2016 (1) TMI 9 - AT - Customs

Waiver of pre deposit - import of goods for use and consumption in manufacturing of final products in 100% EOU - Denial of benefit of notification for non-payment of Customs as well as Excise duty - Held that - Demand of duty of Customs in this case is on the inputs which were imported by the appellant herein for consumption in manufacturing of goods which are to be exported. We find that the show cause notice is issued to individual on the ground that he is the mastermind and key person who managed the activity of improper imports and diversion to local market under the name of M/s. Omi Textiles. We find that there is no dispute as to the fact that separate proceedings have been initiated against M/s. Omi Textiles for demand of the appropriate Central Excise duty on the finished goods which were diverted to local market instead of exporting the same. It is also undisputed that the issue of imports in this case was shown as consumed for manufacture of finished goods which were to be exported but diverted locally. In our considered view, prima facie there cannot be demand on imports as well as the finished goods manufactured out of such imports. The view expressed by the Bench in the case of Gold Multifab Ltd. (2007 (9) TMI 514 - CESTAT, AHMEDABAD) would be applicable in this case. In view of the foregoing, we find that appellant has made out a case for waiver of the condition of pre-deposit of the amounts involved - Stay granted.

Summary

Issues involved:
1. Waiver of pre-deposit of Customs duty, interest, and penalties imposed on the appellant.
2. Demand of Customs duty foregone by revenue authorities on the import of goods for use in manufacturing of final products in 100% EOU.
3. Alleged diversion of finished goods for home consumption instead of export by the appellant.
4. Dispute over the demand of duty on imports and finished goods manufactured by the appellant.
5. Applicability of judgments in similar cases to the present situation.
6. Decision on whether the appellant should be directed to deposit the amounts foregone by the Department.

Analysis:

The judgment by the Appellate Tribunal CESTAT MUMBAI pertains to stay petitions filed by the appellant seeking waiver of pre-deposit of Customs duty, interest, and penalties imposed. The issue at hand revolves around the demand of Customs duty foregone by revenue authorities on the import of goods for use in manufacturing final products in a 100% Export Oriented Unit (EOU). The revenue authorities alleged that the appellant diverted the inputs imported for manufacturing final products, thereby necessitating the denial of benefits related to non-payment of Customs and Excise duty.

During the hearing, the appellant's counsel highlighted that the show cause notice issued to the appellant was based on the alleged diversion of finished goods for home consumption rather than export. The counsel argued that the demand of duty on imports and finished goods was incorrect as the appellant was not the importer of the goods. Reference was made to previous judgments by the Tribunal in similar cases to support the appellant's position.

On the other hand, the departmental representative contended that the demand of Customs duty foregone was correctly confirmed as the appellant had not consumed the materials imported for goods intended for export. The representative urged that the appellant should be directed to deposit the amounts foregone by the Department.

After considering the arguments and perusing the records, the Tribunal found that the demand of Customs duty was on inputs imported by the appellant for manufacturing goods meant for export. It was noted that separate proceedings had been initiated against another entity for the diversion of finished goods to the local market instead of exporting them. The Tribunal opined that there could not be a demand on both imports and finished goods manufactured from those imports. Citing precedents, the Tribunal allowed the appellant's application for waiver of the amounts involved and stayed the recovery until the disposal of appeals.

In conclusion, the Tribunal granted the appellant's request for waiver of pre-deposit of Customs duty, interest, and penalties, emphasizing the distinction between the imported inputs and the finished goods manufactured for export, thereby providing relief to the appellant pending the appeal process.