2013 (12) TMI 1146 - AT - Customs

Denial of duty exemption - Notification 21/2002, dated 1-3-2002 - Import of capital goods - Imposition of redemption fine and penalty - Diversion of imported goods to other entities before completion of 5 years from date of import - Violation of condition 40(b) of Notification - Held that - The paver finisher was used not for construction of road but for the construction of depot and platform for storage of pipes - As per the condition of the Notification, the undertaking was given by the appellant at the time of import that the impugned paver finisher shall be used only and only for construction of roads for a period of 5 years. From the facts ascertained hereinabove, we find that the paver finisher was not used for the intended purpose as undertaken by the appellant. In view of this finding, the department has rightly issued show-cause notice to the appellant for violation of condition of their undertaking and thereby for denying the exemption under Notification 21/2002. As show-cause notice has been rightly issued and in the adjudication order it is also found that the impugned paver finisher was not used for construction of road, therefore they have not fulfilled the condition terms of undertaking/bond at the time of import. As they have violated the terms of condition of their bond/undertaking, therefore they are liable to pay duty as demanded in the impugned order. On limitation, we find that the show-cause notice has been issued for violation of undertaking given at the time of importation for intended use and the fact that the imported paver finisher was not found to be used for intended purpose during investigation which amounts to suppression, therefore, the show-cause notice issued is within limitation - Decided against assessee.

Issues Involved:
1. Denial of duty exemption under Notification 21/2002.
2. Confiscation and redemption of imported capital goods.
3. Demand of customs duty and imposition of penalties.
4. Compliance with conditions of the exemption notification.
5. Limitation period for issuing show-cause notice.

Issue-Wise Detailed Analysis:

1. Denial of Duty Exemption under Notification 21/2002:
The appellants imported a "Paver Finisher" claiming duty exemption under Notification 21/2002, Sr. No. 230. They provided an undertaking to use the paver exclusively for road construction and not to dispose of it for five years. The Revenue contended that the appellants violated this condition by diverting the paver to other entities before five years, thus denying the exemption. The Tribunal noted that the paver was found at a site unrelated to road construction, confirming the violation of the notification's conditions.

2. Confiscation and Redemption of Imported Capital Goods:
The imported paver was confiscated but allowed to be redeemed on payment of Rs. 25 lakhs. The Tribunal upheld the confiscation, stating that the appellants breached the undertaking by using the paver for non-road construction purposes. This breach justified the confiscation and subsequent redemption fine.

3. Demand of Customs Duty and Imposition of Penalties:
The Tribunal confirmed the demand of Rs. 1,30,46,188/- in customs duty and a penalty of Rs. 2.5 lakhs on the appellants. Additional penalties were imposed on co-appellants. The Tribunal found that the appellants failed to fulfill the conditions of the exemption notification, thus liable for the duty and penalties imposed.

4. Compliance with Conditions of the Exemption Notification:
The appellants argued that they complied with the pre-import conditions by executing the necessary bond and that the notification did not require post-import compliance. They cited precedents to support their claim. However, the Tribunal distinguished these cases, emphasizing that the appellants did not use the paver for its intended purpose of road construction, thus violating the notification's conditions.

5. Limitation Period for Issuing Show-Cause Notice:
The appellants argued that the show-cause notice was time-barred under Section 28 of the Customs Act. The Tribunal rejected this argument, stating that the violation of the undertaking constituted suppression of facts, justifying the extended limitation period. The show-cause notice was deemed issued within the permissible time frame.

Conclusion:
The Tribunal upheld the denial of duty exemption, confiscation and redemption of the paver, demand of customs duty, and imposition of penalties. The appellants' arguments regarding compliance with the notification conditions and limitation period were rejected. The appeals filed by the appellants and the Revenue were dismissed, affirming the adjudicating authority's order.

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