2020 (2) TMI 481 - AT - Customs

Import of Beta Napthol under DEEC and Target Plus Scheme - Benefit of N/N. 93/2004-Customs dated 10.09.2004 and N/N. 32/2005-Customs dated 08.04.2005 - Sale of imported goods or not - allegation of the department is that since the appellant have transferred the goods imported under DEEC and Target Plus Scheme to their job-worker, they have contravened the condition of the Notifications - HELD THAT - The job worker has considered the total value including the value of Beta Napthol but since the Beta Napthol was given by the appellant to the job worker free of cost the value of the said Beta Napthol has been reduced from the total value and their final sale value does not include the value of Beta Napthol, therefore even as per the invoice of the job worker there is no sale of Beta Napthol to the appellant. It is obvious that when the appellant have not sold the Beta Napthol to the job worker there is no transfer of right in the property i.e. Beta Napthol from the appellant to the job worker. Consequently question of sale by the job worker to the appellant does not arise. Since, the transaction of the Beta Napthol by the appellant to the job worker does not fall under the term either sale or transferred in other manner . Therefore, there is no contravention of the condition attached to the N/N. 93/2004-Customs dated 10.09.2004 and N/N. 32/2005-Customs dated 08.04.2005. In an identical case of TETRA PAK (I) LTD. VERSUS COMMISSIONER OF CUSTOMS, NHAVA SHEVA 2005 (4) TMI 182 - CESTAT, MUMBAI dealing with the duty free imported goods under DEEC scheme the Tribunal-Mumbai Clearly held that advance license holder cannot be prohibited from out sourcing goods imported duty free for manufacturing to other persons even in the said case the goods imported duty free under DEEC scheme was sold to job worker on cost basis and returned as sale by Job Worker after processing/conversion of cost of other material and labour basis. The tribunal held that this was not violative of the prohibition of selling/transferring such goods - The present case is on a better footing as admittedly the appellant has neither sold Beta Napthol to the job worker nor purchased back the same from job worker. The appellant have not contravened the condition of Notification nos. 93/2004-Cus 32-2005-Cus. Hence, the demand of duty, interest and consequential penalties are not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the transaction of supplying imported Beta Napthol to the job worker and receiving back Gamma Acid after job work amounts to the sale of imported goods or falls under the job-work category, determining the entitlement of the appellant for exemption under specific Customs Notifications.

Analysis:
The case involved the appellant engaged in manufacturing dye and dye intermediates, holding Central Excise Registration, importing raw materials under DEEC and Target Plus Scheme. The dispute arose as the appellant had sent Beta Napthol for conversion into Gamma Acid to job workers, who returned the processed goods on sales invoices. The department alleged a violation of conditions under specific Customs Notifications due to the transfer of goods to job workers. The appellant contended that the transaction was job work, not a sale, supported by previous judgments and the nature of the transaction.

The Tribunal analyzed the nature of the transaction, emphasizing the supply of Beta Napthol for job work purposes, not for sale. The job worker's invoice, despite mentioning VAT, did not include the value of Beta Napthol, indicating no sale by the appellant. The Tribunal concluded that no transfer of property rights occurred, thus no contravention of Notification conditions. Citing previous endorsements of similar transactions as job work by the Commissioner (Appeals) and the Tribunal, the Tribunal upheld the job work nature of the transaction.

Further, referencing a Supreme Court judgment and a Tribunal decision, the Tribunal emphasized that minor items used by the job worker did not alter the job work nature. The Tribunal distinguished cited judgments to support its finding that the present case, based on job work with no sale or transfer of goods, differed from the cases cited by the Revenue. Ultimately, the Tribunal held that the appellant did not breach the Notification conditions, leading to the setting aside of the impugned order and allowing the appeals with appropriate relief.

In conclusion, the Tribunal's detailed analysis focused on the transaction's nature, distinguishing between job work and sale, supported by legal precedents and specific Customs Notifications. The decision highlighted the absence of a sale or transfer of goods, leading to the appellant's entitlement to exemption under the relevant Notifications.