2018 (12) TMI 32 - AT - Customs

Scope of the exemption - Interpretation of conditions imposed under N/N. 20/99-Cus and in particular Condition No. 75 - demand for customs duty has been raised in view of the fact that the goods were sent to Bangladesh before the completion of the five years period specified in condition no.75 of the Notification ibid - Held that - This condition of the Notification binds the importer to use the imported goods exclusively for the construction of roads and further that such equipments should not be sold or otherwise disposed in any manner for a period of five years. It is not in dispute that the imported goods were not used for the construction of road in India. But the fact that the goods have been sent to Bangladesh has been considered as disposal of the goods prior to completion of the mandatory period of five years. The goods were exported to Bangladesh after completion of the road construction project contract by the appellant with the Ministry of Surface Transport as well as Government of Tamilnadu. More importantly the goods were exported to Bangladesh not by way of sale or by way of transfer in any other manner. The goods title in the goods continued to remain vested with the appellant as is evident from the facts when the goods were reimported the Bills of Entry were filed by the appellant. The appellant has not violated the conditions attached to the N/N. 20/99-Cus ibid. - there is no justification for demand of customs duty on such goods either in terms of N/N. 20/99-Cus or in terms of Notification No.94/96-Cus. - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Notification No.20/99-Cus and Condition No.75 regarding imported equipments for road construction.
Violation of conditions of the Notification due to export of goods before completion of mandatory five-year period.
Applicability of Notification No.94/96-Cus for re-imported goods.

Analysis:

Issue 1: Interpretation of Notification No.20/99-Cus and Condition No.75
The appellant imported Hydraulically Operated Self-Propelled Piling Rig with accessories under Notification No.20/99-Cus for duty-free import for road construction. The condition required exclusive use for road construction and no disposal for five years. The appellant procured contracts for road construction from the Ministry of Surface Transport and Government of Tamilnadu. Customs demanded duty as goods were sent to Bangladesh before the five-year period. The Tribunal noted the goods were not used for Indian road construction but were exported to Bangladesh after fulfilling the contracts. The goods were not sold or disposed of, and the appellant retained title, justifying no violation of the conditions.

Issue 2: Violation of conditions due to early export
The dispute centered on whether exporting the goods to Bangladesh before the completion of the five-year period violated the Notification. The Tribunal found that the goods were exported after fulfilling the Indian contracts and were not sold or disposed of. As the goods were reimported and the same as those exported, the Tribunal held that no violation occurred, and the conditions were not breached. The strict interpretation of the Notification's conditions was emphasized, but the Tribunal ruled in favor of the appellant based on the specific circumstances and adherence to the conditions.

Issue 3: Applicability of Notification No.94/96-Cus for re-imported goods
Notification No.94/96-Cus allowed duty-free re-importation of goods exported under certain conditions. The Tribunal confirmed that the reimported goods were the same as those exported to Bangladesh and, therefore, qualified for duty-free clearance under this notification. The Tribunal found no justification for demanding customs duty on the reimported goods based on the provisions of both Notification No.20/99-Cus and Notification No.94/96-Cus.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential benefits, as the appellant did not violate the conditions of Notification No.20/99-Cus and was eligible for duty-free clearance under Notification No.94/96-Cus for the reimported goods, maintaining a strict yet contextually appropriate interpretation of the legal provisions.