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2009 (1) TMI 267 - AT - Customs100% EOU Export of Imported goods as such - Notification 52/2003-Cus., dated 31-3-2003 violation of conditions of the notification for non use in manufacturing activity held that when the information was available to the department the allegation of suppression of facts can not sustain and extended period of limitation can not be invoked moreover there are various decision in similar circumstances benefit of notification was allowed SCN was not issued under section 28 demand is time barred if there is a doubt, commissioner, in terms of the Board s Circular, ought to have made a reference to the Board before issuing the Show Cause Notice
Issues Involved:
1. Alleged violation of Notification No. 52/2003-Cus., dated 31-3-2003. 2. Definition and interpretation of 'manufacture' under EXIM Policy vs. Central Excise Act. 3. Liability for confiscation under Section 111(o) of the Customs Act. 4. Imposition of redemption fine and penalties. 5. Demand of duty and invocation of extended period under Section 28 of the Customs Act. Detailed Analysis: 1. Alleged Violation of Notification No. 52/2003-Cus., dated 31-3-2003: The appellants, all 100% EOUs, were alleged to have violated Notification No. 52/2003-Cus. by exporting spares and components imported 'as such' without subjecting them to any manufacturing process. The Commissioner demanded full duty on these parts, citing non-fulfillment of post-export conditions of the relevant Customs Notification and held the goods liable for confiscation under Section 111(o) of the Customs Act. 2. Definition and Interpretation of 'Manufacture' Under EXIM Policy vs. Central Excise Act: The appellants argued that their activities, including testing, labelling, re-labelling, packing, and re-packing, constituted 'manufacture' under para 9.37 of the Foreign Trade Policy. They cited several Tribunal decisions and CBEC Circular No. 314/30/97-C.E., dated 6-5-1997, which supported a broader interpretation of 'manufacture' for export purposes. The Tribunal agreed, noting that the EXIM Policy's definition of 'manufacture' is broader than that of the Central Excise Act and includes processes such as testing and re-packing. 3. Liability for Confiscation Under Section 111(o) of the Customs Act: The Tribunal found that the appellants had not engaged in mere trading and that the percentage of items exported 'as such' was minimal. The goods were imported, bonded, tested, re-packed, and re-labelled under proper procedures and with Customs Department knowledge. The Tribunal concluded that there was no violation of Notification No. 52/2003-Cus., and thus, the goods were not liable for confiscation under Section 111(o) of the Customs Act. 4. Imposition of Redemption Fine and Penalties: Given the finding that there was no violation of the Notification and the goods were not liable for confiscation, the Tribunal held that the imposition of redemption fine and penalties was unjustified. The Tribunal set aside the penalties imposed under Section 112(a) of the Customs Act and Rule 25 of the Central Excise Rules. 5. Demand of Duty and Invocation of Extended Period Under Section 28 of the Customs Act: The Tribunal noted that the demand of duty should have been issued under Section 28 of the Customs Act, which requires the invocation of the extended period only under specific conditions. The Tribunal found that the conditions for invoking the extended period were not met, making the demands time-barred. Additionally, the Tribunal emphasized that the issue involved interpretation of the Notification and the definition of 'manufacture' under the EXIM Policy, which should have been referred to the CBEC as per the Board's Circular. Conclusion: The Tribunal set aside the impugned orders, holding that the appellants had not violated Notification No. 52/2003-Cus., the goods were not liable for confiscation, and the imposition of redemption fine and penalties was unjustified. The demands for duty were also found to be time-barred. The appeals were allowed with consequential relief.
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