2018 (9) TMI 1291 - HC - Customs

Recovery of Customs Duty - Rule 8 of Customs (IGCRDMEG) Rules, 1996 - The said Rule 8 was not only referred and discussed by both the parties below in detail, but the learned Tribunal without going into the said Rule 8 and effect thereof, just allowed the appeal of the Assessee, finding that there was no allegation against the assessee that the import of the batteries was diverted and that they were not properly accounted for. Held that - There is neither any finding of the Tribunal in this regard as to how the batteries in question were used in the manufacture of handsets or not, nor any discussion on the applicability of Rule 8 quoted above is made, which goes to the root of the matter - the impugned order of the learned Tribunal cannot be sustained and the matter deserves to be remanded back to the learned Tribunal for deciding the appeal again on merits, in accordance with law. Appeal allowed by way of remand.

Summary

Issues:
- Jurisdiction of assessing authority to pass orders under Customs Rules
- Entitlement to concessional rate of customs duty for imported batteries
- Allegation of batteries not being used in the manufacture of mobile handsets
- Issue of batteries being consigned to a different address
- Misinterpretation of Customs Rules by the Tribunal

Jurisdiction of Assessing Authority:
The assessing authority held that it had the jurisdiction to pass orders under the Customs (Import of Goods under Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. The authority found that the assessee was not entitled to the concessional rate of customs duty as the batteries imported were not used for the 'manufacture' of mobile handsets, leading to a demand for the difference in duty from the importer.

Entitlement to Concessional Rate of Customs Duty:
The Tribunal allowed the appeal of the assessee, setting aside the order of the Commissioner. It was found that the batteries imported were used in the manufacture of mobile handsets, meeting the conditions of the relevant notification. The Tribunal emphasized that the jurisdictional Central Excise officers did not have the authority to determine whether batteries could be considered part of mobile handsets, and the importer had used the batteries for their intended purpose.

Allegation of Batteries Not Used in Manufacture:
The Commissioner and the assessing authority alleged that the batteries were not used for the manufacture of mobile handsets, citing discrepancies in the address of receipt. However, the assessee rectified the address error, and it was established that the batteries were indeed used in the factory of the importer. The Tribunal found no case against the assessee, leading to the appeal being allowed.

Issue of Batteries Consigned to Different Address:
The assessing authority raised concerns about the batteries being received at an address different from that indicated in the Bill of Entry. The assessee clarified that this was due to a clerical error, which was corrected with the submission of an amended Bill of Entry as evidence.

Misinterpretation of Customs Rules by the Tribunal:
The Tribunal's decision was challenged by the Revenue due to a misinterpretation of the Customs Rules. The Tribunal failed to consider Rule 8 of the Customs (IGCRDMEG) Rules, 1996, which stipulated that imported goods must be used in the 'manufacture' of excisable goods to qualify for concessional rate of customs duty. The matter was remanded back to the Tribunal for a fresh decision based on the merits and in accordance with the law.

In conclusion, the High Court allowed the appeal filed by the Revenue, setting aside the Tribunal's order and remanding the matter for a reevaluation. The Court emphasized the importance of considering the Customs Rules in determining the entitlement to concessional rate of customs duty for imported goods used in the manufacture of excisable goods.