2010 (12) TMI 1020 - AT - Customs

Duty demand - Import - inadmissible exemption availed by the appellant - goods assessed to duty at the time of import in terms of Notification No. 13/81-Cus., dated 9-2-1981 and 123/81-C.E., dated 2-6-1981 on the strength of appropriate certificate of sponsoring authority. goods warehoused for manufacture in bond. At the time of issue of show-cause notice in 1998, the goods were lying in the warehouse - Held that - Demand cannot be raised on warehoused goods unless they are removed from the warehouse. These were de-bonded in 2002. There is no proposal in the show-cause notice to invoke the provisions of Section 72 of the Customs Act invoked by the Commissioner in the impugned order, interest cannot be demanded on the warehoused goods in view of Notification No. 67/95-Cus. (N.T.) dated 1-11-1995 exempting interest accrued on the customs duty payable on the warehoused goods. Thus vacate the demand and allow this appeal.

Issues involved:
1. Admissibility of exemption on import of testing and measuring equipment under specific notifications.
2. Validity of duty demand and interest invoked under Notification No. 52/2003 Cus.
3. Jurisdiction of Customs authorities to raise demands on warehoused goods.
4. Applicability of Notification No. 67/95-Cus exempting interest on warehoused goods.
5. Compliance with procedures regarding de-bonding of goods and clearance from the Development Commissioner.

Detailed analysis:
1. The judgment dealt with the admissibility of exemption on the import of testing and measuring equipment by an E.O.U under Notifications No. 13/81-Cus., dated 9-2-1981 and 123/81-C.E., dated 2-6-1981. The impugned order confirmed a duty demand of Rs. 67,59,522/- due to inadmissible exemption availed by the appellant. The Commissioner found that the goods were distinct equipment not used for the intended purpose of hardware system/prototypes, leading to the demand upheld under Notification No. 52/2003 Cus., invoking Section 72(b) of the Customs Act, 1962.

2. The challenge to the impugned order raised several grounds, including the requirement for DGFT findings on export obligations, limitations on raising new cases against parties, and the necessity for Revenue to raise all grounds in the notice. Additionally, the judgment addressed the premature demand on warehoused goods before the bond period expiry and the prohibition on questioning the eligibility of notifications once goods are imported with permission from the Development Commissioner.

3. The Tribunal's analysis highlighted that the demand on warehoused goods was premature as they were de-bonded only in 2002, and the show-cause notice did not propose invoking Section 72 of the Customs Act. The judgment emphasized that interest could not be demanded on warehoused goods due to the exemption under Notification No. 67/95-Cus., dated 1-11-1995, which exempts interest on customs duty for warehoused goods.

4. The judgment concluded that the demand was confirmed under a provision not mentioned in the show-cause notice, and the demand on warehoused goods was not permissible until de-bonding. It was noted that proper procedures, including clearance from the Development Commissioner, were not followed before raising the demand. Consequently, the demand was vacated, and the appeal was allowed based on the appellants' arguments and the Tribunal's findings.

This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed and the Tribunal's decision on each point raised in the case.

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