2018 (6) TMI 263 - AT - Customs

Import of machines - Actual user conditions - Post Import Violation of the condition - Exemption to contract for construction of road - Benefit of N/N. 21/2002 Cus dt. 01.03.2002 - Power Paver Finisher SF-3000 Slip Form - the Appellant has used the machine only for 12 kms of road contract awarded by the NHAI and thereafter it was not used any of the projects as enumerated in the condition of the notification - Held that - The imported machine was used for intended purpose of road only once for a small contract and after that period for construction of platform at Airport on contract awarded by AAI. Such contract of platform was neither awarded by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory or the machine was used for 5 years for the above contracts. The issue is squarely covered by the Tribunal judgments in case of Patel Engineering Ltd. 2013 (12) TMI 1146 - CESTAT MUMBAI , where it was held that The department has rightly issued show-cause notice to the appellant for violation of condition of their undertaking and thereby for denying the exemption under N/N. 21/2002. Benefit rightly denied - appeal dismissed - decided against appellant.

Summary

Issues:
Claim for exemption from custom duty under Notification No. 21/2002 - Cus dt. 01.03.2002 for imported machine; Seizure and provisional release of machine due to non-compliance with conditions of exemption; Show cause notice proposing denial of exemption, confiscation of machine, demand of customs duty, penalty imposition; Appeal against the proposed actions.

Analysis:

1. Claim for Exemption and Non-Compliance: The Appellant imported a 'Power Paver Finisher SF – 3000 – Slip Form' claiming exemption from custom duty under Notification No. 21/2002. However, it was found that the machine was initially used for a road construction project but later diverted for a different project not covered by the exemption notification. This led to the seizure of the machine and provisional release after payment of duty. The show cause notice proposed denial of exemption, confiscation of the machine, demand of customs duty, and penalty imposition, including on the director.

2. Appellant's Arguments: The Appellant argued that they were eligible for exemption at the time of import as the machine was used for a road construction project awarded by the National Highway Authority of India. They contended that the subsequent use for a platform at an airport was akin to a road for taxiing aircraft and was a legitimate extension of their work. They also challenged the sustainability of the demand under Section 28 of the Customs Act, citing post-import violation of conditions.

3. Revenue's Submission: The Revenue argued that the impugned order was correctly passed as the conditions of the exemption notification were not adhered to, citing precedents to support their position.

4. Tribunal's Findings: The Tribunal examined the facts and conditions of the notification. It was observed that the imported machine was used for a road construction project for a limited period before being diverted to a project not covered by the exemption conditions. The Tribunal noted that the machine was not used for the specified projects for the required duration as per the notification's conditions.

5. Precedents and Legal Interpretation: The Tribunal referenced previous judgments to support its decision, emphasizing the importance of fulfilling the conditions specified in the exemption notification. The Tribunal upheld the Revenue's arguments and found the Appellant's contentions to be unsubstantiated in light of the legal framework and past rulings.

6. Final Decision: The Tribunal upheld the impugned order, dismissing the appeals filed by both the Appellants and the Revenue. The demands confirmed in the order were upheld, and the penalties imposed were deemed appropriate based on the circumstances of the case.

In conclusion, the Tribunal's decision emphasized the significance of complying with the conditions of exemption notifications and upheld the denial of exemption, confiscation of the machine, and duty payment as proposed in the show cause notice. The judgment highlighted the need for strict adherence to import conditions and the consequences of non-compliance with such requirements.