2013 (10) TMI 242 - AT - Customs

Extended period of limitation - Benefit of notification - disposal of goods imported against Duty Free Import Authorizations Licence (DFIA) - Held that - Notification 40/2006 does not impose any condition on the licence holder that without the permission from the licensing authority the applicants shall not dispose of the goods after discharging the export obligation. Further, we find that it is not in dispute that the applicants have not discharged the export obligation on 18.04.2008 and it is also not in dispute that the goods have been sold by the applicants in open market after discharging the export obligation. Therefore, prima facie the applicants have fulfilled the condition of Notification No.40/2006. We further find that the bond executed by the applicants against duty free import licence has been cancelled by the Customs authorities in 2010 itself. Therefore, extended period of limitation is not invokable in the facts of the case - stay granted.

Issues:
- Demand of duty confirmed along with interest and penalty
- Benefit of Notification No.40/2006-Cus
- Discharge of export obligation and sale of imported goods in the domestic market without EODC
- Violation of conditions of the notification
- Invocation of extended period of limitation
- Waiver of pre-deposit and stay on recovery

Analysis:

Demand of duty confirmed along with interest and penalty:
The appeal was against an order confirming a duty demand of Rs.5,33,90,484/- along with interest and penalty. The main appellant faced an equivalent amount of penalty, and an additional penalty of Rs.1,00,00,000/- was imposed on another individual. The impugned order was challenged before the tribunal.

Benefit of Notification No.40/2006-Cus:
The applicants argued that they complied with the conditions of Notification No.40/2006. They contended that they had discharged their export obligation and obtained permission to sell the goods in the domestic market. The counsel highlighted that the applicants fulfilled the conditions of the notification and were entitled to its benefits, emphasizing that the demands were not sustainable.

Discharge of export obligation and sale of imported goods without EODC:
The applicants had obtained a Duty Free Import Authorizations Licence and later sold the imported goods in the domestic market without obtaining Export Obligation Discharge Certificate (EODC) from DGFT by the sale dates. The Revenue claimed duty payment as the goods were sold without permission from DGFT post-export obligation discharge.

Violation of conditions of the notification:
The Revenue argued that the applicants violated the conditions of the notification by selling goods in the domestic market without EODC and authority. The licensing authority's permission was deemed necessary for disposal of goods, even after export obligation discharge, to comply with the notification's conditions.

Invocation of extended period of limitation:
The Revenue contended that the extended period of limitation was applicable due to the alleged violation of the notification's conditions. However, the tribunal found that the extended period of limitation was not invokable as the bond executed by the applicants had been cancelled by Customs authorities in 2010.

Waiver of pre-deposit and stay on recovery:
After considering the arguments, the tribunal found in favor of the applicants. It granted a 100% waiver of pre-deposit and stayed the recovery of duty, interest, and penalties during the appeal's pendency. The appeals were listed for final hearing due to the significant revenue involved.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the case and the tribunal's decision.

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