2015 (11) TMI 446 - AT - Customs

Availment of DEPB benefit under Sr.No.68B of the DEPB Scheme - Classification of Alloy Steel Forgings (Machined) / goods for use Gear Blanks - Classification under Tariff Item 732616 of the Drawback Schedule or under Tariff Item 848221 and 8708099 of Drawback Schedule - Held that - There is no dispute that the list appended to the Circular clarified that the Sr.No.68B of DEPB Scheme is corresponding to Tariff Item 722616 of Schedule. The Hon ble Supreme Court in the case of Ranadey Micronutrients Ltd 1996 (9) TMI 124 - SUPREME COURT OF INDIA held that the circular issued by CBEC is binding on the officers of Revenue Department and consistency and discipline are of greater importance than winning or loosing the court case. The foreign buyers categorically certified that the impugned exported goods are not useable as such and subjected to various processes. This is supported by the certificates of Central Excise officers and officers of Special Economic Zone. Hence, the said case law is not applicable herein. The goods exported by the Appellant declaring Alloy Steel Forging (Machined) for use of rings of Bearing and Gear Blank in their shipping bills, require further operation and such goods when not fit for being ready to use, would appropriately classifiable under tariff item No.732615 of Drawback Schedule. Therefore, the demand of differential amount of drawback alongwith interest and penalties cannot be sustained. Extended period of limitation - Held that - Appellant has a very strong case in their favour on limitation, as is evident from the analysis of facts herein earlier. When the Department had repeatedly examined the issue earlier and assessments were final, demand can be raised only for normal period. Demand of differential duty set aside - Decided in favor of assessee.

Summary

Issues Involved:
1. Classification of exported goods under the appropriate tariff item of the Drawback Schedule.
2. Eligibility for higher rate of drawback claimed by the appellant.
3. Validity of the demand for recovery of excess drawback along with interest and penalties.
4. Applicability of the limitation period for raising the demand.

Detailed Analysis:

1. Classification of Exported Goods:
The core issue was whether the exported Alloy Steel Forgings (Machined) for use rings for Bearings/Gear Blanks should be classified under Tariff Item 732616 of the Drawback Schedule, as claimed by the appellant, or under Tariff Items 848221 and 8708099, as held by the Adjudicating Authority. The appellants argued that their goods were unfinished and not fit for direct use, thus falling under Chapter 73. The Adjudicating Authority, however, observed that the goods were identifiable as parts of machinery and vehicles, thus falling under Chapters 84 and 87.

2. Eligibility for Higher Rate of Drawback:
The appellants claimed the drawback benefit under Tariff Item 732616, based on the Board's clarification that items under DEPB Scheme Sr. No. 68B would be covered under this tariff item. The Adjudicating Authority contended that the goods should be classified under different tariff items, thus resulting in a lower drawback rate. The Tribunal found that the goods were exported in unfinished form, requiring further processing by customers, thereby supporting the appellant's classification under Tariff Item 732616.

3. Validity of the Demand for Recovery of Excess Drawback:
The Adjudicating Authority issued a show cause notice proposing to recover the excess drawback claimed by the appellant and imposed penalties under Section 114(ii) of the Customs Act, 1962. The Tribunal, however, concluded that the goods were not ready for use and required further processing, thus justifying the higher drawback rate claimed by the appellant. Consequently, the demand for recovery of excess drawback, along with interest and penalties, was not sustained.

4. Applicability of the Limitation Period:
The appellants argued that the demand was barred by limitation, as there was no suppression of facts with intent to evade duty. The Tribunal noted that the Department had repeatedly examined the issue earlier, and assessments were final. Therefore, the demand could only be raised for the normal period, further supporting the appellant's case.

Conclusion:
The Tribunal held that the goods exported by the appellant were not ready for use and required further processing, thereby classifying them under Tariff Item 732616 of the Drawback Schedule. The demand for differential drawback, along with interest and penalties, was set aside. The Tribunal allowed the appeals filed by the appellant company and its Managing Director, with the Revenue being permitted to verify the certificates placed by the appellant with export documents, following principles of natural justice.