2009 (7) TMI 964 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 148/94 regarding exemption from customs duty for articles of food and edible material.
2. Whether the import of De-gummed Rapeseed Oil by State Corporation of India Ltd. (STC) qualifies as a free gift to the Government of India.
3. Allegation of mis-declaration by STC and invocation of extended period for demand of customs duty.
4. Validity of the show cause notice issued by Customs proposing denial of duty exemption and imposition of penalty.

Analysis:

Issue 1: Interpretation of Notification No. 148/94
The case involved the interpretation of Notification No. 148/94, which exempts articles of food supplied as free gifts to the Government of India from customs duty. The Tribunal analyzed the details of the notification and the circumstances under which the goods were imported to determine if the exemption applied.

Issue 2: Import as Free Gift
The Tribunal considered whether the import of De-gummed Rapeseed Oil by STC qualified as a free gift to the Government of India. STC argued that the oil was intended for sale in the Indian market to fund World Food Programme (WFP) projects, and various correspondences supported the claim that it was indeed a free gift. The Tribunal examined the agreements and letters to establish the nature of the import.

Issue 3: Mis-declaration and Extended Period
The Customs alleged mis-declaration by STC and sought to invoke the extended period for demanding customs duty. However, the Tribunal found that STC had appropriately indicated the nature of the goods as "GOVT. GOODS" in the Bill of Entry and had followed the agreed-upon process of monetizing the free gift. The Tribunal held that there was no mis-declaration and that the extended period could not be invoked.

Issue 4: Validity of Show Cause Notice
The Tribunal assessed the validity of the show cause notice issued by Customs proposing to deny the duty exemption and impose a penalty on STC. Considering the evidence presented, including letters from government officials clarifying the nature of the import, the Tribunal concluded that the notice was time-barred and that the Revenue had no case on merit. As a result, the Tribunal set aside the Commissioner's order and allowed STC's appeal.

This detailed analysis of the issues involved in the judgment showcases the Tribunal's thorough examination of the facts and legal provisions to arrive at a decision favorable to the appellant, State Corporation of India Ltd.