2001 (5) TMI 60 - HC - Central Excise

Summary

Issues Involved:
1. Liability for payment of excise duty.
2. Validity of bond release by Central Excise Authority.
3. Applicability of customs duty on reimportation.
4. Entitlement to exemptions under General Exemption Nos. 95 and 95A.
5. Jurisdiction and authority of Central Excise and Customs authorities.

Detailed Analysis:

1. Liability for Payment of Excise Duty:
The petitioners, a public limited company and its director, purchased eight diesel hydraulic truck-mounted cranes from a manufacturer in India, with the price including excise duties. The manufacturer did not pay the excise duty before removal but executed bonds to secure the excise duty payable. The goods were exported to Bangladesh for a project and were to be brought back to India after completion. The petitioners argued that the manufacturer was liable to pay the excise duties.

2. Validity of Bond Release by Central Excise Authority:
The Central Excise Authority released the bonds immediately upon receiving information of export without waiting for reimportation or notifying the petitioners. This premature release of bonds resulted in the Customs authorities disallowing the reimportation of goods without payment of customs duty equivalent to the excise duty. The court found that the release of bonds was wrongful and treated it as canceled, directing the Central Excise Authority to recover the amount from the manufacturer.

3. Applicability of Customs Duty on Reimportation:
The court examined whether the customs authorities could impose customs duties on the petitioners upon reimportation of the goods. The court noted that the goods were exported for a job-oriented project and brought back without any change in ownership or condition, and the transaction was approved by the Reserve Bank of India. Therefore, the reimportation was duty-free, and the customs duty deposited by the petitioners was to be refunded.

4. Entitlement to Exemptions under General Exemption Nos. 95 and 95A:
The court discussed the applicability of General Exemption Nos. 95 and 95A, which provide exemptions for reimported goods sent for execution of approved projects. The manufacturer attempted to bring the matter under exemption No. 95A, which deals with goods exported under bond without payment of excise duty. However, the court clarified that the exemptions were intended for merchant-exporters, not manufacturers, and the petitioners were entitled to the exemptions.

5. Jurisdiction and Authority of Central Excise and Customs Authorities:
The court criticized the conduct of the Central Excise and Customs authorities for their lack of coordination and improper handling of the bond release and customs duty imposition. The court emphasized the need for clear guidelines and proper implementation of policies to avoid such disputes in the future. The Secretary, Ministry of Finance, Department of Revenue, was directed to adjudicate the dispute and provide a reasoned order to guide similar situations.

Conclusion:
The writ petition was disposed of, declaring the discharge of the bond securing the excise duties as wrongful and directing the Central Excise Authority to recover the amount from the manufacturer. The interim order allowing reimportation was confirmed, and the customs duty deposited was ordered to be refunded. The court also directed the Secretary, Ministry of Finance, to adjudicate the dispute and issue guidelines for similar cases. No order was passed as to costs, and a request for a stay of the order was refused.