2008 (11) TMI 186 - AT - Customs

Exemption from customs duty subject to specific use of the machinery gem and jewellery machinery - Notification required that the machines should be used in the processing and manufacture of gem and jewellery for the purpose of export, for which purpose an undertaking was also required to be filed, it has to be considered that the machines could not have been used for any purpose other than export - Since the appellant himself is admitting that the machines were not used exclusively for the purpose of export, there has been a violation of condition of Notification - confiscation upheld demand of differential duty upheld redemption fine and penalties reduced.

Summary

Issues: Appeal against confiscation of machines under Customs Act, 1962, demand for differential duty, imposition of penalty.

Analysis:
1. The appeal challenged the Commissioner's order confiscating nine machines under Sections 111(d) and (o) of the Customs Act, 1962, demanding differential duty on three machines imported after 1-3-87, and imposing a penalty under Sec.112 of the Act.

2. Despite no representation from the appellants, the Tribunal examined the records and heard the ld. SDR representing the respondent.

3. The appellants imported nine machines, claiming benefit under Notification No.159/86 for concessional duty rates for machines used in gem and jewellery manufacture. The appellants argued that for machines imported before 1-3-87, there was no violation as they were registered exporters and used the machines for export, not exclusively. For machines imported after 1-3-87, the Notification required an undertaking for export use, which the appellants did not fulfill, leading to confiscation and demand for differential duty.

4. The ld. DR contended that machines imported before 1987 should have been used exclusively for export, based on the exporters' registration requirement. Post-1987, the use was mandated to be solely for export purposes, not domestically.

5. The Tribunal noted that pre-1987, the only condition was exporter registration, not exclusive use for export. As the appellants were registered exporters and had made substantial exports, confiscation for non-exclusive export use was unwarranted. The Commissioner did not demand differential duty for these six machines.

6. For machines imported after 1-3-87, the Notification required exclusive use for export, with an undertaking. As the appellants admitted non-exclusive export use, a violation occurred, justifying confiscation and demand for differential duty. The Tribunal upheld confiscation of three machines and the demand for differential duty, reducing the redemption fine and penalty proportionately due to setting aside confiscation for six machines. The appeal was partly allowed.