2018 (2) TMI 415 - AT - Customs

Debonding order - suppression of facts - validity of SCN - Held that - the SCN is bad and barred by limitation. There is no allegation of any cotumacious conduct, suppression or mis-statement on the part of the appellant. It is apparent that the SCN have been issued by way of change of opinion and accordingly, the said notice is bad and not maintainable - also, it is evident from the facts that on the record that the consent of authority, namely the Development Authority have not been obtained and as such the show cause notice is bad on this score also - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether Customs Authority can demand differential Customs Duty after de-bonding due to alleged increase in imports value.
2. Validity of show cause notice for demanding Customs Duty on unachieved Net Foreign Exchange (NFE) earnings.
3. Barred by limitation and lack of evidence of suppression or misstatement.
4. Requirement of Development Commissioner's recommendation before confirming duty demands.

Analysis:

1. The primary issue in this appeal is whether the Customs Authority can demand differential Customs Duty after de-bonding based on an alleged increase in the value of imports. The appellant was allowed to de-bond by the Development Commissioner based on satisfying Net Foreign Exchange (NFE) earnings, but Customs later claimed a shortfall in NFE and demanded duty. The Tribunal examined the facts and held that the show cause notice was not maintainable as it seemed to be issued based on a change of opinion without any evidence of suppression or misstatement by the appellant.

2. The second issue revolves around the validity of the show cause notice demanding Customs Duty on the unachieved portion of NFE. The Customs Authority alleged that the appellant failed to achieve the required NFE, leading to a demand for duty. However, the Tribunal found that the notice was bad on the grounds of lacking the Development Commissioner's recommendation, as required by relevant Circulars. The Tribunal cited a previous judgment to support the necessity of obtaining the Development Commissioner's consent before confirming duty demands in such cases.

3. Furthermore, the Tribunal considered the issue of limitation and absence of any evidence of cotumacious conduct, suppression, or misstatement by the appellant. The Tribunal noted that the show cause notice appeared to be issued without proper grounds and was deemed bad on this basis as well. The lack of any such allegations against the appellant strengthened the Tribunal's decision to set aside the impugned order.

4. Lastly, the Tribunal emphasized the requirement of obtaining the Development Commissioner's recommendation before confirming duty demands, as highlighted in relevant Circulars and supported by legal precedents. The failure to secure the Development Commissioner's consent in this case rendered the show cause notice invalid, leading to the allowance of the appeal and granting the appellant consequential benefits as per the law.

In conclusion, the Tribunal's detailed analysis of the issues raised in the appeal resulted in setting aside the impugned order and granting relief to the appellant based on the lack of proper grounds for the demand of Customs Duty and the failure to comply with the necessary procedural requirements.