2023 (11) TMI 22 - AT - Customs

Denial of exemption under Sr.5 of Notification No.45/2017 dated 30.6.2017 - re-import of goods exported earlier for participation in exhibition or on a consignment basis - requirement of exported goods to be brought back within six months of the removal - Imposition of penalty upon the appellant - HELD THAT - Perusal of the said notification and circular No.108/27/2019-GST dated 18.7.2019 read with circular No.21/2019-Customs dated 24.7.2019 makes it clear that where the goods exported either under the Scheme of refund of integrated tax paid on export of goods or under bond without payment of integrated tax on being re-imported that too within six months of export the same shall not amount to supply of goods - As per Section 5(1) of the IGST Act levy of the integrated tax is on inter-state supply of goods or services or both. Thus for levy of integrated tax there must be supply of goods or services or both. In the present case the goods are sent either for exhibition or on consignment basis. The goods which are re-imported are the once which are not sold in the Exhibition or are not approved by the buyer. The ownership of the goods does not transfer to the buyer/consignee to whom the goods i.e. appellant. In case of Exhibition the appellant only takes the goods out of India and brings the same back after Exhibition - in case of goods taken for exhibition both are same person. It is well settled principle that sale cannot be made to oneself only similar concept is applicable in case of supply as well. Further there is no consideration paid when the goods are re-imported by the appellant. Thus at the time of re-import there is no supply of goods as per Section 7 (1) (a) of the CGST Act. Since the goods exported are already held to not to be Goods Supplied but for exhibition the goods exported on LUT bond gets apparently out of the scope of entry 1(d) of the notification dated 30.6.2017. Thus shall fall under entry 5 of the said notification to which applies Nil duty. Thus the demand has wrongly been confirmed with respect to these 3 bills of entry. Imposition of penalty upon the appellant - HELD THAT - The issue in the present case is of the interpretation of a particular notification. The appellant are held to have rightly availed the benefit of Notification No.45/2017-Customs dated 30.6.2017 - there are no evidence on record produced by the department which may prove alleged mens rea for the appellant to evade payment of customs duty. Though one Bill of Entry is held as not eligible for exemption from full customs duty but for want of evidence of alleged intent to evade there are no justifying reason for imposition of penalty upon the appellant. Hence the order imposing penalty upon the appellant is set aside. The order under challenge is hereby set aside except for the amount of duty to be paid with reference to bill of entry No.6830735 dated 16.6.2018. Consequent thereto appeal stands partly allowed.

Summary

Issues Involved:
1. Applicability of Notification No.45/2017-Cus dated 30.6.2017 for re-imported goods.
2. Eligibility for exemption under Sr.No.5 of the Notification.
3. Imposition of penalty on the appellant.

Summary:

Issue 1: Applicability of Notification No.45/2017-Cus dated 30.6.2017 for re-imported goods:
The appellant, a jeweler with Import and Export Code, re-imported goods initially exported for exhibition or consignment. The department argued that the appellant was eligible for exemption under Sr.No.1 (c) or 1 (d) of the Notification, but the appellant claimed exemption under Sr.No.5, which exempts goods from the whole of customs duty and IGST. The adjudicating authority denied the exemption under Sr.No.5, leading to a demand for customs duty amounting to Rs.1,20,17,423/- along with penalties.

Issue 2: Eligibility for exemption under Sr.No.5 of the Notification:
The appellant contended that the re-imported goods were not supplied, as they were exported for exhibition and not sold. The ownership remained with the appellant, and thus, the re-import did not constitute a "Zero rated supply" under Section 16 of the IGST Act, 2017. The appellant argued that Sr.No.1(d) of the Notification applies only to goods exported under the claim of refund of IGST, and since the goods were re-imported within six months, they rightly claimed the benefit under Sr.No.5. The Tribunal agreed, noting that the goods exported under LUT/bond were re-imported within six months, and thus, the demand was wrongly confirmed for these entries.

Issue 3: Imposition of penalty on the appellant:
The appellant argued that there was no act or omission rendering the goods liable to confiscation under Section 111(o) of the Customs Act, 1962, and no mens rea to evade customs duty. The Tribunal observed that the issue was one of interpretation of the notification, and there was no evidence of intent to evade duty. Consequently, the penalty imposed was set aside.

Conclusion:
The Tribunal set aside the order under challenge except for the duty to be paid with reference to one bill of entry where re-import was not effected within six months. The appeal was partly allowed, and the penalty on the appellant was removed.