2016 (11) TMI 38 - AT - Customs

100% EOU - N/N. 13/81-Cus. dated 9.2.1981 - import of refrigerated trucks - de-bonding of EOU unit under EPCG scheme under N/N. .29/1997-Cus - furnishing of bank guarantee to cover the duty liability on the refrigerated trucks - SCN at the time of expiry of the bond and the bank guarantee proposing to enforce the bond to recover the dues - Held that - the refrigerated trucks are used only for the purpose of transporting the frozen raw materials when it is brought into the factory for manufacture/production and also to carry the finished goods from factory to port for export. It is also an admitted fact that the appellant deals with highly perishable sea food. But the connotation of the term capital goods is to cover plant, machinery, equipment or accessories required for manufacture of goods including refrigeration equipment. But from the use of refrigerated trucks by the appellant, it cannot be said that the said use is in the nature of capital goods and cannot be covered by the Notification No.13/81-Cus. The decision cited by the learned AR in the case of International Creative Foods Ltd. 1997 (12) TMI 400 - CEGAT, MADRAS is squarely covering the issue against the appellant. Benefit of N/N. 13/81 not available - appeal dismissed - decided against appellant.

Summary

Issues:
1. Eligibility of the appellant for exemption under Customs Notification No.13/81-Cus. for importing refrigerated trucks.
2. Enforceability of the bond and demand for customs duty without deciding the eligibility issue.
3. Scope of the show-cause notice in relation to enforcement of the bond.
4. Interpretation of capital goods and applicability of EXIM Policy 1992-97.

Analysis:

Issue 1: Eligibility for exemption under Customs Notification No.13/81-Cus.:
The appellant, a 100% EOU, imported refrigerated trucks under the said Notification without paying customs duty. Upon de-bonding to migrate to the EPCG scheme, a bond was executed to cover the duty liability on the trucks. The dispute arose when customs authorities demanded duty on the trucks, claiming they did not qualify as capital goods under the Notification. The appellant argued that the trucks should be considered capital goods as per the EXIM Policy 1992-97, citing a precedent where similar benefit was allowed to another EOU. However, the authorities determined that the trucks did not meet the criteria for exemption under the Notification, leading to the appeal.

Issue 2: Enforceability of the bond without deciding eligibility:
The appellant contended that the show-cause notice only proposed to enforce the bond without addressing the eligibility issue under the Notification. They argued that the authorities exceeded the notice's scope by deciding on eligibility. However, the authorities maintained that the appellant was not entitled to duty-free import under the Notification for the refrigerated trucks, relying on a case law precedent. The bond specifically covered the duty difference between the Notification and the EPCG scheme, supporting the authorities' decision to demand duty.

Issue 3: Scope of the show-cause notice:
The appellant raised concerns about not being informed about the ineligibility for the Notification's benefit regarding the trucks. They emphasized that the show-cause notice focused on enforcing the bond and bank guarantee, rather than addressing the eligibility issue directly. The appellant argued that the Revenue went beyond the notice's scope by deciding on eligibility without proper notice, leading to procedural objections.

Issue 4: Interpretation of capital goods and EXIM Policy 1992-97:
The appellant's argument regarding the refrigerated trucks being considered capital goods was based on the definition in the EXIM Policy 1992-97, which includes refrigeration equipment. However, the authorities found that the trucks' use for transporting raw materials and finished goods did not align with the capital goods definition under the Notification. The appellate authorities upheld the decision, emphasizing that the trucks' use did not qualify them for exemption under the Notification, as established by relevant case law.

In conclusion, the Tribunal dismissed the appeal, upholding the authorities' decision that the appellant was not eligible for the benefit of Customs Notification No.13/81-Cus. for importing refrigerated trucks. The judgment highlighted the importance of aligning imported goods with the specific criteria outlined in relevant notifications and policies to claim exemptions successfully.