2025 (3) TMI 72 - AT - Customs

Alleged contravention of Condition (iii) of Notification No. 32/1997-Cus dated 01.04.1997 - import of Shell on Shrimps - goods were found contaminated with Nitrofuran Metabolite AHD rendering them unsuitable for export or consumption - HELD THAT - In the present case the Appellant sought permission for destruction of the goods and had not proceeded for disposal of the goods to demand customs duty. The Hon ble Supreme Court in the matter of M/s BPL Display Devices Ltd. 2004 (10) TMI 92 - SUPREME COURT held object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage. Similarly as evidenced from the facts of the case after import the goods were used for job work and thereby the appellant made best efforts to comply with the Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996. Facts being so there is no reason or justification to demand duty from the Appellant for the goods since the goods were subjected to job work and appellant was ready to export. However since the sample of imported goods were held to be contaminated with the presence of Nitro furan Metabolite AHD export obligation could not be fulfilled. Conclusion - The duty cannot be demanded when goods were intended for use but became unfit due to unforeseen circumstances. Appeal allowed.

Summary

The issue in the present appeal before the Appellate Tribunal concerns the demand of Customs duty due to the alleged contravention of Condition (iii) of Notification No. 32/1997-Cus dated 01.04.1997. The Appellant imported 'Shell on Shrimps' under the said notification seeking exemption on imports for executing export orders. However, the goods were found contaminated with 'Nitrofuran Metabolite AHD,' rendering them unsuitable for export or consumption. Despite seeking permission for destruction of the goods and updating the authorities, a demand notice was issued for recovery of Rs. 8,20,600 along with a proposal for confiscation and penalty under the Customs Act, 1962. The Adjudicating authority confirmed the demand but refrained from confiscation and penalty. The Appellant, dissatisfied, appealed to the Tribunal.During the hearing, the Appellant's counsel argued that there was no wilful omission to comply with the notification conditions and highlighted the contamination issue. They also challenged the authority's power to issue the Show Cause Notice. The Revenue's representative emphasized the Appellant's failure to fulfill the notification conditions, leading to the duty liability.The Tribunal referred to precedents like M/s Alsa Marine & Harvests Ltd. v. CC Cochin, emphasizing the impossibility of meeting export obligations beyond the Appellant's control. It noted the Appellant's efforts to comply with Customs rules despite the contamination issue. Relying on M/s BPL Display Devices Ltd., the Tribunal held that duty cannot be demanded when goods were intended for use but became unfit due to unforeseen circumstances. Consequently, the appeal was allowed, granting relief to the Appellant in line with the law.In conclusion, the Tribunal's decision was based on the principles of impossibility to fulfill obligations beyond the Appellant's control and the intended use of goods despite contamination issues. The Appellant's efforts to comply with Customs rules were acknowledged, leading to the allowance of the appeal and relief granted accordingly.