2017 (3) TMI 128 - AT - Customs

Extended period of limitation - recovery of duty foregone at the time of import - Held that - appellant had procured the advance licence after the condition of export obligation had been fulfilled by the original holder and utilised for import of goods without payment of duty - As appellant was neither the manufacturer nor the exporter, the conditions under which export obligation was fulfilled, and particularly compliance of conditions thereof, would, in the normal course be not within the knowledge of the appellant - the allegation and finding that appellant suppressed this vital fact at the time of import is without any basis - extended period cannot be invoked - appeal allowed - decided in favor of appellant.

Summary

Issues:
Limitation on recovery of duty and penalty for non-compliance with conditions of exemption notification.

Analysis:
The appeal was primarily focused on the limitation raised by the appellant regarding the recovery of duty not paid on imported goods and the imposition of a penalty under the Customs Act, 1962. The show cause notice was issued for the recovery of duty and penalty for non-compliance with the conditions of exemption notification related to the import of goods using an advance license. The appellant challenged the order-in-appeal upholding the demand and penalty imposed by the lower authorities.

The Tribunal examined the records and found that the appellant had procured the advance license after the export obligation had been fulfilled by the original holder. The appellant imported goods without paying duty based on the transferred advance license. It was noted that the appellant was not the manufacturer or exporter, and thus, might not have been aware of the conditions under which the export obligation was fulfilled. The show cause notice did not allege that the appellant was aware of the credit availed, and there was no evidence to support such a claim.

The Tribunal highlighted that there was no effort made to ascertain if the manufacturer of the export goods had availed the credit on inputs. The notice seemed to be based on assumptions rather than concrete evidence. Referring to a Supreme Court judgment, it was emphasized that the transferee of an advance license cannot be compelled to prove the fulfillment of export obligations by the original license holder. The Tribunal dismissed the appeal, stating that the judgment did not suffer from any infirmity and that the invoking of the extended period for recovery of duty was not supported by evidence.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the recovery of duty based on assumptions without proper evidence was not sustainable. The decision was made in favor of the appellant, highlighting the importance of concrete evidence and adherence to legal provisions in such cases.