2011 (4) TMI 1014 - HC - Customs

Import of goods under DEEC scheme - demand of on unutilized items - notification no. 30/97-Cus., dated 1-4-1997 - assessee has fulfilled the export obligation completely - The excess material in fact had not been utilized completely because of efficient utilization of the raw material. The wastage was less. They ceased manufacturing the pagers and the said material became absolete. Therefore the said unused material had been written off in their books of accounts. They had complied with the conditions stipulated in Notification 30/97-Cus., dated 1-4-1997. - tribunal decided the issue in favor of assessee - held that - assessee is justified in contending that this appeal preferred by the Revenue challenging the order passed by the Appellate Tribunal holding that the assessee is not liable to pay Customs duty, interest and penalty and setting aside the levy of duty and demand notice issued by the Department is not maintainable before this Court.

Issues Involved:
1. Writing off imported duty-free materials.
2. Violation of Actual User Condition and export obligation.
3. Confiscation of goods and liability for duty, penalty, and interest.

Issue-wise Detailed Analysis:

1. Writing off Imported Duty-Free Materials:
The core issue was whether "writing off" the imported duty-free materials from the Books of Accounts amounts to "dispose of" within the meaning of Customs Notification No. 30/97-Cus., dated 1-4-1997. The Tribunal held that the assessee had not diverted or sold the imported materials and had used them efficiently, leading to less wastage. The materials became obsolete due to technological advancements, which was considered a realistic scenario in the Electronic and Communication Industry. Therefore, it was concluded that there was no deliberate violation of the notification conditions, and the assessee fulfilled the export obligations, deeming the conditions of the notification as met.

2. Violation of Actual User Condition and Export Obligation:
The Revenue contended that the assessee violated the norms of "Actual User Condition" and "export obligation" by writing off the materials without paying the duty. The Tribunal found that the assessee had ceased manufacturing pagers, and the unused materials were written off due to obsolescence. The Tribunal emphasized that in such a rapidly changing technological environment, writing off obsolete components was not a violation but a necessity. Hence, the Tribunal set aside the order demanding customs duty, interest, and penalty, concluding that the assessee had complied with the notification's conditions.

3. Confiscation of Goods and Liability for Duty, Penalty, and Interest:
The Revenue issued a show-cause notice demanding customs duty, interest, and penalty, and proposed confiscation of the unutilized imported materials. The Commissioner of Customs upheld this demand, but the Tribunal overturned it, stating that the assessee had not violated the notification's terms and had fulfilled the export obligations. The High Court, upon reviewing the appeal, determined that the Tribunal's decision involved questions related to the rate of duty and the value of goods for assessment purposes, which fall under the jurisdiction of the Supreme Court as per Section 130E of the Customs Act. Consequently, the High Court dismissed the appeal, stating it was not maintainable before it.

Conclusion:
The High Court concluded that the appeal involved issues related to the determination of the rate of duty and the value of goods for assessment, which are to be decided by the Supreme Court. Therefore, the appeal was dismissed as not maintainable before the High Court, and the Revenue was directed to prefer an appeal to the Supreme Court under Section 130E of the Customs Act.

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