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2024 (7) TMI 1268 - AT - CustomsRejection of IGST exemption availed by the Appellant under EPCG Scheme as per Notification No. 16/2015-Cus. dtd. 01.04.2015, as amended by N/N. 79/2018-Cus. dtd. 13.10.2017 - confirmation of demand of custom duty in lieu of IGST - confisacation - interest - penalties u/s 112(a) and (b)(iii) of the of Customs Act, 1962 and penalty of 5,00,000 u/s 114AA of the Act. The allegation of the department in the present matter is that Customs N/N. 16/2015-Cus. dtd. 01.04.2015 was amended by Customs N/N. 79/2017-Cus. dtd. 13.10.2017 to the effect that after amendment, as per para 3(c)(II)(d) of the said amended Custom Notification, payment received in Rupee terms (INR) for such services as notified in Appendix 5D shall also be counted towards discharge of export obligation under the EPCG, only in Authorization where exemption for Integrated Tax and Goods and Services (IGST) compensation cess is not availed. HELD THAT - The EPCG License was issued to the Appellant on 21.01.2019 and under the terms of the said License, the Appellant was required to meet its export obligation within a period of 6 years, i.e by 20.01.2025. We also find that this fact has neither been disputed in the show cause notice nor in the impugned order passed by the Ld. Commissioner. The department has to initiate the proceedings only after the expiry of the licencing period. Therefore, any proceeding prior to this period is purely premature and the impugned order confirming demands before the expiry of the licencing period is not justified and correct in law. Such actions, therefore, cannot be sustained. Para 5.2 of Circular No. 16/2023-Cus dtd. 07.06.2023 state that as per the Hon ble Supreme Court s judgment in the case of UNION OF INDIA ORS. VERSUS COSMO FILMS LIMITED 2023 (5) TMI 42 - SUPREME COURT , importer of goods, who do not meet the pre-import conditions, are required to pay GST and Compensation Cess, as the case may be. However, the Hon ble Court also permitted the assesses to claim refund or avail Input Tax Credit, while specifically stating that a Bill of Entry rather than a challan would be prescribed documents for this purpose. In view of the above judgment, it is clear that if IGST is paid by the Appellant, same shall be available as Input Tax credit to the Appellant and to that extent net liability of GST shall stand reduced while paying the GST by the Appellant. Therefore it is an exercise of revenue neutral for this reason demand does not exist - the demand on the point of revenue neutrality also set aside. The confiscation of the imported goods cannot sustain and it is hereby set aside. On the basis of discussions above, it is also held that penalty imposed on both the appellants is unwarranted - The impugned order is set aside - appeal allowed.
Issues:
Proceedings against M/s. AMNS Ports Hazira Ltd. and an employee for imported goods under Customs Notification, rejection of IGST exemption, demand of custom duty, confiscation of capital goods, imposition of penalties, fulfillment of export obligation, dispute over availing IGST exemption, provision of port services, payment received in rupee terms, export obligation period, premature proceedings, request for reassessment, revenue-neutral situation, availability of Input Tax Credit, revenue neutrality in payment of IGST, setting aside of demands, penalties, and confiscation. Analysis: 1. Proceedings and Rejection of IGST Exemption: The appeals were filed against proceedings initiated against M/s. AMNS Ports Hazira Ltd. and an employee regarding imported goods under Customs Notification. The Ld. Commissioner rejected the IGST exemption availed by the Appellant under the EPCG Scheme. A demand of custom duty was confirmed, and penalties were imposed on both the Appellant and the employee. The appellants challenged the impugned order, leading to the present judgment. 2. Fulfillment of Export Obligation: The Appellant, a provider of port services, imported capital goods under the EPCG Scheme to fulfill an export obligation equivalent to six times the duty saved on the import of capital goods. The dispute arose regarding the export obligation period and the eligibility to claim exemption from IGST payment while fulfilling the said obligation. 3. Availing IGST Exemption and Revenue-Neutral Situation: The Revenue alleged that the Appellant wrongly availed IGST exemption despite receiving payment in rupee terms for services rendered. However, the Appellant argued that it fulfilled its export obligation by providing vessel-related services and earning convertible foreign exchange, maintaining a revenue-neutral situation through the payment of GST and claiming Input Tax Credit. 4. Premature Proceedings and Request for Reassessment: The Tribunal found that the proceedings initiated before the expiry of the export obligation period were premature and not justified in law. The Appellant's request for reassessment to enable the payment of IGST amount was considered, emphasizing the revenue-neutral nature of the situation. 5. Judicial Precedents and Revenue Neutrality: The Tribunal cited various judgments supporting the Appellant's position on revenue neutrality, where payment of IGST was available as Input Tax Credit, leading to a revenue-neutral outcome. The demand for custom duty, penalties, and confiscation of goods were set aside based on the principle of revenue neutrality. 6. Decision and Relief Granted: After careful consideration of submissions from both sides, the Tribunal set aside the confiscation of imported goods, held the penalties imposed as unwarranted, and allowed the appeals with consequential relief as per law. The impugned order was overturned, and the decision was pronounced in the open court. By addressing each issue comprehensively, the Tribunal provided a detailed analysis leading to the setting aside of demands and penalties, emphasizing the concept of revenue neutrality in the payment of IGST and the availability of Input Tax Credit to the Appellant.
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