2005 (2) TMI 417 - AT - Customs

Summary

Issues:
Denial of benefit of Notification No. 34/98-Cus. to the appellants.
Alleged violation of conditions of the notification.
Scope of show cause notice and confirmation of demand under other notifications.

Analysis:
The appeal challenges the impugned order-in-original confirming duty demand against the appellants under Notification No. 34/98-Cus. The issue revolves around the denial of benefit of the notification due to an alleged violation of its conditions. The Revenue contends that the appellants violated the condition by selling goods in areas where sales tax was exempted, contrary to the declaration made at the time of clearance.

The appellants argue that the exemption notifications from Delhi and U.P. only exempted sales tax and did not render the goods non-taxable. They assert that the adjudicating authority exceeded the scope of the show cause notice by confirming demands under other notifications like No. 57/98-Cus. and No. 22/99-CX, which were not alleged initially.

The Tribunal finds merit in the appellants' contentions. It holds that the exemption notifications only deferred or exempted tax payment for a period but did not make the goods non-chargeable to tax. Citing legal precedents, the Tribunal emphasizes that exemption from tax payment does not equate to goods being non-taxable. The Tribunal also agrees that the adjudicating authority overstepped by confirming demands under notifications not mentioned in the show cause notice.

Consequently, the Tribunal sets aside the impugned order, ruling in favor of the appellants. It concludes that no violation of Notification No. 34/98 is established, absolving the appellants from duty and penalty. The appeals are allowed with consequential relief, as per law.

In summary, the judgment addresses the denial of notification benefits, alleged violations of notification conditions, and the scope of the show cause notice. It clarifies the legal interpretation regarding tax exemptions and upholds the appellants' arguments, leading to the setting aside of the duty demand and penalties.