2023 (5) TMI 346 - AT - Customs

Entitlement to duty-free imports of parts intended to be used in the manufacture of antenna subject to compliance with the procedure prescribed in Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - shifting / transfer of facility of manufacture - goods had been utilised in the manufacture of antennas cleared on payment of appropriate duties of central excise, or not - HELD THAT - There can be no two opinions that the operating Rules have been framed for ensuring that the imported goods are not diverted and are utilised for the purposes of, and committed undertaking to, manufacture excisable goods on which duty liability is discharged appropriately. Deviation from the prescribed procedure carries with it the assumption of illicit deployment of non-duty paid imported goods. The lower authorities, lacking jurisdiction beyond their designated territories and not in any position to retain oversight implicit in the said Rules, are bound by the necessity of strict observance of the mandate therein which may be overlooked only at the cost of proper tax administration. The appellant, doubtlessly, has been derelict in not taking steps sufficiently in advance for compliance with procedure that would place the utilisation of the goods beyond the pale of suspicion. That the appellant had a not too pleasant relationship with the owner of the erstwhile premises does not appear to be an incorrect surmise; that the appellant had, in fact, moved manufacturing operations to another registered premises is also not in dispute - The appellant, also, is not incorrect in pointing out that there was no particular reason to discountenance the certificate issued by the Chartered Accountant. As noted by the original authority, the substantial difference between the facts in the present dispute and that in JCT Electronics Ltd 2010 (8) TMI 598 - PUNJAB HARYANA HIGH COURT is the approval of the jurisdictional authorities to the shift of manufacturing facility and the decision of the Tribunal, in re FDC Ltd, therefore, placed emphasis on the larger issue of compliance with the intention of law even if, in the process, procedural requirements may not have been faithfully followed. That the appellant had manufactured goods with the imported material and discharged appropriate duties of central excise thereon is not in dispute - There is, no doubt, about jurisdictional barriers that weighed with the lower authorities and understandably so. Matter remanded back to the original authority for a fresh decision after due ascertainment in accordance with the directions and, in acknowledgement of the pendency of this dispute for an overly long time, a time limit of six months is set from the date of receipt of this order for completion of the adjudication process - appeal allowed by way of remand.

Summary

Issues involved:
The justifiability of initiation of proceedings in the face of substantive compliance of condition in notification no. 25/2005-Cus dated 1st March 2005 availed for import of 'parts' to be used in manufacture of 'antenna' at 'nil' rate of duty.

Summary of Judgement:

Issue 1: Compliance with Notification Conditions
The appellant, M/s Kathrein India Private Limited, contested an order confirming demand of &8377; 36,83,092 under section 28 of Customs Act, 1962, along with interest and penalty, due to the breach of conditions in a customs notification. The appellant was entitled to duty-free imports of 'parts' for 'antenna' manufacture under a specific notification subject to compliance with prescribed procedures. However, the appellant sent some imported consignments to a different facility before surrendering the original factory registration, leading to the initiation of proceedings and eventual recovery of duties.

Issue 2: Compliance with Tribunal Directions
The appellant argued that the lower authorities failed to acknowledge the proper usage of imported goods in antenna manufacture, citing precedents and contending that the factory transfer was known to jurisdictional authorities. The lower authorities emphasized strict compliance with rules to prevent diversion of duty-free goods, leading to the imposition of duties and detriments. The Tribunal noted compliance with its directions but questioned the rejection of evidence by lower authorities.

Issue 3: Special Consideration and Remand
The Tribunal acknowledged the unique circumstances and directed the original authority to obtain details from the new factory to ensure proper utilization of imported goods. The matter was remanded for a fresh decision within six months, emphasizing adherence to natural justice principles and appellant's cooperation for expeditious resolution.

This judgment highlights the importance of strict compliance with customs rules, the need for proper utilization of duty-free goods, and the role of tribunals in ensuring fair adjudication processes.