2020 (1) TMI 307 - AT - Central Excise

Cancellation of bond - Misuse of Benefit of concessional rate of duty - import of Crude Palm Stearin for Manufacture of Excisable Goods - N/N. 21/2002-Cus dated 01.03.2002 - allegation is that appellant had misused the facility granted them to them in terms of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - whether Assistant Commissioner was correct in canceling the bond/undertaking executed by the appellants in terms of Rule 4 of the above Rules? HELD THAT - The order of cancelation of the bond, would imply what do revenue authorities intend to discharge the bond in respect of the goods imported by the appellant prior to its cancellation. The bond is for end usage of the goods. In any case the imports are not made against the bond, but are in terms of the application made by the importer and countersigned by the jurisdictional Assistant Commissioner with whom the bond for end usage has been executed - Assistant Commissioner could have at any time refused to countersign the application if he was having doubt in respect imported goods or their end usage in manufacture of the finished goods. Can on the strength of this bond appellant make an application to the Assistant Commissioner Central Excise for counter signature for future imports? - HELD THAT - On the date today any order passed by us in this appeal cannot be of any relevance for future imports, nor for the past imports that have been made by the appellants. If for contravention of end use conditions in respect of the goods imported on the basis of the certificate countersigned by the Assistant Commissioner Central Excise are to be initiated then they will have to be in terms of the Rule 8 of the above referred rules, or any proceedings in respect of the short payment of duty at the time of clearance of goods are to be initiated then the same can be only in terms o Section 28 of the Customs Act, 1962. Both the proceedings have to be independent of the bond executed - Hence on the date the entire proceedings in this appeal have become an exercise in futility both for the appellant and revenue. Appeal dismissed as infructuous.

Summary

Issues Involved:
1. Jurisdiction of the Assistant Commissioner in canceling the bond.
2. Admissibility of exemption under a specific entry of the exemption notification.
3. Alleged misuse of the facility granted under the Customs Rules.
4. End-use violation of the imported goods.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assistant Commissioner in Canceling the Bond:
The appellants argued that the Assistant Commissioner of Central Excise, having jurisdiction over the factory of manufacture, lacked the jurisdiction to determine the admissibility of the exemption notification. They contended that the issue of admissibility of exemption falls within the jurisdiction of the Customs Authority at the port of import. The tribunal noted that the excise authorities have jurisdiction to ensure the end-use of the goods imported under concessional rates as per the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. However, the tribunal found that the cancellation of the bond by the Assistant Commissioner was beyond his jurisdiction as it was based on the claim of exemption under a wrong entry, which is not within the purview of excise authorities.

2. Admissibility of Exemption under a Specific Entry of the Exemption Notification:
The appellants claimed the benefit of exemption under entry 30(A) of the Notification No 21/2002-Cus, which they argued was more specific as it expressly mentions Crude Palm Stearin. The department, however, contended that the exemption should have been claimed under entry 30(C). The tribunal highlighted that the determination of the correct entry for exemption should be made at the time of import clearance by the customs authorities and not during the bond execution process by the excise authorities. The tribunal also noted that the appellants have the right to choose the applicable entry for exemption, and this choice cannot be denied on the grounds that another entry is available for the same goods.

3. Alleged Misuse of the Facility Granted under the Customs Rules:
The department accused the appellants of misusing the facility granted under the Customs Rules by claiming exemption under the wrong entry. The tribunal observed that the bond executed by the appellants was for ensuring the end-use of the imported goods and not for determining the admissibility of exemption. The Assistant Commissioner could have refused to countersign the application for import if there were doubts about the end-use or the nature of the imported goods. The tribunal found no evidence of misuse of the facility granted under the Customs Rules by the appellants.

4. End-use Violation of the Imported Goods:
The appellants argued that there was no violation of the end-use condition of the Notification No 21/2002-Cus, and hence Rule 8 of the Customs Rules was not attracted. The tribunal noted that the imports were made against the application countersigned by the jurisdictional Assistant Commissioner, who had the authority to ensure the end-use of the goods. The tribunal found that the cancellation of the bond was not related to any end-use violation but rather to the claim of exemption under the wrong entry. Therefore, the tribunal concluded that there was no end-use violation by the appellants.

Conclusion:
The tribunal dismissed the appeal as infructuous, stating that the cancellation of the bond by the Assistant Commissioner was beyond his jurisdiction and that the determination of the admissibility of exemption should be made by the customs authorities at the port of import. The tribunal also noted that the proceedings in this appeal had become an exercise in futility for both the appellants and the revenue, as any order passed would not be relevant for future or past imports. The tribunal emphasized that the appropriate proceedings for determining the admissibility of exemption or for addressing any end-use violations should be conducted independently of the bond executed.