2018 (5) TMI 1479 - AT - Customs

Violation of import conditions - DEEC license - It is detected that the appellant had consumed lesser quantity than the prescribed under the standard norms for manufacture of their export product and as a result the quantity of inputs imported duty free saved in the process - Confiscation - redemption fine - penalties - Held that - Hon ble Bombay High Court in their own case ARKEMA CATALYST INDIA PVT. LTD. VERSUS UNION OF INDIA 2009 (10) TMI 630 - BOMBAY HIGH COURT in identical issue has held that once the percentage is fixed by the notification, mere fact that the one manufacturer may use more inputs and the another manufacturer use less inputs in terms of the norms prescribed is irrelevant as long as conditions of the notification are fulfilled - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Commissioner's order demanding Customs duty, confiscating goods, imposing redemption fine, and penalties.
- Interpretation of DEEC license and Standard Input Output Norms (SION) for import of Aluminium Ingots.
- Dispute over quantity of inputs imported duty-free and saved during manufacturing process.
- Applicability of High Court and Tribunal decisions on Customs Authorities' jurisdiction over license terms.
- Comparison with Commissioner (Appeals) decision in subsequent period and its acceptance by Revenue.

Analysis:
1. The appeal by M/s Arkema Catalyst India Pvt. Ltd. challenges the Commissioner's order demanding Customs duty, confiscating goods, and imposing fines and penalties. The core issue revolves around the discrepancy in the quantity of inputs imported under a DEEC license and the prescribed Standard Input Output Norms (SION) for manufacturing Aluminium Chloride. The dispute arises from the Customs Authorities' claim that the appellant used a lesser quantity of inputs than allowed, leading to duty demands and confiscation threats.

2. The appellant argued citing a Bombay High Court decision and a Delhi High Court case, contending that once a valid license is issued covering the imported goods, Customs Authorities lack the jurisdiction to question the license terms. They emphasized compliance with the license terms and the absence of provisions for accounting for wastage in the import-export process. Additionally, they highlighted a subsequent decision by the Commissioner (Appeals) dropping the demand for a later period, which was accepted by the Revenue without challenge.

3. The Commissioner (Appeals) decision for a subsequent period supported the appellant's position, emphasizing the conditions specified in the notification and the absence of specific allegations of non-compliance by the appellant. The Commissioner's analysis differentiated the case laws relied upon by the department, noting the unique conditions of the import notification in question and concluding that the demand raised lacks sustainability in the absence of any violation of notification conditions.

4. The Tribunal, concurring with the High Court and Commissioner (Appeals) findings, allowed the appeal, highlighting the alignment of the issue with the previous decisions and the absence of evidence supporting the Customs Authorities' claims of non-compliance. The judgment, delivered on 11.05.2018, underscores the importance of adhering to license terms and notification conditions in Customs duty disputes, ultimately ruling in favor of the appellant based on the established legal precedents and factual analysis presented.