2016 (2) TMI 358 - AT - Customs

Demand of duty - Transshipment of goods without charging duty - period of limitation - Held that - appellants were clearing the goods on the basis of transshipment permits and when the definition of Continental Shelf and Exclusive Economic Zone were changed. As a result the duty liability arose in respect of the clearance made to area within the Continental Shelf and Exclusive Economic Zone. The show-cause notice in respect of these clearances made was issued on 3.12.2002 for the clearance made from 11.2.2002 to 13.2.2002. The show-cause notice was issued beyond a period of six months prescribed at the material time. The Revenue had sought to explain the delay on account of the litigation before Hon ble Bombay High Court. It is also a fact that the Revenue issued show-cause notice during the pendency of this Writ Petition, which clearly indicates that the court did not bar issue of notice. This confirms the fact that the Court proceedings were not preventing Revenue from issuing show-cause notice in timely manner. The contention of the Revenue that the appellant during pendency of Writ Petition needs to be excluded, cannot be accepted. In the circumstances, we find that the show-cause notice is barred by limitation. The impugned order cannot be sustained on this count. The fact that the goods cleared under transshipment permit are required for the intended purpose is clear from the facts that the essentiality certificate has been issued. Whether it is issued under Notification No. 17/2001 or 21/2002 is immaterial so long as the essentiality certificate covered the goods, benefit of notification cannot be denied. - Demand set aside - Decided in favor of appellant.

Summary

Issues:
1. Duty liability arising from clearance of goods to Continental Shelf and Exclusive Economic Zone.
2. Time limitation for issuance of show-cause notice.
3. Admissibility of Notification No. 21/2002 for exemption benefits.

Analysis:

Issue 1:
The appellants, engaged in the supply of material for offshore drilling rigs, cleared goods to the Continental Shelf and Exclusive Economic Zone. Duty liability arose following changes in the definition of these areas. The show-cause notice issued beyond the prescribed six-month period was challenged. The Tribunal found that the notice was time-barred as the Writ Petition filed did not prevent the Revenue from issuing the notice within the limitation period.

Issue 2:
Regarding the time limitation, the appellants contended that the notice was issued after six months from the clearance of goods. The lower authorities argued that the pendency of the Writ Petition before the High Court should exclude this period. However, the Tribunal held that the pendency did not bar the Revenue from issuing the notice within the stipulated time, rendering the notice time-barred.

Issue 3:
The appellants obtained an Essentiality Certificate required for exemption benefits under Notification No. 21/2002. The denial of exemption was based on the grounds that the certificate was issued under a later notification and produced after clearance. The Tribunal observed that the delay in obtaining the certificate was due to procedural lapses, not the appellants' fault. It held that as long as the goods were required for the intended purpose, the timing of producing the certificate should not affect the benefit of the notification. The Tribunal set aside the impugned order, allowing the appeal with consequential relief as per law.