2020 (4) TMI 387 - AT - Customs

Export of job-worked goods to the overseas supplier, who had supplied the imported goods to the job worker in India - benefit of N/N. 32/97-Cus dated 01.04.1997 - in the present case, since, no job work activities were undertaken on the imported goods, the Department had entertained the belief that the conditions of Notification dated 01.04.1997 had not been fulfilled - HELD THAT - It is an admitted fact on record that the subject goods were imported by the appellant for the purpose of carrying the job work activities and for re-exportation of the job worked goods, pursuant to the contract entered into between it and the overseas supplier. However, due to certain unavoidable circumstances, the contract was cancelled by the overseas supplier, resulting in the return of the goods to the supplier - In view of the fact that at the time of issuance of show-cause notice, the subject goods were not available in India and that at the time of importation of the subject goods, the conditions of the Notification were duly complied with. The adjudged demands confirmed on the appellant, cannot be sustained inasmuch as the duty demand along interest is confined to irregular importation of goods, which has not been specifically alleged by the department - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Import of goods under duty exemption notification, compliance with conditions of notification, cancellation of job order affecting re-exportation, initiation of show-cause proceedings, sustenance of adjudged demands.

Analysis:

1. Import of Goods under Duty Exemption Notification: The appellant imported a consignment of "lace" claiming duty exemption under Notification No.32/97-Cus dated 01.04.1997. The conditions of the notification required the imported goods to undergo job work in India and be exported to the overseas supplier. The appellant imported the goods for job work activities as per the contract with the overseas supplier.

2. Compliance with Conditions of Notification: Due to the cancellation of the job order by the overseas supplier, the appellant re-exported the imported goods in as-is condition. The Department initiated show-cause proceedings, alleging non-compliance with the notification conditions. The original order confirmed the duty demand, which was upheld by the Ld. Commissioner (Appeals) in the impugned order dated 18.09.2008.

3. Cancellation of Job Order Affecting Re-exportation: The appellant argued that the cancellation of the job order by the overseas supplier was unforeseen, leading to the re-exportation of goods before the show-cause notice was issued. The appellant contended that since the goods were not available in India at the time of the notice, the adjudged demands were unjustified.

4. Initiation of Show-Cause Proceedings: The show-cause proceedings were not initiated before the re-exportation of goods by the appellant. The Tribunal noted that at the time of importation, the conditions of the notification were complied with. The Tribunal found that the duty demand with interest was based on irregular importation, which was not specifically alleged by the Department.

5. Sustenance of Adjudged Demands: After hearing both parties and examining the records, the Tribunal concluded that the demands confirmed on the appellant could not be sustained. The Tribunal held that the duty demand and interest were not justified as the goods were not available in India at the time of the show-cause notice issuance. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.