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Issues: Appeal against refund claim rejection based on interpretation of Notification No. 77/80 and permission requirements for transfer of capital goods from Free Trade Zone to Domestic Tariff Area.
Analysis: 1. The appeal was filed by the Assistant Collector of Customs, Kandla Free Trade Zone, challenging the order of the Collector of Customs (Appeals), Bombay, which had set aside the rejection of a refund claim made by the respondents. The respondents had imported capital goods, including a Packing Line Machine, at nil duty rate under Customs Notification No. 77/80. They later sought permission to transfer the machine to the Domestic Tariff Area for use in their factory in Bombay. The dispute arose regarding the interpretation of the Notification and the requirement of permission for such transfer. 2. The Assistant Collector initially rejected the refund claim, stating that the respondents did not obtain permission from the Kandla Free Trade Zone Board as required by the Notification. However, the Collector (Appeals) held that the permission granted by the Controller of Imports and Exports, in accordance with the Import-Export Policy, satisfied the conditions of the Notification, irrespective of the authority granting permission. 3. The Policy and Handbook of Procedures outlined different permission requirements for transfer or disposal of goods from the Free Trade Zone. While the respondents obtained permission from the licensing authority for the transfer, they did not secure approval from the Board as mandated by the Notification for depreciating the assessable value of the goods. The Notification specified conditions for duty exemption based on depreciated value, necessitating permission from the Kandla Free Trade Zone Board. 4. The Tribunal analyzed the discrepancies between the Policy, Handbook, and Notification to determine the applicable permission requirements. It emphasized that to benefit from the depreciated assessable value provision, permission from the Board was crucial, distinct from the licensing authority's approval for transfer. The purpose of these permissions differed, with the Board's role aimed at reducing duty liability for the importer. 5. As the respondents failed to obtain permission from the Kandla Free Trade Zone Board, they were deemed ineligible for the benefit of the depreciated assessable value under the Notification. The Tribunal upheld the Assistant Collector's decision, setting aside the Collector (Appeals) order. Additionally, an objection regarding the timeliness of the appeal filing was dismissed by the Tribunal, affirming the decision in favor of the Assistant Collector. 6. Ultimately, the Tribunal ruled in favor of the Assistant Collector, emphasizing the necessity of complying with the specific permission requirements outlined in the Notification for availing duty exemptions based on depreciated value when transferring capital goods from the Free Trade Zone to the Domestic Tariff Area. The judgment highlighted the importance of obtaining permission from the designated authority to qualify for such benefits under the relevant Customs regulations.
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