2017 (5) TMI 1369 - AT - Customs

Violation of conditions for goods imported at concessional rate of duty for manufacture - import of LCD Panel for use in their factory for manufacture of L.C.D. TVs - N/N. 21/2002-Cus. dated 01/03/2002 as amended - Held that - for the period subsequent to the period of SCN the said Rules were amended wherein it was provided that the imported goods which could not be utilized can be re-exported. Though the said provision was not applicable to the period for which the SCN was issued, the principle involved in the said provision should be applicable for all the material periods - if the goods on importation are re-exported as such then they should be treated as if they were never imported. In that event, Rule 8 of the said Rules will not be applicable - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Compliance with Customs rules regarding import of goods at concessional rate of duty.
2. Alleged evasion of payment of Basic Customs Duty.
3. Interpretation of Rule 7A and Rule 8 regarding re-export of unutilized imported goods.
4. Applicability of amended rules to the period of Show Cause Notice.
5. Decision on recovery of duty for re-exported goods.

Compliance with Customs rules regarding import of goods at concessional rate of duty:
The appellant imported LCD Panels for manufacturing LCD TVs at a concessional rate of duty under Notification No. 21/2002-Cus. However, the Revenue alleged non-compliance with the conditions laid down under the Customs Rules, leading to evasion of Basic Customs Duty. A Show Cause Notice was issued, and subsequent orders confirmed the demand, interest, and penalty. The appellant challenged this before the Tribunal.

Alleged evasion of payment of Basic Customs Duty:
The Revenue claimed that the appellant failed to comply with Customs rules, resulting in the evasion of Basic Customs Duty amounting to ?17,23,112. The Original Authority upheld this claim, leading to the Commissioner's decision, which the appellant appealed to the Tribunal.

Interpretation of Rule 7A and Rule 8 regarding re-export of unutilized imported goods:
The appellant argued that Rule 7A, allowing re-export of unutilized imported goods, should apply to the case. They contended that re-exported goods without any use should be treated as if they were never imported, thereby not invoking Rule 8 for recovery of duty on such goods.

Applicability of amended rules to the period of Show Cause Notice:
The Tribunal considered the amendment to the rules allowing re-export of unutilized goods for subsequent periods. Although this amendment did not apply to the period of the Show Cause Notice, the Tribunal held that the principle should be applicable to all relevant periods.

Decision on recovery of duty for re-exported goods:
The Tribunal, in light of the re-export of the goods in question, concluded that they should be treated as if they were never imported. Therefore, Rule 8 of the Customs Rules, regarding recovery of duty, was deemed inapplicable. Consequently, the Tribunal set aside the Order-in-Appeal and allowed the appeal of the appellant.