1994 (10) TMI 146 - AT - Customs

Summary

Issues: Classification of goods under Customs Tariff Act, liability to pay excise duty on reimported goods

Classification of Goods under Customs Tariff Act:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the classification of reimported Silk Cushion Covers under the Customs Act, 1962. The appellants claimed the goods were exempt under Section 20(1)(d) of the Customs Act and no duty was chargeable as they were to be re-exported under the Duty Exemption Entitlement (DEEC) Scheme. The Assistant Collector classified the goods under sub-heading 6304.99 of the Customs Tariff Act, holding them liable for additional duty. The Collector (Appeals) upheld this classification, adding that excise duty was also payable on the goods under Section 20(1)(c) of the Customs Act as no duty was paid prior to export.

Liability to Pay Excise Duty on Reimported Goods:
The main issue for consideration was whether the reimported goods were liable for duty under Section 20(1)(c) of the Customs Act or eligible for clearance without duty under Section 20(1)(d). The appellants argued that as the goods were manufactured under the DEEC Scheme and exported without paying duty, they should be eligible for duty-free clearance. They relied on case law to support their contention. The respondents, however, maintained that since the goods were exported under the DEEC Scheme, they were deemed to have been exported under bond, making them liable for duty on reimportation. They cited a judgment from the Andhra Pradesh High Court to support their position.

Analysis:
The Tribunal noted that goods exported under a Central Excise bond and reimported due to rejection by the foreign buyer may not be chargeable to customs duty under Section 20(1)(d) of the Customs Act, as per a judgment by the Madras High Court. In this case, the goods were manufactured under the DEEC Scheme, which required a bond to be executed with Customs authorities. If the appellants had executed the bond, the goods would be deemed to have been manufactured under a customs bond, making them liable for duty on reimportation under Section 20(1)(c) of the Act.

The Tribunal found that the judgment cited by the respondents was not relevant to the current case as it pertained to the interpretation of a notification. Since it was unclear whether the appellants had executed the necessary bond for importation under the DEEC Scheme, the Tribunal set aside the impugned order and remanded the matter to the Assistant Collector for readjudication. The appellants were directed to be granted a personal hearing during the readjudication process.

In conclusion, the appeal was allowed by way of remand for further consideration based on the Madras High Court judgment and the provisions of the DEEC Scheme, emphasizing the importance of the bond execution in determining the liability for duty on reimported goods.