2017 (4) TMI 678 - AT - Customs

Benefit of exemption N/N. 104/94-CUS, dt. 16.03.1994 - denial on the ground that containers are not durable containers - The word used in the N/N. 104/94 is containers of durable nature. The authorities below relied upon the Board Circular to interpret the word durable as capable of being reused. It is thus observed by the department that since the containers used for packing the perishable products are of disposable nature, they cannot be considered as durable containers - Held that - The said view of the department is highly imaginary. The appellants are using containers for exporting perishable products. The packing is done as per the specifications of the overseas purchaser of the product. Further, the department cannot insist that the containers should be capable of reuse when the products are being exported. When the products are being exported after packing in containers, the appellants cannot be expected to reuse such containers for further packing. The appellant cannot be compelled to do something which is practically not possible for them - rejection of benefit of exemption by the authorities below is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of "containers of durable nature" under Notification No. 104/94 for exemption from Customs duty on packing materials
- Consideration of whether containers used for packing perishable goods are durable containers
- Relevance of reusability in determining durability of containers
- Application of past judgments on durable containers in similar cases

Analysis:
1. The case involved a dispute regarding the interpretation of "containers of durable nature" under Notification No. 104/94 for exemption from Customs duty on packing materials. The appellant imported packing materials for perishable goods and sought exemption, but the department insisted on duty payment, leading to the appeal.

2. The appellant argued that the containers used for packing perishable goods should be considered durable as per the notification. The department relied on a circular to define durable containers as reusable, which the appellant contested. Citing past judgments, the appellant highlighted that durability should be assessed based on the context and intended use of the containers, not just reusability.

3. The department reiterated its stance that the packing containers, being disposable and for one-time use, do not qualify as durable containers under the notification. However, the appellant emphasized compliance with overseas purchasers' specifications and the impracticality of reusing containers for export products.

4. The Tribunal, led by Ms. Sulekha Beevi, analyzed the definition of durable containers from past judgments and the common understanding of durability. The Tribunal emphasized that durability is relative and not solely dependent on reusability. It noted the absence of conclusive evidence on durability testing for the containers in question.

5. Referring to the Dimakusi Tea Co. Ltd. case, the Tribunal clarified that containers need not be reusable to be considered durable. Considering the facts presented and past precedents, the Tribunal found the denial of exemption unjustified and set aside the impugned order, allowing the appeal with consequential reliefs.

6. The judgment highlighted the importance of assessing durability in the context of the containers' intended use, rejecting a rigid interpretation based solely on reusability. By considering the practicalities of exporting perishable goods, the Tribunal ruled in favor of the appellant, emphasizing the relative nature of durability and setting aside the denial of exemption under the notification.