2003 (9) TMI 160 - AT - Customs

Summary

Issues:
1. Benefit of concessional rate of duty under Notification No. 267/89-Cus.
2. Utilization of imported goods in manufacturing activity.
3. Rejection of appeal by Commissioner (Appeals) on different grounds.
4. Validity of Registration-cum-Membership Certificate.
5. Distribution of goods to outside parties.

Analysis:

1. The appellants imported Magnetic Buttons under a concessional rate of duty under Notification No. 267/89-Cus for use in the leather industry. They furnished a Bond as per the conditions of the Notification at the time of import.

2. The appellants claimed that the Magnetic Buttons were used in manufacturing Leather Ladies' Hand Bags, which were subsequently exported. They provided documents, including a certificate from a Chartered Accountant, to support their claim.

3. After several years, a show cause notice was issued proposing recovery of duty. The Assistant Commissioner demanded evidence of the utilization of the imported goods in manufacturing activities. The appeal to the Commissioner (Appeals) was rejected for not fulfilling certain conditions of the Notification.

4. The appellants argued that the rejection was based on grounds not mentioned in the show cause notice or the original adjudication order. They contended that they had fulfilled all conditions, including possessing a valid Registration-cum-Membership Certificate from the Council for Leather Exports.

5. The Commissioner (Appeals) raised issues regarding the appellants' membership status and distribution of goods to outside parties. The appellants clarified that the goods were sent to job workers and that they were the actual users as per the Notification's explanation.

6. The Tribunal found merit in the appellants' arguments, noting that the Commissioner (Appeals) had exceeded the scope of the show cause notice. The Tribunal held that since the original adjudicating authority had not raised these grounds, the rejection was unjustified. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants.