2014 (11) TMI 818 - AT - Customs

Exemption under Notification No.21/2002-CUs dated 01/03/2002 - Non submission of certificates for finished goods - Revenue contends that in the absence of such a certificate from DGHC, the coated pipes, which are manufactured under bond is liable to import duty at the time of clearance from bond and accordingly issued show-cause notices proposing to demand Customs duty on the entire value of the coated pipes - Held that - Both the bare pipes as well as the coated pipes were for use for oil exploration/exploitation and the essentiality certificate issued by the DGHC clearly evidence this fact. Though, the certificate specifically mentions serial No.215 of the Notification NO.21/2002, the finished products are also specified therein and the said finished products figure in List 12 to Notification No.21/2002, which also exempts the said goods from import duty vide Serial No. 216 subject to production of essentiality certificate from DGHC. Since the end use not in dispute, the appellant would be entitled the benefit of Serial No. 216 even though they have not specifically claimed the exemption. Since the assessment of duty liability has to be done by the Customs, notwithstanding the fact that the appellant did not claim the benefit of exemption, the same should have been extended to the respondent importer. Further, we observe that the demands covered under show-cause notice dated 07/04/2010 and 17/07/2009 are clearly time barred, inasmuch as the entire transactions were fully known to the department and the respondent s clearance of coated pipes to Bombay High under shipping bills were also approved by the Customs authorities concerned - Decided against Revenue.

Summary

Issues:
- Appeal against dropping of Customs duty demand by adjudicating authority
- Exemption claim on coated pipes for oil exploration/exploitation
- Classification of transaction as import or export
- Time-barred demands and benefit of exemption

Analysis:
1. Appeal against dropping of Customs duty demand:
The Revenue appealed against the dropping of Customs duty demands totaling over Rs. 312 crores by the adjudicating authority. The authority observed that both the coated pipes and raw materials used in their manufacture were eligible for exemption, hence no duty demand should arise. The Revenue contended that the respondent did not claim the exemption for coated pipes and argued that the supply of coated pipes to Bombay High constituted an import transaction, making it liable for duty.

2. Exemption claim on coated pipes for oil exploration/exploitation:
The respondent, a manufacturer of coated pipes under Customs bonded/warehouse provisions, supplied coated pipes for oil exploration/exploitation activities. The respondent claimed exemption under Notification No.21/2002 for raw materials used in manufacturing. The Revenue argued that without claiming the exemption, the benefit could not be extended. However, the Tribunal noted that the end use of the coated pipes was for oil exploration/exploitation, making them eligible for exemption under Serial No. 216 of the Notification.

3. Classification of transaction as import or export:
The Revenue contended that the clearance of goods from the bonded warehouse to Bombay High should be considered an import transaction due to the location being part of India. In contrast, the respondent considered it an export transaction, supported by filing shipping bills assessed by Customs authorities. The Tribunal held that the entire transaction was known to the department, and demands for certain periods were time-barred.

4. Time-barred demands and benefit of exemption:
The Tribunal found demands covered under specific show-cause notices to be time-barred as the transactions were known to the department, and the respondent's actions were approved by Customs authorities. It was emphasized that even though the respondent did not claim the exemption explicitly, the benefit should have been extended considering the end use and essentiality certificate provided.

In conclusion, the Tribunal dismissed the Revenue's appeals, stating that the respondent was entitled to the benefit of exemption and that the demands for certain periods were time-barred. The cross objections filed by the respondent were also dismissed.