2013 (4) TMI 238 - AT - Customs

Valuation - extended period of limitation 100% EOU - dismantling of machine as scrap and sale of scrap on payment of excise equal to customs duty - Levy of SAD - Held that - The Tribunal held that M/s. Ashima Fabrics (100% EOU) 2002 (6) TMI 144 - CEGAT, MUMBAI was not liable to pay SAD on the capital goods as there was no levy of that duty at the time of its importation. In the result, the demand of CVD and SAD raised on the assessee in the present case is not sustainable. As it is not in dispute that the machinery was dismantled under the supervision of the Central Excise Range officers and cleared from the factory as scrap, in our view, it should be considered to be a DTA clearance by the EOU attracting Central Excise duty. It was not clearance of the capital goods as such from the factory. Therefore the payment of Central Excise duty by the assessee at the time of clearance of the scrap to M/s. SJCM cannot be faulted. The Department has no case that there was short-payment of this duty by the assessee. - entire demand is beyond the normal period of limitation - Decided in favor of assessee.

Summary

Issues:
1. Demand of customs duty, interest, penalty, confiscation, and imposition of penalties on the company's Managing Director and Director.
2. Allegations of fraud, misstatement, and contravention of Customs Act provisions.
3. Calculation and payment of duty by the company.
4. Challenge to demands and contentions raised by the company.
5. Quantification of duty by the Commissioner.
6. Applicability of Special Additional Duty (SAD) and Central Value Duty (CVD).
7. Consideration of DTA clearance and payment of Central Excise duty.
8. Plea of limitation raised by the company.

Analysis:

1. The first appeal was filed against the demand of customs duty, interest, penalty, confiscation, and imposition of penalties on the company's Managing Director and Director. The company imported capital goods duty-free for their export-oriented unit but faced issues related to disposal and payment of applicable duties.

2. The Department alleged fraud, misstatement, and contravention of Customs Act provisions by the company, leading to demands and penalties. The company denied the allegations through various submissions and contentions.

3. The company calculated and paid the duty, with the Commissioner quantifying the duty based on the company's depreciation calculation. The duty was calculated as per the relevant notifications and regulations.

4. The company challenged the demands and contentions raised by the Department, citing legal provisions and previous tribunal decisions to support their arguments.

5. The Commissioner quantified the duty, including Basic Customs Duty (BCD), Central Value Duty (CVD), and Special Additional Duty (SAD), leading to the total demand amount.

6. The Tribunal found that the demand of CVD and SAD was not sustainable based on the applicable regulations and previous legal precedents, resulting in the dismissal of those demands.

7. The Tribunal considered the clearance of goods as scrap under the supervision of Central Excise officers, leading to the payment of Central Excise duty, which was deemed appropriate and not subject to penalties under the Customs Act.

8. Additionally, the Tribunal accepted the plea of limitation raised by the company, stating that the entire demand was beyond the normal period of limitation and lacked evidence of suppression or fraud, leading to the decision to set aside the impugned order and allow the appeals.