2024 (8) TMI 676 - AT - Customs

Benefit of exemption of Additional Duty of Customs (SAD) leviable under Section 3(5) of Customs Act, 1962 - April 2011 to March 2013 - benefit of N/N. 20/2006-Cus. dated 01.03.2006 (Sl. No. 50) and N/N. 21/2012 dated 17.03.2012 (Sl. No. 12). Extending the benefit of Notification to the goods that were omitted - HELD THAT - The question of extending the benefit of Notification to the goods that were omitted does not arise. Therefore, the appellant s claim that the amendment to the First Schedule has no implication on the exemption Notification is absolutely of no legal basis in as much as the exemption Notification read with the amendment made to the First Schedule makes them ineligible for the benefit of the above Notification. There is no dispute that the Bills of Entry filed by the appellant was for clearance of textile materials classifiable under Chapter Headings 5407, 5516 and 5903 which specifically stand omitted by the above amendment. Hence, the Commissioner (Appeals) had rightly denied the benefit of the Notification. As rightly submitted by the Revenue, in view of the numerous decisions of the Hon ble Supreme Court, any exemption Notification has to be strictly interpreted. Therefore, the appellant is not eligible for the benefit of the Notification during the disputed period. Whether there was any misstatement or misdeclaration of facts so as to invoke extended period of limitation? - HELD THAT - The period of dispute is April 2011 to March 2013 wherein the appellant had filed Ex-bond Bills of Entry during the relevant period clearly showing the description of goods, the Chapter Heading and had paid BCD along with CVD and claimed the benefit of Notification No.20/2006-Cus. dated 01.03.2006 or Notification No. 21/2012 dated 17.03.2012 on SAD as the case may be. These Ex-Bond Bills of Entry placed on record have been clearly endorsed by the offices of the Customs as proof of assessment and allowed the goods to be cleared. Since, the description, specific chapter heading and respective duties liable to be paid are clearly mentioned and assessed to duty by the officers, the question of reopening the assessments for the extended period does not arise. There are no material facts that have been mis-declared or misrepresented except to state that in self-assessment, the appellant should have been vigilant and claimed only those benefits that were available to them. There is nothing on record to prove that there was wilful default on the part of the appellant and hence, the demand cannot be sustained beyond the normal period. Accordingly, confiscation under Section 111(m) of Customs Act, 1962 and penalty imposed under Section 114A of the Customs Act, 1962, are set aside. The appeal is allowed by way of remand only for the purpose of re-quantification of demand along with the interest for the normal period.

Summary

Issues Involved:
1. Eligibility for exemption from Additional Duty of Customs (SAD).
2. Invocation of the extended period of limitation due to alleged misstatement or misdeclaration.

Detailed Analysis:

1. Eligibility for Exemption from Additional Duty of Customs (SAD):
The appellant, M/s. Sewing Systems Private Ltd., imported garment accessories under Customs Tariff Headings (CTH) 5407, 5516, and 5903 and claimed exemption from Additional Duty of Customs (SAD) of 4% under Notification No. 20/2006 dated 01.03.2006 and Notification No. 21/2012 dated 17.03.2012. The goods were initially warehoused and later de-bonded, during which the appellant paid Basic Customs Duty (BCD), Countervailing Duty (CVD), and Cess but claimed exemption from SAD.

The authorities contended that the goods were not covered under the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, post-amendment by the Finance Act, 2011. The show-cause notice and subsequent order confirmed the duty element of 4% for the period April 2011 to March 2013, invoking suppression due to self-assessment and misdeclaration.

The appellant argued that the benefit of the exemption was claimed under a bona fide belief and cited precedents where similar claims were upheld. They contended that it was the responsibility of the proper officer to assess the duty correctly during the clearance of goods.

The Revenue countered that the exemption Notification should be strictly interpreted, and the appellant was not eligible for the benefit during the disputed period. They relied on various Supreme Court decisions to substantiate their claim.

Upon examination, it was found that the exemption benefit under Notification No. 20/2006 and Notification No. 21/2012 was available only to goods specified in the First Schedule to the Additional Duty of Excise (Goods of Special Importance) Act, 1957. The Finance Act, 2011, had omitted goods under headings 5407, 5516, and 5903 from the First Schedule, making the appellant ineligible for the exemption. Therefore, the Commissioner (Appeals) rightly denied the benefit of the Notification.

2. Invocation of the Extended Period of Limitation:
The second issue was whether there was any misstatement or misdeclaration of facts to justify invoking the extended period of limitation. The appellant had filed Ex-bond Bills of Entry during the relevant period, showing the description of goods, Chapter Heading, and paid BCD along with CVD, claiming the benefit of the exemption Notifications.

The Revenue argued that under self-assessment, the appellant should have claimed only the benefits available to them and that the extended period was justified due to misdeclaration.

The Tribunal referred to the Supreme Court's decision in Uniworth Textiles Ltd., which emphasized that the extended period of limitation under Section 28 of the Customs Act requires a deliberate default and specific averments in the show-cause notice. The Tribunal found no evidence of willful default or misdeclaration by the appellant and concluded that the demand could not be sustained beyond the normal period. Consequently, the confiscation under Section 111(m) and penalty under Section 114A of the Customs Act were set aside.

Conclusion:
The appeal was allowed by way of remand for the purpose of re-quantification of demand along with interest for the normal period. The Tribunal emphasized the need for strict interpretation of exemption Notifications and the requirement for specific averments to invoke the extended period of limitation. The decision underscored the appellant's eligibility for exemption and the absence of willful default, leading to the setting aside of penalties and extended period demands.