2010 (12) TMI 1046 - AT - Customs

Import - import of specified goods at concessional rate of duty for manufacture of electronic connectors and harnesses, they imported various specified goods (inputs) - housings, terminals etc. were not specified as finished goods in the Notifications allegation that appellant had misused the Notifications by availing the benefit of concessional rate of duty in respect of the imported goods and using these goods in the manufacture of parts of connectors which were cleared as finished goods, wilfully misstated/suppressed facts with intent to evade payment of appropriate Customs duty on the imported goods - appellant submitted that Rule 8 of the 1995 Rules did not confer jurisdiction on the Deputy/Assistant Commissioner of Central Excise to issue the demand notices; SCNs issued without obtaining prior approval of the Chief Commissioner of Customs or the Commissioner of Customs Held that - show-cause notices issued in the present case under Rule 8 ibid, by the Deputy/Assistant Commissioner of Central Excise for recovery of differential duty of customs from the appellant in respect of the goods imported by them and cleared on payment of duty at concessional rate in terms of the relevant Customs Notifications are without jurisdiction. The notices should have been issued under Section 28(1) of the Customs Act by the proper officer of Customs, show-cause notices were issued without jurisdiction, appeals stand allowed

Issues Involved:
1. Jurisdiction of the Deputy/Assistant Commissioner of Central Excise to issue demand notices.
2. Applicability of Section 28 of the Customs Act for subsequent demands of duty.
3. Validity of show-cause notices issued without prior approval from higher authorities.
4. Interpretation of the term "for use" in the context of the Notifications.
5. Allegation of misuse of Notifications and evasion of customs duty.
6. Applicability of the extended period of limitation for recovery of duty.
7. Adjustment of duty drawback for exported finished goods.

Detailed Analysis:

1. Jurisdiction of the Deputy/Assistant Commissioner of Central Excise to Issue Demand Notices:
The appellant argued that Rule 8 of the 1995 Rules did not confer jurisdiction on the Deputy/Assistant Commissioner of Central Excise to issue demand notices. The original authority and the first appellate authority rejected this plea, citing that the assessee had filed declarations and executed necessary bonds at the Central Excise Divisional office, thus conferring jurisdiction. The Tribunal, however, found that the show-cause notices issued under Rule 8 by the Deputy/Assistant Commissioner of Central Excise were without jurisdiction. The proper procedure involved the proper officer of Customs issuing notices under Section 28(1) of the Customs Act.

2. Applicability of Section 28 of the Customs Act for Subsequent Demands of Duty:
The appellant contended that subsequent demands of duty should be made through reassessment under Section 28 of the Customs Act. The Tribunal agreed, stating that Section 28 is the statutory mechanism for collecting any amount of customs duty that has not been levied or has been short-levied. The Tribunal emphasized that any rule inconsistent with Section 28 is redundant and ineffective.

3. Validity of Show-Cause Notices Issued Without Prior Approval from Higher Authorities:
The appellant argued that show-cause notices issued without prior approval from the Chief Commissioner of Customs or the Commissioner of Customs were void. The Tribunal did not explicitly address this issue in its final decision, as it found the show-cause notices to be without jurisdiction on other grounds.

4. Interpretation of the Term "For Use" in the Context of the Notifications:
The appellant interpreted "for use" to mean that the imported goods were intended to be used in the ultimate manufacture of connectors. However, the Tribunal found that the imported goods were used in the manufacture of parts of connectors, which were not specified as finished goods in the Notifications. The Tribunal held that an Exemption Notification must be strictly construed, and any liberal interpretation is not permissible.

5. Allegation of Misuse of Notifications and Evasion of Customs Duty:
The department alleged that the appellant misused the Notifications by availing concessional duty rates for imported goods used in manufacturing parts of connectors, which were not specified as finished goods. The Tribunal found that the evidence supported the department's claim and that the appellant misused the Notifications to avail the benefit of concessional duty rates.

6. Applicability of the Extended Period of Limitation for Recovery of Duty:
The appellant denied the allegation of suppression of facts and argued that the extended period of limitation was not invocable. The Tribunal did not explicitly address the limitation issue in its final decision, as it found the show-cause notices to be without jurisdiction on other grounds.

7. Adjustment of Duty Drawback for Exported Finished Goods:
The appellant argued that a large number of finished goods had been exported, and duty drawback should have been allowed and adjusted while quantifying the demand of duty. The Tribunal did not explicitly address this issue in its final decision, as it found the show-cause notices to be without jurisdiction on other grounds.

Conclusion:
The Tribunal set aside the impugned orders, finding that the show-cause notices issued under Rule 8 by the Deputy/Assistant Commissioner of Central Excise were without jurisdiction. The proper procedure involved the proper officer of Customs issuing notices under Section 28(1) of the Customs Act. The appeals were allowed on this ground, without examining other issues.

← Previous Next →