysis:
The judgment by the Appellate Tribunal CESTAT, CHENNAI, involved the denial of exemption under Notification No. 32/97-Cus. to the appellants who imported unit soles for shoes free of duty for job work, exporting men's shoes after meeting the required value addition. The denial was based on the appellants claiming drawback on some Shipping Bills. The Tribunal referred to a similar case involving M/s. Sierra Trading Pvt. Ltd., where the denial of exemption under the same notification was set aside. The Tribunal held that assessees are eligible for customs duty exemption even if drawback is claimed. It was noted that imports under the notification are for jobbing purposes, and exports using such imports are not eligible for DEPB benefits. The Department could have disallowed drawback or DEPB benefits but could not deny the benefit of Notification No. 32/97.

The Tribunal, following the decision in the M/s. Sierra Trading Pvt. Ltd. case, set aside the impugned order and extended the benefit of exemption under Notification No. 32/97 to the present appellants. The appeal was allowed with consequential relief. The judgment emphasized the applicability of the previous decision to the current case, highlighting that the denial of exemption based on claiming drawback was not justified under the provisions of the notification. The Tribunal's ruling provided clarity on the eligibility for customs duty exemption in such cases and the limitations on claiming certain benefits like DEPB in relation to imports under specific notifications. The decision aimed to ensure consistency in the application of customs duty exemptions and benefits, upholding the rights of importers engaged in job work activities involving imported goods.