2014 (12) TMI 311 - HC - Customs

Maintainability of appeal - Import of Uninterrupted Power Supply Systems (UPS) - Exemption of basic customs duty, under Notification No.25 of 2005, dated 01.03.2005 - Classification of imported goods - Alternate remedy - Held that - The petitioner has failed to avail the alternate remedy, available to them, under the Statute and straightaway approached this Court, by way of this writ petition. In the affidavit filed in support of the writ petition, no justifiable grounds have been raised by the petitioner to justify their action in by-passing the appellate remedy. In any event, each bill of entry has to be independently assessed and there is sufficient jurisdiction for the Assessing Officer to call for the information from the importer, more so, when the importer claims full exemption of basic customs duty, by placing reliance on the notification. The onus is on the importer to satisfy that the imported goods falls squarely within the four corners of the exemption notification. If the petitioner fails to prove the same, it is not entitled for the benefit of the exemption notification and the settled legal principles being that an exemption notification shall be interpreted strictly. The petitioner has not denied the information, which has been uploaded in its website, which shows that the product is capable of being put to multiple use, which is not contemplated under Notification No.25 of 2005, under heading 8504 40, which describes the goods as static converters for automatic data processing machines and units thereof and telecommunication apparatus. Thus, it appears that the exemption notification is specific pertaining to static converters for automatic data processing machines and telecommunication apparatus. Therefore, if it is the case of the petitioner that though the product is capable of multiple use or used for automatic data processing machines or telecommunication apparatus, nothing prevented the petitioner from establishing the same and one such method is producing an end-use. The Hon ble Supreme court, in the case of Liberty Oil Mills Pvt. Ltd., v. Collector of Central Excise, reported in 1994 (12) TMI 74 - SUPREME COURT OF INDIA held that, in a case of an ambiguity or doubt regarding an exemption provision in a fiscal statute, the ambiguity or doubt will be resolved in favour of the Revenue and not in favour of the Assessee. In any event, these contentions could very well be raised before the Appellate Authority and the petitioner has not placed any material before this Court to justify its action in bypassing the appellate remedy available under the Act. - Appeal not maintainable - Decided against assessee.

Summary

Issues Involved:
1. Classification of imported goods (UPS systems) under the Customs Tariff.
2. Eligibility for exemption from basic customs duty under Notification No. 25 of 2005.
3. Requirement of end-use proof for claiming exemption.
4. Validity of the Assistant Commissioner's order and its adherence to previous orders.
5. Maintainability of the writ petition without availing the statutory appellate remedy.

Detailed Analysis:

Classification of Imported Goods:
The petitioner, a private limited company, challenged the classification of imported UPS systems under CTH 8504 40 90 by the Assistant Commissioner of Customs, which denied the exemption from basic customs duty under Notification No. 25 of 2005. The petitioner argued that the UPS systems should be classified differently and be eligible for duty exemption.

Eligibility for Exemption:
The petitioner contended that the exemption notification is unconditional and does not require any end-use proof. They relied on a previous Order-in-Original No. 21/2010, which classified UPS systems under Chapter Heading 8504 and granted exemption. The petitioner argued that the notification should be interpreted plainly, and since there is no end-use condition, they are eligible for the exemption.

Requirement of End-Use Proof:
The Appellate Authority noted that the dispute centered on the interpretation of the exemption notification. It emphasized that the meaning of the notification must be gathered from its language without ignoring its purpose. The petitioner failed to prove that the imported goods were directly used in the IT industry, as required by the notification. The goods were capable of multiple uses, including domestic, industrial, and healthcare applications, which did not meet the exemption criteria.

Validity of the Assistant Commissioner's Order:
The petitioner argued that the Assistant Commissioner's order was illegal and non-speaking, as it did not follow the previous order dated 11.01.2010. However, the Appellate Authority found that the previous order, which dealt with mobile phone chargers, was not binding and did not consider the multiple uses of the imported goods. The Assistant Commissioner's order was upheld, and all 80 appeals filed by the petitioner were rejected.

Maintainability of the Writ Petition:
The court noted that the impugned order was appealable under Section 129A of the Customs Act, 1962, to the CESTAT. The petitioner bypassed the appellate remedy and directly approached the court without justifiable grounds. The court emphasized that the petitioner must explain their entitlement to the exemption, which involves factual appreciation best suited for the Tribunal. The court dismissed the writ petition as not maintainable but allowed the petitioner to file an appeal before the CESTAT if advised.

Conclusion:
The court dismissed the writ petition on the grounds of non-maintainability due to the availability of an alternate appellate remedy. The petitioner's failure to establish the eligibility for exemption under Notification No. 25 of 2005, and the requirement of end-use proof for the imported UPS systems, were central to the judgment. The court upheld the Appellate Authority's decision, emphasizing the need for strict interpretation of exemption notifications and the petitioner's obligation to prove their case within the statutory framework.