2024 (5) TMI 475 - AT - Customs

Import of Construction equipment - Violation of post-importation conditions of deployment - Benefit of N/N. 21/2002-Cus - recovery of duty - confiscation - Penalty - Import of slip form paver finisher for laying concrete pavement model S600 - Concessional duty - HELD THAT - In the context of the present dispute the blossoming of events prior to import and after clearance save for conditions of import are irrelevant and reference to such in the adjudication order appears to be proverbial straw clutching of which does little to sanctify the adjudicatory process or promote the credibility of the adjudication order. We are concerned with deployment of goods that having been procured on high sea sale in a contractually secured transaction are endorsed as not being for the intended project. Neither has the sale been voided nor has the award of work and certified as being in favour of the importer by the competent authority been questioned in the order. The threshold eligibility is thus beyond controverting. There is no doubt that the goods were not used for the intended project which for whatever reason and not relevant in determining the consequences of non-utilization is certainly cause for triggering duty liability should the notification so warrant. There is also no controverting of the submission of the appellant that the goods were not used on any project let alone on any ineligible road project. The notification stipulates that the goods cannot to be used for any ineligible activity during the lock in period. The goods were in accordance with the notification locked in till December 2015 which happened to be truncated with effect from October 2011 barely a year into the lock in period and by premature action in the part of customs authorities. The hasty conclusion that contract cancellation did trigger the foreclosure of entitlement under the notification is not supported by the terms and conditions of the notification. The seizure and subsequent forced debarment from use even within the scope of the relaxation extended by amendments effectively interfered with the free run intended in the notification without even the excuse of goods having been diverted. For this reason the entire period of inoperative lock in from date of seizure should stand erased for the purposes of administration of the notification. Accordingly the recovery of duty and the confiscation ordered by the adjudicating authority are set aside along with the consequential detriments as also the show cause notice. The impugned goods are restored to the appellant-importer for compliance with the post-importation condition in the notification. Appeals are disposed off on these terms.

Summary

Issues Involved:
1. Eligibility for concessional duty u/s Notification No. 21/2002-Cus.
2. Compliance with post-importation conditions.
3. Justification for recovery of duty and imposition of penalties.

Summary:

1. Eligibility for Concessional Duty u/s Notification No. 21/2002-Cus:
M/s Niraj Cement Structurals Ltd imported a 'slip form paver finisher' claiming concessional duty under Notification No. 21/2002-Cus. The Commissioner of Customs denied this eligibility, leading to a recovery of duty foregone amounting to Rs. 1,32,73,596, along with interest u/s 28AB of the Customs Act, 1962, and imposed penalties u/s 114A, 112, and 114AA of the Customs Act, 1962. The Tribunal noted that the goods were imported in accordance with the conditions of the notification and that the failure to comply with the post-importation condition was due to uncontrollable circumstances, including the termination of the contract due to civil disturbances.

2. Compliance with Post-Importation Conditions:
The Tribunal acknowledged that the machinery was not deployed on the intended project due to 'Maoist activity' and subsequent contract termination. The Tribunal emphasized that the notification's conditions must be met at the threshold and continued possession and utilization during the lock-in period. The Tribunal found that the goods were never used for any ineligible project and that the customs authorities' premature action interfered with the intended free run of the notification.

3. Justification for Recovery of Duty and Imposition of Penalties:
The Tribunal concluded that the recovery of duty and confiscation ordered by the adjudicating authority were unjustified. The seizure and subsequent debarment from use were deemed premature and unsupported by the notification's terms. The Tribunal set aside the recovery of duty, confiscation, and consequential penalties. The impugned goods were restored to the appellant-importer for compliance with the post-importation condition, with the liberty to approach customs authorities for termination of deferment if compliance was not possible due to changed circumstances.

Disposition:
The appeals were disposed of on these terms, and the order was pronounced in open court on 07.05.2024.