2017 (11) TMI 357 - AT - Customs

Recovery of customs duty - duty foregone due to duty free import - subsequent amalgamation - Held that - The goods imported in the present case were meant for use in manufacture but became redundant by virtue of amalgamation. There is no evidence at all brought on record by Revenue to establish that the goods were not meant for such use - When there is no evidence on record to establish that appellant was not enriched at the cost of revenue, appeal is allowed - decided in favor of appellant.

Summary

Issues:
1. Import of duty-free goods for manufacturing purposes.
2. Goods becoming unusable due to company amalgamation.
3. Excise and Customs duty implications.
4. Applicability of legal precedent on goods usage.
5. Dispute resolution and litigation avoidance.

Analysis:

1. The appellant imported goods duty-free under a specific notification for use in manufacturing. However, due to the amalgamation of the appellant with another company, the goods became redundant and unusable. The appellant argued that it had no motive to import goods duty-free only to make them unusable, leading to a loss when the goods had to be scrapped with the permission of the Excise authority.

2. The appellant contended that under a Company Court decree, it should not be subjected to further litigation regarding the duty foregone on the goods that became unusable due to circumstances beyond its control. The appellant relied on a Supreme Court judgment emphasizing that goods meant for use should be considered as "intended for use," especially when they become unusable for reasons not attributable to the importer.

3. The Revenue, on the other hand, argued that since the goods imported for manufacturing purposes were not used as intended, the importer should pay the duty foregone, amounting to around ?3 lakhs. The case involved repeated litigations under both Excise and Customs laws, with the appellant facing challenges regarding the duty payment for the unused goods.

4. The Tribunal analyzed the situation and found no evidence presented by the Revenue to establish that the goods were not meant for use in manufacturing. The appellant's reliance on the Supreme Court judgment regarding goods usage appeared justified, as there was no indication of any mala fide intention on the appellant's part. The Tribunal noted that the appellant had not benefited at the cost of revenue and allowed the appeal, emphasizing the lack of evidence to support the Revenue's claims.

5. In conclusion, the Tribunal ruled in favor of the appellant, highlighting the absence of evidence suggesting any wrongdoing on the appellant's part. The decision aimed to provide a resolution to the dispute and prevent further litigation, considering the circumstances surrounding the import of duty-free goods that became unusable due to the company's amalgamation. The judgment emphasized the importance of evidence and legal precedent in determining the liability of the importer in such cases to ensure a fair and just outcome.