2019 (6) TMI 506 - AT - Customs

Valuation of export goods - deemed export - undervalued clearances of PTA made to deemed export category buyers - whether the transfer of advance licenses are to be considered as a consideration for sale of the goods by the appellant to the buyers? - HELD THAT - The transferred advance license, can be beneficial for the appellant for duty free inputs of the raw materials required for manufacture in the appellant s factory. Hence, certain benefit accrued to the appellant through the receipt of transferred advance licenses. Time bar - HELD THAT - In the Haldia Petrochemicals 2018 (12) TMI 1031 - CESTAT KOLKATA case, the Tribunal held that the appellant will be entitled to the benefit of time bar. Revenue neutrality - HELD THAT - The appellant will not be entitled to the benefit of revenue neutrality. The demand for differential duty on merit upheld - the demand for duty beyond the normal time limit set aside - penalties set aside - Appeal allowed in part.

Summary

Issues: Undervaluation of clearances, differential duty demand, deemed export transactions, bonafide belief, revenue neutrality, consideration for sale, time bar, suppression of facts, revenue neutrality benefit.

Analysis:
1. Undervaluation of Clearances and Differential Duty Demand: The appellant, engaged in manufacturing Purified Terephthalic Acid (PTA), was involved in supplying PTA to deemed export category buyers at a transaction value lower than that for domestic supplies. The Department alleged undervaluation and proposed a demand for differential duty for the period April 2000 to November 2006. Multiple show-cause notices were issued, and orders were challenged through appeals.

2. Bonafide Belief and Revenue Neutrality: The appellant argued that they were entitled to the benefit of bonafide belief based on previous judgments. They cited a case where the demand within the normal time limit was held not payable due to revenue neutrality. However, the Revenue opposed this claim, stating that the appellant had suppressed facts and should be liable for the entire period's demand.

3. Consideration for Sale and Time Bar: The crux of the dispute revolved around whether the transfer of advance licenses constituted consideration for the sale of goods. The Hon'ble Supreme Court's decision in a related case favored the Revenue, emphasizing that the transferred licenses represented additional consideration. The Tribunal also held that the appellant was entitled to a bonafide belief and restricted the demand to the normal time limit.

4. Suppression of Facts and Revenue Neutrality Benefit: The Revenue contended that the appellant had suppressed facts and should be held liable for the entire period's demand. The Tribunal analyzed previous judgments and distinguished cases where the plea of revenue neutrality was applicable. Ultimately, the Tribunal upheld the demand for differential duty on merit but set aside the demand beyond the normal time limit, along with penalties.

5. Conclusion: The Tribunal upheld the differential duty demand on merit but restricted it to the normal time limit, setting aside penalties. The appeals were disposed of accordingly, considering the arguments presented by both sides and the legal precedents cited.