2013 (8) TMI 318 - AT - Customs

Differential custom duty - concessional rate of duty under Notification No.21/2002 and Notification No. 21/2005 - import of goods (inputs) of Chapter 84 for manufacturing mobile/cellular phones and parts/components/ accessories of mobile phones. - As per Department the assessee could not validly claim the benefit of Sl. No. 28 either - The investigative findings made their way into a show-cause notice - in adjudication whereof the learned Commissioner denied the benefit of the Notification to the assessee and confirmed the demand of CE duty against them Held that - The assessee s argument that the assessments on the Bills of Entry could not had been reopened/reviewed by way of issue of a show-cause notice u/s 28(1) of the Customs Act is, prima facie, untenable - UOI Vs. Jain Sudh Vanaspati (1996 (8) TMI 108 - SUPREME COURT OF INDIA) claims of the assessee with regard to CENVAT credit and quantification of duty were no better. It appears, an opinion given by BSNL and one given by VJTI in favour of the appellant are the main basis for the appellant to claim that FWTs could be considered as mobile/cellular phones. Prima facie, BSNL being the buyer of the goods manufactured and supplied by the appellant cannot be considered as a detached and independent expert and therefore BSNL's opinion may not be reliable. VJTI's opinion was taken by the appellant on 03/05/2012 and submitted to the Commissioner and the same was not accepted inasmuch as the Institute's authenticity to issue such opinion/certificate was not established by the appellant and the opinion/certificate was found to have been issued without examining the basic function of the FWTs. Apparently, the adjudicating authority has stated specific and cogent reasons for not accepting either of the two certificates. Extended period of limitation - Held that - Apart from the fact that there was difference of opinion even in the Department, the fact remains that the department officials had been regularly visiting the factory of the appellants and were in the know of the process of manufacture adopted by the appellants and to state that the appellants had played fraud on the department is difficult to sustain. - Demand beyond normal period set aside. Stay application waiver of pre deposit - the entire demand of duties having been confirmed against the assessee for periods beyond the normal period of limitation court granted the bar of limitation - waiver of predeposit and stay of recovery are ordered against the demands of duties on the ground of limitation - decided in favour of assessee.

Summary

Issues Involved:
1. Waiver of predeposit and stay of recovery.
2. Differential customs duty demand.
3. Central Excise (CE) duty demand.
4. Imposition of penalties under Section 112 of the Customs Act and Section 11AC of the Central Excise Act.
5. Eligibility for exemption under various Notifications (21/2002-Cus, 21/2005-Cus, 6/2006-CE).
6. Allegations of misrepresentation/suppression of facts.
7. Invocation of the extended period of limitation.
8. Validity of expert opinions and certificates.
9. Quantification of the demand.
10. Denial of natural justice.

Detailed Analysis:

1. Waiver of Predeposit and Stay of Recovery:
The assessee sought waiver of predeposit and stay of recovery against demands of differential customs duty, CE duty, and penalties. The Tribunal found a prima facie case for the assessee based on limitation but not on merits.

2. Differential Customs Duty Demand:
The assessee faced a demand for differential customs duty of Rs. 16.13 crores for goods imported and cleared under concessional rates. The Department alleged that the imported goods were not used for manufacturing mobile/cellular phones or their parts, thus ineligible for the concessional rate under Notifications No. 21/2002-Cus and No. 21/2005-Cus.

3. Central Excise (CE) Duty Demand:
A demand of Rs. 16.15 crores was raised for CE duty on goods manufactured and cleared without payment of duty, claiming exemption under Notification No. 6/2006-CE. The Department argued that the goods (Fixed Wireless Terminals - FWTs) did not qualify as mobile/cellular phones and thus were not eligible for the exemption.

4. Imposition of Penalties:
Penalties equal to the duties were imposed under Section 112 of the Customs Act and Section 11AC of the Central Excise Act. The Tribunal's decision to grant relief on the ground of limitation implied a stay on these penalties as well.

5. Eligibility for Exemption under Notifications:
The assessee claimed exemptions under various notifications for parts, components, and accessories of mobile handsets. The Department contested this, stating that FWTs were not mobile/cellular phones. The Tribunal noted that the assessee could not establish a prima facie case for the exemptions claimed.

6. Allegations of Misrepresentation/Suppression of Facts:
The show-cause notice invoked the extended period of limitation, alleging misrepresentation and suppression of facts by the assessee to evade duties. The Tribunal found merit in the assessee's argument that there was no deliberate suppression, supported by divergent views within the Department and regular inspections by authorities.

7. Invocation of the Extended Period of Limitation:
The Tribunal found the invocation of the extended period of limitation questionable due to the lack of clarity and divergent views within the Department regarding the classification and eligibility for exemptions. The Tribunal referenced the Supreme Court's judgment in Ugam Chand Bhandari, emphasizing that the extended period should not apply if there was no deliberate intention to suppress facts.

8. Validity of Expert Opinions and Certificates:
The assessee presented certificates from BSNL and VJTI supporting their claim that FWTs operated on cellular technology. The adjudicating authority rejected these certificates, questioning their validity and the independence of BSNL as an expert. The Tribunal noted that the rejection of expert opinions without valid reasons was improper.

9. Quantification of the Demand:
The Tribunal observed that the quantification of the demand was contested by the assessee, who argued that the demand should be restricted to specific imports. The Commissioner had not modified the demand due to the absence of related details and documents, leading to a prima facie case for the assessee on quantification errors.

10. Denial of Natural Justice:
The assessee claimed denial of natural justice as they did not receive all relevant documents despite repeated requests. The Tribunal acknowledged this issue but noted that the impugned order mentioned the assessee's acknowledgment of receiving documents relied upon in the show-cause notice.

Conclusion:
The Tribunal granted waiver of predeposit and stay of recovery based on limitation, acknowledging the lack of clarity and divergent views within the Department. The demands of duties and penalties were stayed, providing relief to the assessee.