2024 (12) TMI 297 - AT - Customs

Exemption of SAD and CVD - whether the appellant is entitled to claim exemption from Additional duty of Customs (SAD) vide N/N. 21/2012 dated 17.03.2012 (Sl.No.2), as amended by N/N. 32/2012 dated 08.05.2012 and counter-veiling duty (CVD) vide N/N.12/2012, CE dated 17.03.2012 (Sl. No.180)? - HELD THAT - There is no dispute that the footwear imported by the appellant was having MRP less than Rs.500 per pair and hence they were exempted from payment of excise duty subject to the condition that the retail sale price is indelibly marked or embossed on the footwear itself. The requirement under Condition No.15 is not merely that it should be marked or embossed in any manner but that it should be indelibly marked or embossed. The intent behind incorporating the term 'indelibly' with the expression marked or embossed is obvious that there is no possibility to remove the MRP/RSP. This is clear from the dictionary meaning of the term 'indelibly', which means, it cannot be removed and cannot be washed away or erased, something which is imperishable. The appellant has deliberately circumvented the compliance of the said condition by merely putting the MRP/RSP on a piece of cloth stitched on one side. This kind of labelling can be easily removed, which implies that the appellant has not complied with the condition in its true spirit as enumerated in the notification. The appellant being a trading concern is regularly importing goods in question, however, without satisfying the pre-condition under the notification, they wrongly claimed the exemption. The attempt on the part of the appellant to justify that registration under the Delhi VAT Act was unnecessary though the notification mandates the declaration of VAT registration number was wilful mis-statement of facts. The failure to declare the TIN number at the time of import violates the conditions of the exemption notification. The appellant also misled the Department that the goods imported are properly marked with the MRP/RSP. Having failed to comply with the mandatory conditions of the notification, the appellant was not eligible to the exemption claimed and was, therefore, liable to pay SAD and CVD along with interest as per Section 28AA of the Act. In the circumstances, the goods were held to be liable for confiscation under Section 111(o) of the Act and since the goods were not available, the Adjudicating Authority rightly imposed the fine of Rs.25,00,000/- under Section 125 of the Act. Consequently, there are no fault with the invocation of the extended period of limitation and imposition of penalty under Section 112 and also 114A of the Act, which mandates penalty equal to the duty in case of collusion, wilful mis-statement or suppression of facts. There are no infirmity in the impugned order and the same is, accordingly upheld. The appeals, therefore stand dismissed.

Summary

Issues Involved:

1. Eligibility for exemption from Additional Duty of Customs (SAD) and Countervailing Duty (CVD) under relevant notifications.
2. Compliance with conditions related to VAT registration and marking requirements for claiming exemption.
3. Applicability of revenue neutrality and procedural compliance.
4. Legality of confiscation, penalty, and invocation of the extended period of limitation.

Detailed Analysis:

1. Eligibility for Exemption from SAD and CVD:

The primary issue was whether the appellant was entitled to claim exemption from Additional Duty of Customs (SAD) under Notification No. 21/2012 and Countervailing Duty (CVD) under Notification No. 12/2012. The appellant claimed exemptions based on the retail sale price (RSP) of the imported footwear being less than Rs.500/- per pair. The tribunal found that the appellant did not meet the mandatory conditions of the notifications, which required the retail sale price to be "indelibly marked or embossed" on the footwear. The tribunal emphasized that the term "indelibly" implies permanence, and the appellant's method of affixing RSP via stitched stickers did not satisfy this requirement.

2. Compliance with VAT Registration and Marking Requirements:

The tribunal highlighted the necessity of declaring the Value Added Tax (VAT) registration number in the state where the goods were intended to be sold, as mandated by the exemption notifications. The appellant's argument that no VAT registration was required under the Delhi VAT Act was rejected because the exemption claim arose under the Customs Tariff Act, not the VAT Act. The tribunal held that compliance with the conditions of the notification was mandatory, and the appellant's failure to declare the VAT registration number at the time of importation disqualified them from claiming the exemption.

3. Applicability of Revenue Neutrality and Procedural Compliance:

The appellant argued for revenue neutrality, suggesting that SAD was refundable upon clearance of goods. However, the tribunal dismissed this argument, stating that the refund process requires proper scrutiny and is not automatic. The tribunal also rejected the appellant's claim of substantial compliance, emphasizing that the conditions violated were mandatory and not merely procedural. The tribunal referred to precedents that distinguished between substantial and procedural requirements, concluding that the appellant's non-compliance was substantial.

4. Legality of Confiscation, Penalty, and Invocation of Extended Limitation:

The tribunal upheld the confiscation of goods under Section 111(o) of the Customs Act, as the appellant failed to meet the exemption conditions. The imposition of penalties under Sections 112 and 114A was justified due to the appellant's willful misstatement and suppression of facts. The tribunal also supported the invocation of the extended period of limitation, given the appellant's deliberate attempts to mislead the authorities.

Conclusion:

The tribunal concluded that the appellant was not entitled to the claimed exemptions due to non-compliance with mandatory conditions. The order of confiscation, penalties, and interest was upheld, and the appeals were dismissed. The judgment emphasized strict adherence to the conditions specified in exemption notifications and rejected the appellant's claims of procedural compliance and revenue neutrality.