2018 (8) TMI 709 - AT - Customs

Benefit of Exemption N/N. 21/2002-Cus dated 01.03.2002 - import of 10,800 boxes declared as plastic boxes - denial of benefit on the ground that the appellants have not fulfilled the conditions of the Notification and goods imported by them are not covered under the Notification - Whether the imported product is covered under the Notification? - Held that - Notification does not permit the import of tag pins or loops . Any Notification giving the benefit of exemption is required to be construed strictly and the person invoking the exemption provision to relieve him of the tax imposed establish that he has exempted by the said Notification as held by the Hon ble Supreme Court in the case of M/s. Perfect Machine Tools Vs. CC 1997 (10) TMI 66 - SUPREME COURT OF INDIA - the appellants did not import tags . Items imported by them tag loops or pins are not eligible for exemption under Sl. No. 140 of the N/N. 21/2002-Cus Whether the importers are qualified to be bonafide exporters? - Held that - The show-cause notice or the Order-in-Original or Order-in-Appeal have not examined the claim of the appellants that they are bona fide exporters in a proper perspective. No finding has been given as to whether the appellants have not exported at all even in the past contrary to their claims - however, as the goods in question are not eligible for exemption we do not intend to go further into the aspect whether the appellants were bona fide exporters or otherwise. It is a settled law that there is no estoppel in matters relate to taxes. Only due to the reason that such imports were permitted in previous years, the same cannot be continued once the Department has come to know about the wrong practice. Appeal allowed in part.

Summary

Issues Involved:
1. Eligibility for exemption under Notification 21/2002-Cus.
2. Classification of imported goods as 'tags' or 'tag pins'.
3. Status of importers as bona fide exporters.
4. Appropriateness of fines and penalties imposed.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Notification 21/2002-Cus:
The appellants, M/s. Continental Exporters and M/s. Sapna Garments, claimed the benefit of Notification 21/2002-Cus, which exempts certain goods imported by bona fide exporters. The Department denied this benefit, arguing that the appellants did not fulfill the conditions of the Notification and that the imported goods were not covered under it. The Tribunal noted that the Notification should be interpreted strictly as per its wording, and the burden of proving eligibility for exemption lies with the appellants. The Tribunal found that the appellants did not satisfactorily prove their eligibility for the exemption.

2. Classification of Imported Goods as 'Tags' or 'Tag Pins':
The core issue was whether the imported goods were 'tags' as specified in the Notification or 'tag pins,' which are not covered. The Tribunal examined various definitions and concluded that 'tags' are labels or cards providing information, whereas 'tag pins' are devices used to attach tags to products. The Tribunal determined that the imported items were 'tag pins' or 'tag loops,' not 'tags,' and thus were not eligible for the exemption under Sl. No. 140 of the Notification.

3. Status of Importers as Bona Fide Exporters:
The Tribunal considered whether the appellants were bona fide exporters eligible for duty-free imports. The Order-in-Original and Order-in-Appeal concluded that the appellants were not bona fide exporters, as they sold the imported goods to M/s. Impex International on a high sea sales basis without following proper procedures. The appellants provided certificates from the Apparel Export Promotion Council (AEPC) but did not furnish details of past exports. The Tribunal found that the appellants did not demonstrate bona fide exporter status satisfactorily. However, since the goods were not eligible for exemption, the Tribunal did not delve further into this issue.

4. Appropriateness of Fines and Penalties Imposed:
The Tribunal reviewed the fines and penalties imposed by the lower authorities. It found that fines in lieu of confiscation were not appropriate since the goods were not available for confiscation. The fine of ?30,00,000/- on M/s. Continental Exporters was set aside, and the fine on M/s. Sapna Garments was reduced from ?7,50,000/- to ?1,00,000/-. The penalties on various parties were also deemed excessive and were reduced as follows:
- M/s. Impex International: from ?8,00,000/- to ?1,00,000/-.
- M/s. Sapna Garments: from ?1,50,000/- to ?1,00,000/-.
- M/s. Continental Exporters: from ?6,00,000/- to ?2,00,000/-.
- Shri Kanthilal Jain: from ?5,00,000/- to ?3,00,000/-.

Conclusion:
The Tribunal rejected the appeals concerning the confirmation of duties but partially allowed them by reducing the fines and penalties as discussed. The decision emphasized strict interpretation of exemption notifications and the necessity for importers to substantiate their claims for such benefits.