2020 (3) TMI 643 - AT - Customs

Diversion of imported goods - violation of N/N. 21/2002-Cus. - only reason for raising the demand by the Revenue is that the goods so imported under Notification No. 21/2002-Cus. was used in appellant s different unit located at Baddi, Himachal Pradesh - HELD THAT - The appellant have bonafidely applied to the Jurisdictional Officer regarding transfer of goods from their Indrad Unit to their Baddi Unit. And after transfer of goods, the Jurisdictional Officer of Baddi Unit has issued certificate regarding receipt of the goods in the Baddi Unit. Therefore, there is no dispute that the goods were ultimately received by their own Baddi Unit. However, as regard the use of the goods, there is no evidence on record. Therefore, the only for the reason that the goods were transferred to their Baddi Unit, the exemption could not be denied subject to verification that the said transferred goods have been used in the Baddi Unit. The Adjudicating Authority is directed to ascertain the fact of end use of the goods in Baddi Unit. And if it is found that goods were used in the manufacture of final excisable goods, the appellant shall be entitled for the exemption - appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues:
1. Interpretation of Notification No. 21/2002-Cus. and Customs (Import of Goods at Concessional Rate of Duty Manufactured on Excisable Goods) Rules, 1996.
2. Eligibility for exemption under Notification No. 21/2002-Cus. for imported goods transferred to a different manufacturing unit.
3. Requirement of verification of the actual use of transferred goods for exemption.

Analysis:
1. The case involved the appellant importing bulk drug "Levodopa BP" under Notification No. 21/2002-Cus., subject to Customs Rules. The dispute arose when part of the imported goods was transferred to a different manufacturing unit in Baddi, Himachal Pradesh, leading to a demand for Customs duty by the department.

2. The appellant contended that the transferred goods were used in their Baddi Unit for manufacturing excisable goods, supported by a certificate from the Central Excise Range in Baddi. They argued for exemption under Notification No. 21/2002-Cus. without following the Conditional Duty Rules, 1996, citing relevant judgments to support their claim.

3. The Revenue maintained its stance, leading to the Tribunal's analysis. The Tribunal noted the appellant's application for transfer and the certificate confirming the receipt of goods at the Baddi Unit. However, the Tribunal emphasized the need to verify the actual use of the transferred goods in manufacturing excisable goods at the Baddi Unit to determine exemption eligibility.

4. Ultimately, the Tribunal set aside the impugned order, directing the Adjudicating Authority to verify the end use of the goods in the Baddi Unit. If it is confirmed that the transferred goods were indeed used in manufacturing final excisable goods, the appellant would be entitled to the exemption under Notification No. 21/2002-Cus. The appeal was allowed for further consideration based on the Tribunal's observations, emphasizing the importance of verifying the actual use of the transferred goods for exemption eligibility.