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2023 (9) TMI 875 - AT - CustomsAppellant is manufacturer or not - use of factory of loan licensee - benefit of N/N. 50/2017-cus dated 30.7.2017 - benefit denied solely because the (duty-free) goods imported were used in the factory of loan licensee, i.e. M/s Tuton Pharma, Ahmedabad, and not the appellant's own factory - suppression of facts or not - invocation of extended period of limitation under Section 28 of the Customs Act, 1962 - HELD THAT - The matter stand largely covered by the decision in the case of M/S FDC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR 2016 (12) TMI 1270 - CESTAT MUMBAI which is in relation to job-work under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 only and it was held that even though the factory is of the loan licensee but use is on behalf the appellant therefore there is no violation of condition of the Customs Rules, 1996. So far as the decision cited by learned AR are concerned, in COMMISSIONER OF CENTRAL EXCISE, GOA VERSUS M/S. COSME FARMA LABORATORIES LTD. 2015 (4) TMI 355 - SUPREME COURT , the question was different and the dispute related to whether the manufacturer or principal who is owner and manufacturer in the given facts and circumstances of the matter - Further, in the case of CCE, BELAPUR VERSUS FERRING PHARMACEUTICALS PVT. LTD. 2017 (11) TMI 1510 - CESTAT MUMBAI , the single Member Bench in the facts of the case, held that loan licensee to be treated as manufacturer and further in the facts of the issue the cancellation of registration as manufacturer was required, and does not match with the present case. Appeal allowed.
Issues Involved:
1. Eligibility for benefit of Notification No. 50/2017-Cus dated 30.7.2017. 2. Use of imported goods in the factory of a loan licensee. 3. Interpretation of "importer" and "manufacturer" under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. 4. Time-barred Show Cause Notice. Summary: 1. Eligibility for Benefit of Notification No. 50/2017-Cus: The core issue was whether the appellant could be denied the benefit of Notification No. 50/2017-Cus solely because the duty-free imported goods were used in the factory of a loan licensee, M/s Tuton Pharma, and not in the appellant's own factory. The appellant had executed necessary bonds and bank guarantees, showing M/s Tuton as the manufacturer, and followed the prescribed procedure under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. 2. Use of Imported Goods in Loan Licensee's Factory: The appellant argued that neither the subject Notification nor the Customs Rules mandated the use of imported goods in the importer's own factory. The imported goods were used on behalf of the appellant in the loan licensee's factory, which was registered as the appellant's additional place of business under GST law. The ownership of the goods remained with the appellant throughout the process, and the end-use condition was fully complied with. 3. Interpretation of "Importer" and "Manufacturer": The appellant highlighted that the Customs Act, 1962 defines "importer" to include any owner or person holding himself out to be the importer. The Customs Rules define "manufacturer" as processing raw materials into a new product. The appellant contended that these definitions allowed for the use of imported goods in a job worker's factory. The appellant cited various judgments supporting the interpretation that the importer need not own the factory where the goods are used. 4. Time-Barred Show Cause Notice: The appellant argued that the Show Cause Notice dated 23.9.2020, covering the period from 15.09.2017 to 25.03.2019, was partly time-barred. The appellant had provided all relevant details and executed bonds, and there was no indication of willful suppression of facts or fraud. Therefore, the longer limitation period under Section 28 of the Customs Act, 1962, would not apply. Decision: The Tribunal found that the matter was largely covered by the decision in the case of FDC Limited vs. CCE, Belapur, which dealt with similar issues under the Customs Rules. The Tribunal held that the imported goods used in the loan licensee's factory on behalf of the appellant fulfilled the end-use condition. The Tribunal accepted the appellant's arguments, set aside the impugned order, and allowed the appeal with consequential relief.
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