2013 (12) TMI 986 - AT - Customs

Benefit of Notification No. 53/97-Cus. - Import of inputs and capital goods without payment of duty - Penalty imposed u/s 112 - Held that - while the duty free imports availing the benefit of Notification No. 53/97-Cus. had been made during the period July 1999 to October 2000, the show cause notice denying the benefit of this exemption and recovery of duty has been issued only on 5-7-2005, which will survive only if the extended period under proviso to Section 28 of the Customs Act, 1962 is available to the department, but on going through the show cause notice and the impugned order-in-original, we find that there is absolutely no evidence of any wilful misstatement or suppression of facts on the part of the appellant. Moreover when the period of one year for installation of the imported capital goods could be extended by the Jurisdictional Assistant Commissioner, on request in this regard being made by the assessee, just because the assessee due to ignorance or any other reason did not made request for extension and there is delay in installation of the capital goods, it cannot be said that there was any intention on the part of the appellant to wrongly avail of the duty exemption or that the appellant had wilfully suppressed the fact of delay in installation of capital goods with intent to evade the payment of duty. substantive condition of the exemption notification has been fulfilled by the appellant and just because of some delay in installation of capital goods, which was condonable, the benefit of duty exemption cannot be denied - Decided in favour of assessee.

Summary

Issues:
1. Duty exemption on imported capital goods under Notification No. 53/97-Cus.
2. Installation of capital goods within the stipulated period.
3. Allegation of violation of conditions of the exemption notification.
4. Time limitation for issuing show cause notice.

Analysis:
1. The appellant, a 100% EOU engaged in manufacturing semi-worsted woollen yarn, imported capital goods duty-free under Notification No. 53/97-Cus. for use in manufacturing finished goods for export. The Customs Department alleged that the capital goods were not installed within the required one-year period and demanded duty of Rs. 72,12,938/- along with interest and penalty under Section 112 of the Customs Act, 1962.

2. The appellant argued that the capital goods were indeed installed and used for the intended purpose, albeit with a delay beyond the stipulated period. They contended that the delay could have been condoned by the Jurisdictional Assistant Commissioner. The appellant emphasized that the goods were used for manufacturing finished goods for export, fulfilling the substantive conditions of the duty exemption, and the demand raised in the show cause notice was time-barred.

3. The Department defended the order, stating that the condition of installing the capital goods within one year as per the exemption notification was not met, thus rendering the appellant ineligible for the exemption. They relied on a Supreme Court judgment emphasizing strict compliance with conditions for availing benefits under exemption notifications.

4. The Tribunal noted that there was no evidence of wilful misstatement or suppression of facts by the appellant. They highlighted that the substantive condition of using the imported goods for manufacturing goods for export was met, and the delay in installation, which could have been condoned, should not result in denying the duty exemption. The Tribunal found the Supreme Court judgment cited by the Department not applicable to the case and held that the impugned order was unsustainable. Consequently, the order was set aside, and the appeal was allowed.