2014 (12) TMI 1077 - HC - Customs

Extended period of limitation - suppression of facts - import of raw material, viz., spring steel wires - The allegation of the DRI is that the raw material imported under the advance licenses as replenishment, were different from the raw material used in the manufacture of exported goods in terms of character, thickness, etc. - Notification Nos.149/1995-Customs dated 19.9.95, 30/1997-Customs dated 1.4.97, 31/1997-Customs dated 1.4.97 and 51/2000-Customs dated 27.4.00 - Held that - Tribunal, on a perusal of the records, has held that the licences and documents were furnished at the time of export and also at the time of import of the raw materials for replenishment and such details were furnished to the licencing authority, which includes, DEEC passbook and other export documents. The said documents have been scrutinized by the DGFT and customs authorities and, thereafter, the goods were allowed clearance by an order passed by the appropriate officer. If that be the case, this issue ought to have been agitated by the Department within the period prescribed. The question of suppression does not arise in the light of the finding of the Commissioner himself, which clearly shows that goods imported and exported tally as per licence. In the light of the above finding of the Commissioner, as extracted by the Tribunal, this Court is of the considered view that the Tribunal was justified in coming to the conclusion that there was no case of suppression. As a result, the entire cause of action for issuance of show cause notice does not survive. This Court is in entire agreement with the findings recorded by the Tribunal and is of the considered view that it warrants no interference. Accordingly, the first question of law answered against the Revenue and in favour of the respondent - Decided against Revenue.

Summary

Issues:
1. Interpretation of Customs Act regarding limitation period for demanding duty.
2. Eligibility for duty exemption under DEEC scheme.
3. Allegation of suppression of facts by the Department.
4. Application of actual user condition in Customs Notifications.
5. Justification of penalty in case of suppression.

Analysis:
1. The case involved a dispute regarding the limitation period for demanding duty under the Customs Act. The respondent, a manufacturer of helical springs, imported raw materials under the DEEC scheme. The Department alleged suppression, stating that the imported raw materials differed from those used in the exported goods. The Tribunal held that the demands were barred by time as all details were declared and scrutinized by authorities, finding no suppression or mis-declaration of facts. The Tribunal's decision was based on thorough scrutiny of records, licenses, and documents, leading to the conclusion that the demands were time-barred.

2. The respondent contended that they had complied with the DEEC scheme requirements by furnishing necessary licenses and documents during export and import. They argued that the Department's interpretation of Customs Notifications was incorrect and contrary to established judicial precedents. The Tribunal relied on the Supreme Court decision in Oblum Electrical case, stating that the actual user condition cannot be imposed based on the said notifications. The Tribunal upheld the respondent's position, emphasizing compliance with scheme requirements and judicial precedents.

3. The Department alleged suppression of facts by the respondent, leading to the show cause notice. However, the Tribunal found no evidence of suppression as all relevant documents were furnished and scrutinized by authorities. The Tribunal's decision was supported by the Commissioner's finding that goods imported and exported aligned with the license terms, indicating no suppression. Consequently, the Tribunal ruled in favor of the respondent, rejecting the Department's allegation of suppression.

4. The Tribunal analyzed the application of actual user condition in Customs Notifications concerning duty exemption. Relying on judicial precedents, including the Oblum Electrical case, the Tribunal concluded that the actual user condition could not be imposed based on the notifications. The Tribunal's decision was in line with established legal interpretations and previous judgments, providing clarity on the application of actual user condition in duty exemption cases.

5. Regarding the penalty for suppression, the Tribunal ruled in favor of the respondent due to the absence of suppression as established by the scrutiny of documents and compliance with scheme requirements. The Tribunal's decision to reject the penalty was upheld by the Court, emphasizing the lack of evidence supporting the Department's claim of suppression. As a result, the Court dismissed the appeal, affirming the Tribunal's decision on suppression and penalty issues.