2013 (9) TMI 510 - AT - Customs

Exemption from duty liability Actual user condition - import of cone type stone crusher - use in construction of roads - Held that - Exemption notification should be strictly construed since it is an exception relied upon Gammon India Ltd., Vs. CC, Mumbai (2011 (7) TMI 17 - SUPREME COURT OF INDIA) and Novopan India Ltd., Vs. CCE, Hyderabad (1994 (9) TMI 67 - SUPREME COURT OF INDIA) - This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption - assessee had violated the terms and conditions of the notification - he was not eligible for the benefit of duty exemption under the notification. Eligibility for benefit - both the conditions with respect to the user as well as use had to be satisfied which had not been done in the case - When the notification stipulates two conditions, one with respect to the use and the other with respect to the user, both these conditions needs to be satisfied simultaneously and it cannot be said that the condition relating to the user can be ignored - If that was done it would make the condition relating to the user redundant - It was a well settled principle of law that the statute has to be interpreted in a harmonious manner so as to give effect to each and every word/expression used therein. Interpretation of provisions - Held that - the importer assessee had violated the conditions of exemption and he was not eligible for the benefit of exemption - the confirmation of duty demand along with interest thereon made in the order were upheld - Court should not give such an interpretation to provisions which would render the provision ineffective or odious following the judgement of Balwant Singh vs. Jagdish Singh (2010 (7) TMI 556 - SUPREME COURT OF INDIA). Confiscation of goods - the end-use condition relating to the goods stands clearly violated -they were rightly liable to confiscation under the provisions of section 111(o). Redemption Fine - Held that - The fine imposed ought to be reduced substantially - the goods were diverted, they were used for the construction of roads though by a different user which could be considered as a mitigating factor in the case. Penalty u/s 112(a) - penalties imposed on the appellant firm under section 112 (a) Held that - penalty was liable to imposed for contravention of the provisions of the law and there was no mens rea required to be established - mens rea was also evident from the conduct of the assesse - Considering the amount of duty sought to be evaded the penalty imposed cannot be said to harsh or unreasonable demand of duty along with interest was upheld decided against assessee.

Summary

Issues Involved:

1. Eligibility for duty exemption under Notification No.21/2002.
2. Violation of conditions stipulated in the exemption notification.
3. Confiscation of imported goods under Section 111(o) of the Customs Act.
4. Imposition of penalties under Section 112(a) and (b) of the Customs Act.
5. Quantum of redemption fine imposed on the confiscated goods.

Detailed Analysis:

1. Eligibility for Duty Exemption:
The appellants imported a Nordberg Secondary Lokotrack Mobile Crushing Plant Model LT 1100 under Bill of Entry No.720254 dated 02/11/2006 and availed duty exemption under Notification No.21/2002, subject to the condition that the equipment would be used exclusively for road construction and not disposed of for five years. The appellants argued that they were eligible for the exemption as the equipment was used for road construction projects awarded by NHAI, even though it was used by M/s. Ashoka Buildcon Ltd., the lead partner of the joint venture, after the completion of the Chittorgarh Bypass project.

2. Violation of Conditions:
The investigation revealed that the equipment was shifted to a new project site at village Deoli, Maharashtra, and used by M/s. Ashoka Buildcon Ltd., not the joint venture. This was seen as a violation of the conditions stipulated in the exemption notification, as the equipment was transferred and used by a different entity within the five-year period. The appellants contended that they had not sold or otherwise disposed of the equipment, but merely allowed its use by the lead partner, which did not constitute a violation.

3. Confiscation of Imported Goods:
The adjudicating authority concluded that the appellants violated the conditions of the exemption notification, rendering the equipment liable for confiscation under Section 111(o) of the Customs Act. The equipment was seized on 27/02/2008 based on the reasonable belief that it was liable for confiscation.

4. Imposition of Penalties:
Penalties were imposed on the importer (joint venture) under Section 112(a) of the Customs Act, and on Shri S.D. Parakh and Shri S.P. Londhe under Section 112(b) for their roles in the transaction. The appellants argued that the penalties were unwarranted as they had not indulged in any malpractice and had used the equipment for road construction.

5. Quantum of Redemption Fine:
A redemption fine of Rs.90 lakhs was imposed on the confiscated equipment. The appellants contended that the fine was excessive, considering that the equipment was used for road construction, albeit by a different user.

Judgment:
The tribunal upheld the demand for duty along with interest, confirming that the appellants violated the conditions of the exemption notification. The confiscation of the equipment under Section 111(o) was also upheld. However, the redemption fine was reduced from Rs.90 lakhs to Rs.30 lakhs, considering that the equipment was used for road construction. The penalties imposed on the appellants and the individuals involved were deemed reasonable and were upheld.

Conclusion:
The appeals were disposed of by upholding the duty demand, interest, and penalties, while reducing the redemption fine imposed on the confiscated equipment.