2018 (7) TMI 551 - AT - Customs

Benefit of Concessional rate of duty - N/N. 51/96-Customs dated 23.07.1996 - Essentiality Certificate - denial on the ground that the computers were being used by students and faculty members for preparing articles/projects which did not appear to be research work Held that - In the instant case, the Essentiality Certificate has been issued and the importer is affiliated to Bangalore University and Bangalore University is registered with the DSIR. Therefore, the importer is eligible to import the said items under concessional rate as the conditions of the Notification have been satisfied. No fraud was alleged. In fact, it is seen that no investigation is made and no statements are recorded. The Essentiality Certificate was not withdrawn by the authority who has issued it. Under these circumstances, demand notice for an extended period only on strength of a letter written by the university to the A.G., Audit party is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Import of computers under concessional rate of duty, demand of differential duty, validity of Essentiality Certificate, withdrawal of certificate, compliance with prescribed conditions, eligibility for exemption, justification of demand, legal import of goods.

Analysis:
The case involved the import of computers by the appellants under a concessional rate of duty based on an Essentiality Certificate issued by Bangalore University. The Department issued a show cause notice demanding a differential duty alleging that the computers were not being used for research purposes as claimed. The Commissioner confirmed the demand, leading to the appeal. The appellants argued that the Essentiality Certificate was valid and not withdrawn, citing precedents where withdrawal of such certificates did not justify demands in the absence of fraud or collusion.

The appellants contended that the certificate remained valid as it was not withdrawn by the university, despite a clarification letter regarding the nature of courses offered. They relied on previous cases to support their argument. They further argued that confiscation of goods and penalty imposition were unjustified as the goods were imported against an allegedly invalid certificate, citing a relevant CESTAT decision.

The Departmental Representative supported the Commissioner's findings, emphasizing that the courses offered did not involve research, making the imports illegal. They highlighted the discrepancy between the courses and the eligibility criteria for the concessional rate. The Department's position was that the demand and confirmation were justified based on the lack of research in the college curriculum.

After hearing both sides and examining the records, the Tribunal found that the appellants were eligible for the concessional rate as the Essentiality Certificate was issued by Bangalore University, which was registered with the DSIR. The Tribunal noted that no fraud was alleged, no investigation was conducted, and the certificate was not withdrawn. Citing a circular and a precedent, the Tribunal concluded that the demand notice based solely on a letter from the university was not sustainable. The Tribunal held that since the certificate was not withdrawn, negated, or proven to be fraudulent, the imports were legal and valid, allowing the appeal.

In conclusion, the Tribunal allowed the appeal, emphasizing the validity of the Essentiality Certificate and the lack of justification for the demand raised by the Department. The decision highlighted the importance of compliance with prescribed conditions and the legal import of goods based on valid certificates, ultimately ruling in favor of the appellants.