2013 (12) TMI 462 - AT - Customs

Duty demand - Stay application - Exemption under Notification No. 203/92-Cus - Nexus between the import item and the export item - Held that - Neither of the lower authorities has denied the benefit to the assessees from the licensing angle. The export item is synthetic shoes. The imported material is, admittedly, polyester fabric 58 . The Norms Committee s decision is in favour of the assessees. It is to the effect that the polyester fabric 58 can be considered as synthetic lining material for synthetic shoes covered by the relevant item of SION. Prima facie, therefore, the view taken by the authorities below is not correct. Hence there will be waiver of pre-deposit and stay of recovery in respect of the amounts of duty worked out by the appellants on the basis of the finalized assessments. Further, there will be stay of the operation of the impugned order as well - Stay granted.

Summary

Issues:
1. Stay of operation of the impugned order and waiver of pre-deposit.
2. Denial of exemption under Notification No. 203/92-Cus.
3. Consideration of Norms Committee decision.
4. Violation of quantity restrictions under Exim Policy 1992-97.

Analysis:
1. The appellants imported polyester fabrics under the DEEC Scheme claiming duty exemption under Notification No. 203/92-Cus. The Assistant Commissioner finalized assessments without granting the exemption, leading to appeals. The issue revolved around the nexus between the export and import items, with the lower authorities upholding the denial of exemption. However, the Norms Committee's decision favored the appellants, stating that the imported material could be considered synthetic lining material for synthetic shoes. Consequently, the Tribunal found the authorities' view incorrect and granted waiver of pre-deposit and stay of recovery, along with the stay of the impugned order.

2. The learned counsel cited a previous Tribunal order in favor of another party, but it was deemed invalid as it was passed by a Single Member without jurisdiction. However, the Norms Committee's decision supporting the appellants' position was crucial. The Committee's decision established the polyester fabric as synthetic material for manufacturing synthetic footwear, aligning with the SION Product Group 63. This decision, communicated to the appellants, was not presented before the lower appellate authority, influencing the Tribunal's decision in favor of the appellants.

3. The JDR argued that the imports violated quantity restrictions under the Exim Policy 1992-97, as the original advance licenses were obtained in 1995. The issuance of duplicate licenses in 2009 after the cancellation of the originals was subject to the policy restrictions. However, the Tribunal focused on the lack of nexus between the import and export items as the sole ground for denying exemption, not the licensing angle. The Norms Committee's decision supported the appellants' position, emphasizing the synthetic nature of the imported material for manufacturing synthetic shoes.

4. Despite the JDR's argument regarding quantity restrictions, the Tribunal's decision centered on the nexus between the import and export items. The Norms Committee's decision played a pivotal role in establishing the polyester fabric as synthetic material, contradicting the authorities' denial of exemption. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery, emphasizing the incorrectness of the authorities' view and the validity of the Norms Committee's decision.