2016 (12) TMI 316 - AT - Customs

Recovery of duty - import of Phosphoric Acid - whether quantity received short by the appellant of Phosphoric Acid during the period 1991 to 1995 needs to be subjected to customs duty by denying the benefit of exemption Notification claimed? - Held that - I have perused the Notifications 166/76, 236/89, 121/92, 265/92 & 24/94 and find that the said notification specifically notification No. 24/94 and earlier one Notifications exempt Phosphoric Acid from customs duty if they are imported for manufacture of fertilizers. In the case in hand, there is no dispute as to the fact that the Phosphoric Acid imported is for manufacture of fertilizers. When there is no dispute as to the short receipt of the Phosphoric Acid in the shore tank, I find that the demand as raised by the Revenue was correctly dropped by the adjudicating authority. The reliance placed by the lower authority on the CBEC Circular No. 96/2002 dated 27.12.2002 is correct proposition of law and has been affirmed by the Hon ble Supreme Court in the case of Hindustan Petroleum Corporation Ltd. 2000 (7) TMI 313 - CEGAT, MUMBAI . Appeal rejected - decided against Revenue.

Summary

Issues:
1. Consideration of dropping proceedings against the appellant for recovery of customs duty on imported goods.
2. Interpretation of Customs Notifications regarding concessional rate of duty on imported goods for manufacturing fertilizers.
3. Assessment of shortage of imported goods and applicability of customs duty exemption.
4. Application of judicial precedents in determining customs duty liability.

Analysis:
1. The appeal was filed by the Revenue challenging the dropping of proceedings against the appellant for recovery of customs duty on imported goods, specifically Phosphoric Acid imported during 1991-1995. The issue was whether the adjudicating authority was correct in dropping the proceedings initiated.

2. The respondent imported Phosphoric Acid for manufacturing fertilizers under various Customs Notifications. The Revenue alleged that a portion of the imported quantity was not used for manufacturing fertilizers, thus not eligible for duty exemption. The adjudicating authority, after considering evidence and notifications, concluded that the shortage was due to transfer processes and exempted the goods from duty.

3. The Revenue argued that the appellant failed to receive a specific quantity of Phosphoric Acid, making them liable for customs duty and penalties. They claimed that the adjudicating authority erred in dropping the proceedings without considering the notification correctly. However, the appellant contended that the quantity discrepancy was due to transfer processes and relied on Circulars and judicial decisions supporting their position.

4. The Tribunal analyzed the evidence and notifications, finding that the shortage of Phosphoric Acid was established. As the imported goods were for manufacturing fertilizers, they were exempt from customs duty. The Tribunal upheld the lower authority's decision, citing judicial precedents and Circulars supporting the exemption and assessment based on shore tank receipts.

In conclusion, the Tribunal rejected the Revenue's appeal, affirming the correctness of the lower authority's decision to drop the proceedings against the appellant for customs duty recovery on imported Phosphoric Acid used for manufacturing fertilizers. The judgment was based on a thorough analysis of evidence, Customs Notifications, Circulars, and relevant judicial precedents.