2011 (8) TMI 436 - AT - Customs

Demand of customs duty - Re-import of goods exported - Exported goods under bond without payment of duty in terms of Notification No.263/79-CE dt. 22.9.79 - Provisions of Section 20 of the Customs Act, 1962 which provides for payment of duty on goods re-imported into India - Therefore, no merit in the submission of the assessees that reference to Rule 13 of the Central Excise Rules, 1944 in Notification No.263/79 is merely for procedural compliance and that for all other practical purposes, goods are exempt from payment of central excise duty subject to the condition that the goods are meant for exhibition, trade fair etc.- The submission of the assessees that re-imported goods have been accounted in their stock register, and if they have been cleared from the factory on payment of duty, then the present demand would amount to double demand and cannot be sustained - This factual position requires verification - Also held that the benefit of MODVAT credit of duty paid on inputs used in the manufacture of re-imported goods would be admissible subject to assessees establishing duty paid nature of such goods.

Summary

Issues:
Challenge to demand of customs duty on goods exported under bond without payment of duty under specific notifications.

Analysis:
The judgment revolves around the challenge to the demand of customs duty amounting to Rs.1,46,616/- on goods exported under bond without payment of duty. The assessees exported tyre re-treading machinery and accessories for international trade fairs under Notification No.263/79. Upon re-import, they claimed exemption under Notification 94/96-Cus. The dispute centered on whether the goods fell under Sl.No.1(d) of the Table to the Notification, which covers goods exported under bond without payment of duty, or under Sl.No.3, attracting a "Nil" rate of duty for goods other than those under Sl.Nos.1 & 2.

The Tribunal's analysis was based on the provisions of Section 20 of the Customs Act, 1962, which mandates duty payment on re-imported goods. The Tribunal dismissed the assessees' argument that the reference to Rule 13 of the Central Excise Rules, 1944 in Notification No.263/79 was for procedural compliance only. The Tribunal held that the duty liability was upheld, rejecting the contention that goods exported under bond were exempt from central excise duty for exhibition purposes.

However, the Tribunal acknowledged the assessees' submission regarding double demand if re-imported goods had already been cleared from the factory on duty payment. The Tribunal deemed this factual aspect requiring verification. Additionally, the Tribunal recognized the admissibility of MODVAT credit for duty paid on inputs used in manufacturing re-imported goods, subject to the assessees establishing the duty paid nature of such goods.

In conclusion, the Tribunal disposed of the appeal by upholding the duty liability but directing further verification regarding the clearance of re-imported goods and acknowledging the potential for MODVAT credit on duty paid inputs. The judgment was pronounced on 11.8.2011.