2018 (6) TMI 1166 - AT - Customs

Double benefit of DFIA Scheme availed - N/N. 40/2006-Cus denied - certificate regarding use of goods not produced - shortage of 997.340 MT of coal in the factory - The only defense of the appellant is that though there is shortage of being a small quantity which is due to transit loss the exemption in respect of such shortage could not be denied - Held that - The Notification prescribes various condition unlike in the Notification 13/1997-Cus. As per the conditions, the importer is duty bound to execute a bond binding himself to use the imported materials in his factory and not only that, he has to submit a Certificate of the jurisdictional Excise Officer regarding enduse of the goods - Since the appellant could not use quantity of 997.340 MTs, the Jurisdictional Officer also did not issue enduse Certificate. All these conditions are mandatory in case of N/N. 40/2006-Cus. In failure to comply with this substantive condition, the appellant is not eligible for exemption Notification. Reliance placed in the case of BPL Display Devices Ltd. 1991 (8) TMI 83 - SUPREME COURT OF INDIA , where it was held that the exemption cannot be denied on the ground that the goods imported is notified for use and there is no dispute that in the present case also the goods imported were notified for use in the manufacture - Held that - The Hon ble Supreme Court held that when substantive conditions prescribed for extending the benefit of exemption notification, should be scrupulously followed and in failure to follow the condition, the benefit of exemption cannot be allowed. Therefore, it is clear that all the conditions prescribed in the Notification 40/2006-Cus are not identical in the case of N/N. 13/1997-Cus. - Therefore, the case of Hon ble Supreme Court in the case of BPL Display Devices stands distinguished. There is a clear violation of the condition of the N/N. 40/2006-Cus, therefore, the appellant is not entitled for the benefit of said Notification - demand confirmed in respect of the short receipt quantity is sustainable - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Eligibility for duty exemption under Notification 40/2006-Cus.
2. Shortage of imported goods and its implications.
3. Applicability of previous judgments and notifications.
4. Compliance with conditions stipulated in Notification 40/2006-Cus.

Issue-wise Detailed Analysis:

1. Eligibility for Duty Exemption under Notification 40/2006-Cus:
The appellant imported 49874.000 MTs of 'Steam (Non-Coking) Coal' under the Duty Free Import Authorization (DFIA) Scheme. Out of this, 46933.950 MTs were cleared availing duty exemption under Notification 40/2006-Cus. The central issue was whether the appellant was eligible for this exemption, given that they availed cenvat credit facilities, thereby violating condition 5 of the Notification. The adjudicating authority confirmed a duty liability of ?2,63,834/- along with interest under Sections 28(2) and 28AB of the Customs Act, 1962. A penalty equal to the duty amount was also imposed under Section 114A of the Customs Act. The Commissioner (Appeals) upheld the demand but set aside the penalty.

2. Shortage of Imported Goods and Its Implications:
The appellant argued that the shortage of 997.340 MTs out of the total imported quantity was due to transit loss and should be permissible. They cited previous judgments, including the Supreme Court's ruling in BPL Display Devices Ltd., which held that exemption cannot be denied on the ground that the goods were notified 'for use' and not actually used. However, the Tribunal found that the shortage was substantial (more than 1.5%) and not negligible, thus not covered by the cited judgments.

3. Applicability of Previous Judgments and Notifications:
The appellant cited various judgments to support their case, including those in Jhoonjhunwala Vanaspati Ltd. and Suraj Industries Ltd. However, the Tribunal distinguished these cases, noting that the conditions in Notification 40/2006-Cus were more stringent compared to Notification 13/1997-Cus. The Tribunal emphasized that the conditions in Notification 40/2006-Cus required strict compliance, including the submission of an end-use certificate from the jurisdictional Excise Officer, which the appellant failed to provide.

4. Compliance with Conditions Stipulated in Notification 40/2006-Cus:
The Tribunal highlighted that the conditions under Notification 40/2006-Cus were mandatory and included the requirement to execute a bond and submit an end-use certificate. The appellant's failure to comply with these substantive conditions rendered them ineligible for the exemption. The Tribunal referred to the Supreme Court's ruling in Mangalore Chemicals & Fertilizers Ltd., which held that substantive conditions for exemption must be scrupulously followed.

Conclusion:
The Tribunal concluded that the appellant violated the conditions of Notification 40/2006-Cus and was not entitled to the duty exemption. The demand for the short receipt quantity was upheld, and the appeals were dismissed.

Pronouncement:
The judgment was pronounced in the open court on 22.06.2018.