2018 (3) TMI 360 - AT - Customs

Non-fulfilment of export obligation - the appellant appeared to have availed the double benefit under N/N. 203/92-CUS dt. 19.05.1992 and violated para V(a) of the said notification - Held that - the object of the bond is to ensure compliance with post-import requirements to thwart any attempt to divert imported goods and therefore hold that the conditions are substantive in nature. In the circumstances, compliance with these conditions is mandatory to meet the objects and purposes of the notification. As to the question of levy of additional duty of customs (CVD) on the imported HMS, we do not find any merit in the contention of the appellant that CVD should not be demanded from them because they would be eligible to avail the Modvat credit from CVD. If that view is accepted, then no importer-manufacturer would ever be required to pay CVD on the ground that Cenvat Credit of the same would be availed by them at the next stage. Extended period of limitation - Held that - in the present case, the department has rightly alleged that the appellant had withheld the information about availment of Modvat credit at the time of import of consignments at CFS - extended period rightly invoked. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Double benefit availed under Notification No.203/92-CUS and failure to fulfill export obligation.
2. Confiscation and penalty imposed under the Customs Act.
3. Applicability of Notification No.83/90-Cus for concessional duty.
4. Procedural conditions and their impact on substantive benefit.
5. Levy of additional duty of customs (CVD).
6. Invocation of the extended period of limitation.
7. Alleged misdeclaration and suppression of facts.

Detailed Analysis:

1. Double Benefit and Export Obligation:
The appellant imported HMS scrap under Value Based Advance Licence and availed customs duty exemption under Notification No.46/93-Cus and additional duty exemption under Notification No.44/93-CE. However, it was found that the appellant availed double benefit under Notification No.203/92-CUS and failed to fulfill the export obligation within the specified period. Consequently, a show cause notice was issued, and the Commissioner of Customs ordered the payment of basic customs duty, additional duty, and imposed a fine and personal penalty.

2. Confiscation and Penalty:
The Commissioner ordered the payment of basic customs duty amounting to ?12,08,520 and additional duty of ?3,57,445. The imported scrap was ordered to be confiscated under Section 111(d) of the Customs Act, and a fine of ?3,00,000 was imposed in lieu of confiscation. A personal penalty of ?2,00,000 was also imposed under Section 112(a) of the Customs Act.

3. Applicability of Notification No.83/90-Cus:
The appellant contended that the duty should be payable under Notification No.83/90-Cus, which grants concessional duty for specified iron and steel melting scrap used in electric arc or induction furnace. The Tribunal remanded the case to the Commissioner to consider this plea. The Commissioner found that the appellant did not fulfill the conditions of Notification No.83/90-Cus, such as timely production of an end-use certificate and genuine reasons for delay in consumption of the imported scrap.

4. Procedural Conditions and Substantive Benefit:
The appellant argued that procedural conditions should not deny substantive benefits. The Commissioner and Tribunal, however, held that the conditions under Notification No.83/90-Cus were substantive and mandatory. The Supreme Court's judgment in CCE, New Delhi Vs. Hari Chand Shri Gopal was cited, emphasizing that procedural requirements are essential to prevent misuse and diversion of imported goods.

5. Levy of Additional Duty of Customs (CVD):
The appellant argued against the levy of CVD, claiming eligibility for Modvat credit. The Tribunal rejected this argument, stating that CVD is required to be paid before clearance and cannot be waived on grounds of revenue neutrality. The cited cases involving central excise duty were found not comparable to the present case of imported goods.

6. Invocation of Extended Period of Limitation:
The appellant contended that the extended period of limitation was not invokable due to no suppression of facts. The Tribunal found that the appellant withheld information about availment of Modvat credit at the time of import, justifying the invocation of the extended period.

7. Alleged Misdeclaration and Suppression of Facts:
The appellant argued that there was no misdeclaration. The Tribunal found that the appellant knowingly opted for a notification with specific end-use conditions and failed to comply, constituting misdeclaration and suppression of facts.

Conclusion:
The Tribunal upheld the order of the Commissioner, confirming the demand of customs duty, additional duty, and rejecting the appellant's arguments regarding procedural conditions, CVD, and limitation. The appeal was dismissed.