2017 (12) TMI 461 - HC - Customs

Refund claim - duty paid under protest - claim of the appellant on the basis of proviso to subsection (1) of Section 20 of the said Act was that the benefit of the proviso will be available and no duty will be payable on reimported goods - It is alleged that in absence of the failure to establish identity at the time of importation, benefit of the proviso could not be made available - Held that - Sub-Section (1) of Section 20 lays down the rule with regard to reimportation of goods produced or manufactured in India which are imported into India after exportation therefrom. Such goods are liable to duty and are subject to such conditions and restrictions, if any, to which goods of the like kind and value not so produced or manufactured are liable or subject, on importation thereof. The proviso is by way of an exception to the general Rule under Sub Section (1) of Section 20. Only if the conditions of the proviso are satisfied, reimport without payment of duty is permissible. The proviso is applicable provided satisfaction is recorded by the Assistant Collector of Customs that the goods are the same which were exported. In fact of the case and even in the reply, the appellant accepted that the goods are not the same, in the sense that what was exported was the Nylon yarn and by adopting a process, the same was converted into Tyre cord. Thus, going by the stand taken by the appellant, this is not a case of slight or minor transformation of the goods. In this case, goods were exported in one form and re-imported in another form. Thus, it cannot be said that the goods imported are the same. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Section 20 of the Customs Act, 1962 regarding reimportation of goods.
2. Determination of whether the goods reimported were the same as the goods exported.
3. Application of the proviso to subsection (1) of Section 20 for duty exemption.
4. Assessment of the transformation undergone by the goods exported and reimported.

Issue 1: Interpretation of Section 20 of the Customs Act, 1962 regarding reimportation of goods:
The judgment delves into the provisions of Subsection (1) of Section 20 of the Customs Act, emphasizing the liability to duty and conditions for reimportation of goods produced or manufactured in India. The proviso to Subsection (1) allows duty exemption if the reimported goods are the same as those exported, subject to the satisfaction of the Assistant Collector of Customs.

Issue 2: Determination of whether the goods reimported were the same as the goods exported:
The case involved the export of defective Rayon Tyre Yarn, part of which was converted into Tyre Cord in Germany. The appellant claimed that the reimported goods were the same, emphasizing the change in form but not in nature. However, the authorities found that the goods exported and reimported were entirely different in form, nature, identity, and usage, leading to the conclusion that they were not the same goods.

Issue 3: Application of the proviso to subsection (1) of Section 20 for duty exemption:
The appellant relied on the proviso to subsection (1) of Section 20 to claim duty exemption for the reimported goods. However, the authorities and the Appellate Tribunal determined that the conditions of the proviso were not met due to the significant transformation of the goods from export to reimport, leading to the rejection of the duty exemption claim.

Issue 4: Assessment of the transformation undergone by the goods exported and reimported:
The judgment analyzed the transformation undergone by the goods, focusing on the conversion of Rayon Tyre Yarn into Tyre Cord in Germany. The authorities concluded that this transformation resulted in the goods being exported in one form and reimported in a different form, indicating a substantial change that precluded the reimported goods from being considered the same as the exported goods.

In conclusion, the High Court upheld the decision of the Appellate Tribunal, dismissing the appeal and emphasizing that the goods exported and reimported were not the same due to the significant transformation undergone during processing, thereby denying the duty exemption claim.