2015 (10) TMI 1095 - AT - Customs

Demand of Duty Textile Machinery imported - Assessee contends that ownership of machinery is with M/s TFL as per Hire-Purchase agreement, they are liable to pay duty Machine removed under a Court order and not deliberately M/s Vampex purchased the machine and hence liable to pay duty and assessee is further liable to claim depreciation on duty demanded. Revenue contended that assessee is only liable to pay duty and depreciation granted is on the higher side. Held That - Liability to pay duty arises from bond executed by assessee with Department obliging to abide by the conditions in Notification - Section 142 inserted by Act No. 23 of 2004 holds that successor of defaulter would also be held liable; M/s Vampex are also liable to pay the dues Depreciation rate charged by the authority is not to be interfered with Appeal dismissed partly in favour of the Revenue.

Summary

Issues:
1. Appeal filed by Revenue challenging impugned order
2. Appeal filed by assessee challenging same order
3. Service of notice to assessee
4. Compliance with interim order by Tribunal
5. Liability of assessee to pay customs duty on imported textile machinery
6. Ownership of machinery under Hire Purchase Agreement
7. Liability of M/s TFL and M/s Vamptex Traders
8. Allowance of depreciation on duty demand

Analysis:
1. The Tribunal had issued an interim order directing the deposit of duty demand by the assessee, challenged by the High Court. Despite multiple notices, the assessee did not appear, leading to the Tribunal considering the appeal on merits based on subsequent court orders.

2. The main issue was whether the assessee was liable to pay customs duty on textile machinery imported in 1997. The machinery was purchased under a Hire Purchase Agreement, and the assessee defaulted on payments, leading to its sale and subsequent duty demand.

3. The Tribunal found the assessee primarily liable for duty payment as per the bond executed under the duty exemption notification. The argument that M/s TFL, the financier, should bear the duty liability was rejected.

4. The liability of M/s Vamptex Traders, who purchased the machinery, was also examined. Terms of the sale agreement indicated the purchaser's responsibility for duties and taxes, making them liable for the dues as the successor of the defaulting importer.

5. The Commissioner (Appeals) allowed depreciation on the duty demand, reducing the liability based on the period of machine usage. The Tribunal upheld this decision, stating it was not a fit case to interfere with the depreciation allowance.

6. Ultimately, both the Revenue's and the assessee's appeals were dismissed, and the decision was pronounced on 24.8.2015. The Tribunal upheld the Commissioner's order on duty liability, ownership under the Hire Purchase Agreement, and allowance of depreciation, concluding the case comprehensively.