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2023 (9) TMI 418 - AT - CustomsBenefit of concessional rate of duty under Notification No. 25/99-Cus dated 28.02.1999 - part of manufacturing activity was undertaken in a premises/factory not declared in the Registration Certificate obtained under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - confiscation for non-compliance to the condition of the Notification ibid read with the Customs Rules, 1996 or not - levy of redemption fine and penalty - HELD THAT - No dispute is there and it is an admitted fact that the appellant has not manufactured Switches in their Coimbatore unit, but, only parts of Switches / sub-assemblies / components which were entirely cleared to their unit at Una, Himachal Pradesh on payment of applicable Central Excise duties. A perusal of the records will clearly indicate that the appellant has not intimated the jurisdictional Central Excise and Customs authorities in Coimbatore regarding clearance of parts of Switches to Una unit till the time of the audit of unit took place - The Notification No. 21/2002-Cus. dated 01.03.2002 allows the benefit of concessional rate of duty only if the imported goods are used for the manufacture of Switches, Relays and Connectors. Whereas the manufacture of Switches not done in the Coimbatore unit but only the parts and sub-assembly of Switches. Reference made to the decision of the Apex Court in the case MIHIR TEXTILES LTD. VERSUS COLLECTOR OF CUSTOMS, BOMBAY 1997 (4) TMI 75 - SUPREME COURT , wherein it was held that when concessional relief of duty is made dependent of satisfaction of certain conditions, the relief cannot be granted in the absence of satisfaction of the conditions even if the conditions are only directory. Any Notification has to be interpreted strictly and the benefit of the Notification is not extendable when the conditions are not complied with. In the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL 2010 (11) TMI 13 - SUPREME COURT , the Hon ble Apex Court has held that in respect of exemption notification, the conditions of the notification have to be complied with if exemption is available on compliance with conditions. The mandatory requirement of such requirement must be obeyed or fulfilled exactly. In the case of FDC Ltd. 2016 (12) TMI 1270 - CESTAT MUMBAI , the imported goods were sent to the job worker and the ownership of the goods remained with the appellant right from import of goods till their utilization in the manufacture of the final product and it is held that end use condition was satisfied. Whereas in this case, semi-finished parts were cleared to their unit at Una, Himachal Pradesh on payment of duty, both the units have functioned independently. There are no merit in the appellant s contentions that they have complied with the conditions of the Notification read with the Customs Rules, 1996 - it is also noted that the lower original authority s observation that the appellant s unit at Una, Himachal Pradesh have sold parts of switches as could be seen from the sale invoices given as Annexure B2 to the Order-in-Original No. 01/2013-ADC dated 21.03.2013. On consideration of the appellant s contentions that all the components/sub-assemblies/parts of Switches were cleared to their unit at Una, Himachal Pradesh where these were reportedly utilized for the manufacture of the Switches and that too when the goods are not available for confiscation adopting a liberal approach and relying on the decision rendered by the Tribunal in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. CUS., NASIK 2009 (1) TMI 124 - CESTAT MUMBAI wherein it was held that the goods cannot be confiscated and the redemption fine not to be imposed when they are not available for confiscation, we order to set aside the confiscation and consequently, the fine imposed - imposition of penalty under Section 112 (a)(ii) of the Customs Act, 1962 for contravening the provisions of the Notification No. 21/2002-Cus. dated 01.03.2002 read with the Customs Rules, 1966 is justified but the same is reduced to Rs.3,60,000/-. Appeal allowed in part.
Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 25/99-Cus dated 28.02.1999. 2. Liability for confiscation of imported goods and resultant products. 3. Justification of fine and penalty imposed. Summary: Issue 1: Eligibility for Concessional Rate of Duty The appellant, M/s. Salzer Electronics Limited, imported parts of relays, switches, and connectors availing concessional duty under Notification No. 25/99-Cus dated 28.02.1999. The appellant argued compliance with the Customs Rules, 1996 by manufacturing sub-assemblies/parts at their Coimbatore unit and transferring them to their Una unit for final assembly. The Tribunal noted that the appellant did not manufacture the final products (switches) at the Coimbatore unit, which was the declared manufacturing premises. The Tribunal emphasized strict compliance with the notification conditions, citing the Supreme Court's stance in Mihir Textiles Ltd. and Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri Gopal. The Tribunal concluded that the appellant did not meet the notification's conditions, thus ineligible for the concessional duty. Issue 2: Liability for Confiscation The Tribunal found that the appellant contravened the Customs Rules, 1996 by not informing the jurisdictional authorities about the inter-unit transfer of parts and not maintaining proper accounts. The Tribunal upheld the lower authorities' decision that the imported goods were not used for the intended purpose, making them liable for confiscation under Section 111(O) of the Customs Act, 1962. Issue 3: Justification of Fine and Penalty The Tribunal acknowledged that the imported parts were cleared to the Una unit and used for manufacturing switches. However, it noted that some parts were sold directly from the Una unit without further manufacturing. The Tribunal, adopting a liberal approach and relying on Shiv Kripa Ispat Pvt. Ltd., set aside the confiscation and fine since the goods were not available for confiscation. However, it upheld the imposition of a penalty under Section 112 (a)(ii) of the Customs Act, 1962, reducing it to Rs. 3,60,000/-. Conclusion: The appeal was partly allowed, confirming the demand for duty and interest but setting aside the confiscation and reducing the penalty.
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