2014 (2) TMI 408 - AT - Customs

Exemption certificate in respect of defence items imported - Notification No. 39/96-Cus dated 27.7.1996 - Whether the benefit of Notification No. 39/96-cus dated 23.7.1996 as amended, in respect of the import made against the four Bills of Entries was available to the appellant or not, on the basis of the exemption certificate produced by the appellant at the time of import - Held that - import of items for the purpose of Bomb Disposal under Sr. No. 20 of notification no 39/1996-Cus can be allowed in the case of imports by special Frontier Force on the basis of certificate issued by the Inspector General, HQ, Special Frontier Force, New Delhi in the Cabinet Secretariat, who is a Joint Secretary level officer in the Cabinet Secretary level officer in the Cabinet Secretary GOI. Regarding the goods, mentioned at Sl. No. 10 and 20 of notification No. 39/1996-Cus dated 23.07.1996 it is observed that Battery Packs have not been mentioned at Sl. No. 10 and 20. These battery pack are being used in Bomb detection and Bomb Disposal as other equipments/parts/accessories and thus eligible for duty free clearance. So we allow these packs against exemption certificate keeping in mind the factual matrix that imports are against exemption certificate issued by competent authority to be used by security forces - certificate have been issued by the Inspector General who is equivalent to Joint Secretary level officer in the Cabinet Sectt. As such we consider that the certificate has been issued by the competent authority - goods have rightly been imported availing exemption under notification No. 39/96-Cus dated 23.7.2006. In view of the aforesaid fact, confirmation of the customs duty/imposition of penalty is not justified and requires to be set aside - Decided in favour of assessee.

Summary

Issues:
- Exemption certificate validity under Notification No. 39/96-Cus dated 23.7.1996 for defense items imported.
- Competency of the authority issuing the exemption certificate.

Analysis:

Issue 1: Exemption Certificate Validity
- Case C/441/2008: The appellant imported battery packs for defense use, claiming duty exemption under Notification No. 39/96-Cus. The exemption certificate was deemed invalid as it did not meet the specified criteria, leading to duty demand, confiscation, and penalties under Customs Act, 1962.
- Case C/442/08: Duty-free clearances made based on an exemption certificate issued by the Directorate General of Assam Rifles were challenged. The certificate did not meet the requirement of being signed by a Joint Secretary to the Govt. of India in the Ministry of Defence, resulting in duty demand, penalties, and confiscation under the Customs Act, 1962.

Issue 2: Competency of Issuing Authority
- The authority issuing the exemption certificate was a crucial aspect. The appellant argued that the certificates were issued by competent authorities equivalent to Joint Secretary level officers in relevant departments, justifying the validity of the certificates.
- The CBEC's clarification highlighted that certain security forces, like the Special Frontier Force (SFF), attached to the Cabinet Secretariat, faced challenges in obtaining certificates from specific ministries. In such cases, certificates issued by designated officers were deemed valid for duty exemptions under the notification.

Judgment:
- The Tribunal considered the Board's clarification and upheld the validity of certificates issued by competent authorities, including the Inspector General HQ Special Frontier Force, New Delhi. The import of items for bomb detection and disposal by security forces was allowed under the notification.
- Battery packs used for defense purposes were found eligible for duty-free clearance under the exemption certificate issued by competent authorities.
- Consequently, the Orders-in-Original confirming duty demands, penalties, and confiscation were set aside, and both appeals were allowed in favor of the appellants with consequential relief.

Conclusion:
The judgment clarified the validity of exemption certificates issued by competent authorities for defense item imports under Notification No. 39/96-Cus. It emphasized the importance of meeting specified criteria and recognized the challenges faced by certain security forces in obtaining certificates from relevant ministries. The decision favored the appellants, setting aside duty demands, penalties, and confiscation, ensuring compliance with the exemption provisions.