2013 (10) TMI 508 - AT - Customs

Waiver of pre-deposit - Invalid VKGUY credit - Held that - amending VKGUY licences in order to restrict the eligibility of duty free imports the power vests with DGFT authorities and not the Commissioner of Customs, Ahmedabad. We also find strong force in the contentions raised by the ld. counsel that for the demand of duty under Section 28 of the Customs Act, 1962, on the goods imported, the show cause notices needs to be issued to importers who had imported the goods through Tuticorian or Kandla ports. We are unable to understand the adjudicating authority s findings as to demand of the customs duty on the appellant under provisions of Section 28 of the Customs Act, 1962 as it provides for demand of the duty only from the importer; it is an admitted fact that the appellant herein is not an importer and he has only sold the VKGUY licences. As of today, we find that the licences are not yet cancelled or revoked by the DGFT authorities and hence any imports, prima facie, under these licences are valid imports - appellant has made out prima facie case for the waiver of the pre-deposit of the amounts involved - stay granted.

Summary

Issues:
Stay petitions for waiver of pre-deposit of duty demand, penalty, and interest based on misclassification of exported products under VKGUY scheme.

Analysis:
The judgment pertains to stay petitions filed for the waiver of pre-deposit of duty demand, penalty, and interest concerning the misclassification of products exported under the VKGUY scheme. The duty demand, penalty, and interest amounts were confirmed by the adjudicating authority as invalid VKGUY credit, with the duty being demanded from the appellants who exported the products. The central issue revolved around the correct classification of the exported product, which impacted the eligibility for VKGUY benefits. The appellants exported MAWs and claimed classification under ITC 03074990, availing VKGUY benefits for such exports. However, the Revenue contended that the product should be classified under 0305574990, affecting the VKGUY benefit cap. Show cause notices were issued based on this discrepancy, leading to a legal dispute.

Upon hearing both parties and examining the records, the Tribunal considered the arguments presented. The appellants had been granted VKGUY licenses for their exports, which were subsequently credited by the DGFT authorities after verifying the exports. The Revenue alleged misclassification by the appellants and sought duty payment based on a different product classification. The Tribunal acknowledged the counsel's argument that the power to amend VKGUY licenses to restrict duty-free imports rested with the DGFT authorities, not the Commissioner of Customs. Additionally, the Tribunal noted that the demand for customs duty under Section 28 of the Customs Act, 1962, should be directed at the importers who brought goods through specific ports, not the exporters who sold VKGUY licenses.

The Tribunal found merit in the appellants' case for a waiver of pre-deposit, as they had a prima facie argument supporting their position. Consequently, the applications for the waiver of pre-deposit of the remaining amounts were allowed, and recovery was stayed pending the appeal's disposal. The judgment emphasized the importance of proper classification in determining duty liabilities and highlighted the distinction between exporters and importers in duty recovery processes.