2003 (5) TMI 154 - AT - Customs

Summary

Issues:
1. Interpretation of entry 108 of the Table to Notification 11/97 for duty exemption.
2. Application of extended period under section 28 of the Act for misdeclaration.
3. Justification for invoking the extended period of limitation.
4. Impact of Circular 74/98-Cus. on the case.
5. Compliance with end-use conditions for duty exemption.

Analysis:

1. Interpretation of entry 108 of the Table to Notification 11/97:
The appellant imported live consignments declared as "nylon tricot flocking fabrics" for use in the leather industry under entry 108 of the notification. The investigation revealed multiple uses of the fabrics beyond footwear insoles. The Commissioner held that the goods were not entitled to the exemption due to misdeclaration.

2. Application of extended period under section 28 of the Act:
The department invoked the extended period alleging wilful misdeclaration by the importer. The appellant argued against the limitation, stating that the nature of the goods was declared, and the department had prior knowledge of the product's varied usage.

3. Justification for invoking the extended period of limitation:
The appellant contended that the extended period should not apply as the department previously granted the exemption without end-use evidence. The Tribunal held that the extended period was unjustified, and the demand was barred by limitation under Section 114 of the Act.

4. Impact of Circular 74/98-Cus.:
Circular 74/98-Cus. highlighted the need for actual use in the leather industry for duty exemption. The circular indicated a shift in practice to require end-use conditions for goods like nylon tricot fabrics, emphasizing compliance with the Supreme Court's judgments.

5. Compliance with end-use conditions for duty exemption:
The Tribunal noted that despite the circular's requirement for end-use certification, the regular practice in Mumbai Customs allowed clearance without such conditions. The appellant's declaration of the fabric's nature was known to the department, and merely claiming an exemption did not constitute misdeclaration.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order. The judgment's application extended to similar cases like Gaunir Impex Pvt. Ltd., Niren Ajmera, and Sudha Ajmera, where the demand for duty and penalty imposition was based on identical grounds predating the Circular, leading to the same outcome of setting aside the orders.