2008 (2) TMI 241 - AT - Customs

Quantum of import used - allegation that the Appellant made violation of standard input-output norm in respect of imported material revenue contend that assessee is showing excess consumption of the imported material but in reality he is diverting the imported material so they were not entitled to concessional rate of duty as per not. 46/96 allegation was not proved by revenue - terms of Notification was well complied by the appellant so appeal is allowed demand not justified

Summary

Issues:
Challenge to duty demand under Customs Act, 1962 and penalty imposition. Entitlement to concessional rate of Customs duty under Notifications. Violation of standard input-output norm. Maintenance of proper accounts. Benefit denial under Notification No. 25/99. Compliance with DEPB Scheme. Burden of proof on the Appellant. Time-limit for proceedings. Diversion of imported material.

Detailed Analysis:

1. Challenge to Duty Demand and Penalty Imposition:
The Appellant challenged the duty demand of Rs. 81,86,663 and penalty of Rs. 80,00,000 under the Customs Act, 1962. The dispute centered around the concessional rate of Customs duty under Notifications for the financial years 1998, 1999, and 2001 concerning imported ferric oxide and manganese oxide. Allegations included violation of standard input-output norm and failure to maintain proper accounts, leading to the duty demand and penalty imposition.

2. Entitlement to Concessional Rate of Customs Duty:
The Adjudicating Authority found that the Appellant, registered under Customs Rules, failed to follow standard input-output norm and maintain proper accounts as required by the Rules. The Authority confirmed the demand, stating that the concessional rate of duty was not applicable due to non-compliance with the Rules.

3. Compliance with DEPB Scheme and Notifications:
The Appellant argued that they fully complied with Notification No. 25/99 and maintained proper records as per Rule 7 of the Customs Rules. They contended that they were entitled to the benefits under the DEPB Scheme and that the standard input-output norm was not applicable post-importation. The Appellant emphasized that the imported material was utilized entirely, challenging the calculation of material consumption by the Authority.

4. Burden of Proof and Time-Limit for Proceedings:
The Revenue contended that the Appellant failed to demonstrate the consumption pattern of imported goods and deviated from standard norms. They argued that the burden of proving exemption Notification compliance rested on the Appellant, who allegedly imported more material than required. The Revenue claimed that the proceeding was within the time-limit and penal consequences were justified due to post-importation violations.

5. Diversion of Imported Material and Final Decision:
After thorough analysis, the Tribunal found no evidence of diversion of imported material for ulterior motives. The Tribunal highlighted that the Appellant's maintained records were never questioned by the Department, and there was no credible evidence of deviation from the Rules. The Tribunal ruled in favor of the Appellant, allowing the Appeal and setting aside the impugned order on 25-2-2008.