2024 (12) TMI 1320 - AT - Customs

100% EOU - Eligibility to claim the benefit of Notification No. 52/2003-Cus dated 31.03.2003 - reimport of goods being food items - time limit of three years under S.No.14 of the said Notification No. 52/2003-Cus dated 31.03.2003 cannot be extended to the impugned reimported goods - goods were reimported beyond one year from the date of original exportation - HELD THAT - On a plain reading of the S. No. 14 of the Notification No.52/2003-Cus dated 31.03.2003 the meaning of Repair and Reconditioning is extensive and inclusive the said term would include reprocessing or re-making or restoring or reusable etc. On a plain reading of clause (i) of S.No. 14 it is unambiguosly clear that any goods other than the goods specified in Annexure-VII to the Notification are permitted to be re-imported within 3(three) years from the date of exportation for Repair or Reconditioning . The finding given by the Adjudication authority limiting such exemption to machinery and equipments spare parts accessories etc. is not tenable. As far as food products are re-imported and if they are subjected to reprocessing clause (i) of S.No. 14 to Notification No. 52/2003-Cus dated 31.03.2003 will apply if the goods are not covered in Annexure-VII even as per the communication relied on by the appellant dated 25.01.2021 and the endorsement of the respondent shows that at the time of re-import the appellant was permitted to clear the goods by executing a bond with an undertaking to re-export the goods within 1(one) year and it was allowed by proper officer in accordance with law. Moreover at the time of re-import the appellant had furnished the details of export and there is no suppression of facts by the appellant. The goods were also exported after reprocessing within the stipulated period. Facts being so there is no reason to justify the demand of duty from the appellant and is not tenable. Conclusion - The proceedings being barred by time limitation the demand of duty cannot be sustained. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are:

Whether the appellant is eligible to claim the benefit of Notification No. 52/2003-Cus dated 31.03.2003 for re-imported goods.
Whether the process of 'reprocessing' of food items falls under the scope of 'repair or reconditioning' as mentioned in the Notification.
Whether the appellant's re-imported goods were eligible for exemption despite being re-imported beyond the one-year period stipulated for re-export.
Whether the proceedings initiated against the appellant are barred by limitation under Section 28(9) of the Customs Act, 1962.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Eligibility for Notification No. 52/2003-Cus

Legal Framework and Precedents: The relevant legal framework includes Notification No. 52/2003-Cus, which provides exemptions for goods re-imported for repair or reconditioning within three years from the date of exportation.
Court's Interpretation and Reasoning: The Tribunal interpreted 'repair or reconditioning' to include reprocessing, especially for food items, which are not specified in Annexure-VII of the Notification.
Key Evidence and Findings: The appellant re-imported food items and claimed they were reprocessed, falling under the exemption criteria.
Application of Law to Facts: The Tribunal found that the appellant's goods were eligible for exemption as they were re-imported within the stipulated period and reprocessed.
Treatment of Competing Arguments: The Tribunal rejected the Adjudication Authority's view that the exemption was limited to machinery and equipment.
Conclusions: The Tribunal concluded that the appellant is eligible for the exemption under Notification No. 52/2003-Cus.

Issue 2: Reprocessing as Repair or Reconditioning

Legal Framework and Precedents: The Tribunal relied on its previous decisions and Board Circulars, which supported a broader interpretation of 'repair or reconditioning.'
Court's Interpretation and Reasoning: The Tribunal held that reprocessing is synonymous with repair or reconditioning, especially in the context of food items.
Key Evidence and Findings: The appellant reprocessed the goods due to quality complaints from foreign buyers, aligning with the Notification's intent.
Application of Law to Facts: The Tribunal applied this interpretation to conclude that the appellant's re-imported goods qualify for the exemption.
Treatment of Competing Arguments: The Tribunal dismissed the Revenue's narrow interpretation, emphasizing the supportive Board Circulars.
Conclusions: The Tribunal upheld the appellant's eligibility for exemption based on the broader interpretation of 'repair or reconditioning.'

Issue 3: Re-import Beyond One Year

Legal Framework and Precedents: The Tribunal referred to the Kar Mobiles Limited case and Board Circulars that allowed flexibility in re-import timelines for EOUs.
Court's Interpretation and Reasoning: The Tribunal noted that the delay due to the pandemic was a technical lapse and not a substantive breach of the Notification.
Key Evidence and Findings: The appellant provided evidence of pandemic-related delays and compliance with procedural requirements.
Application of Law to Facts: The Tribunal accepted the appellant's justification for the delay, considering the broader context of the pandemic.
Treatment of Competing Arguments: The Tribunal rejected the Revenue's strict enforcement of the one-year re-export condition.
Conclusions: The Tribunal allowed the exemption despite the delay, emphasizing the exceptional circumstances.

Issue 4: Limitation under Section 28(9) of the Customs Act

Legal Framework and Precedents: Section 28(9) of the Customs Act prescribes the limitation period for issuing assessment orders.
Court's Interpretation and Reasoning: The Tribunal agreed with the appellant that the proceedings were barred by limitation as no proper assessment order was issued within the prescribed period.
Key Evidence and Findings: The Tribunal found no evidence of a timely assessment order.
Application of Law to Facts: The Tribunal applied the limitation provisions to conclude that the proceedings were time-barred.
Treatment of Competing Arguments: The Tribunal dismissed the Revenue's argument for a broader interpretation of the limitation provisions.
Conclusions: The Tribunal ruled that the proceedings were barred by limitation and thus not maintainable.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes: The Tribunal emphasized, "The finding given by the Adjudication authority limiting such exemption to machinery and equipments, spare parts accessories, etc., is not tenable."
Core Principles Established: The Tribunal reinforced the broader interpretation of 'repair or reconditioning' to include reprocessing, particularly for EOUs.
Final Determinations on Each Issue: The Tribunal allowed the appeal, granting the exemption under Notification No. 52/2003-Cus and concluding that the proceedings were barred by limitation.

In conclusion, the Tribunal's judgment favored the appellant by interpreting the Notification broadly and considering exceptional circumstances like the pandemic. The decision underscores the importance of contextual interpretation and procedural compliance in customs matters.

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