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2012 (7) TMI 640 - AT - CustomsDuty confirmed u/s 28(2) and penalty imposed u/s 114A - claim of exemption under Notification No.32/2005-Cus. dt. 08/04/2005 under the Target Plus Scheme - c.c. copper rods imported by the assessee - Held that - For claiming the benefit of exemption under Notification No.32/2005-Cus. dt. 08/04/2005 under the Target Plus Scheme, it was not necessary for the assessee-appellants to establish that the goods imported as input by them were usable in the manufacture of the goods exported by them as it was enough for them to establish a broad nexus between the imported input and the exported products with reference to the respective Export Product Groups - that M/s. Gimpex Ltd. were not eligible for exemption under Notification No.32/2005-Cus. in respect of the c.c. copper rods imported by them inasmuch as there existed no nexus between the said goods and the exported products of Chemical & Allied Products Group whereas M/s. Sree Enterprises were eligible for exemption as they could establish a broad nexus between the said goods and the exported products. Challenge the extended period of limitation - Held that - The extended period of limitation under the proviso to Section 28(1) was not invokable as duty credit certificates used by the assessee under the TPS to secure duty-free clearance of the imported goods, the assessee can hardly be said to have done so with any intent to evade payment of duty and non-production of copies of Shipping Bills, which documents were already in the Department s possession, cannot amount to suppression of the documents by the assessee - consequently, the demands of duty on GL and SE are entirely time-barred. Consequent to demand being quashed the penalties imposed on GL and SE u/s 114A are liable to be set aside and that the penalties imposed on other appellants u/s 112 are also liable to be set aside.
Issues Involved:
1. Jurisdiction of show-cause notices issued by DRI authorities. 2. Eligibility of M/s. Gimpex Ltd. (GL) and M/s. Sree Enterprises (SE) for duty exemption under Notification No.32/2005-Cus. 3. Invocation of the extended period of limitation under Section 28(1) of the Customs Act. 4. Imposition of penalties under Sections 114A and 112 of the Customs Act. Detailed Analysis: 1. Jurisdiction of Show-Cause Notices: The appellants challenged the jurisdiction of the show-cause notices issued by DRI authorities based on the Supreme Court's decision in Commr. Vs. Sayed Ali. The High Court of Andhra Pradesh directed CESTAT to reconsider the stay applications in light of this decision. However, the jurisdictional question was resolved by Notification No.44/2011-Cus(N.T.) and the newly enacted sub-section (11) of Section 28 of the Customs Act, which gave retrospective effect, thereby removing any jurisdictional defect of show-cause notices issued by DRI authorities. 2. Eligibility for Duty Exemption: - M/s. Gimpex Ltd. (GL): GL exported industrial minerals and obtained duty credit certificates under the Target Plus Scheme (TPS). They imported continuous cast copper rods using these certificates. The Customs authorities denied exemption under Notification No.32/2005-Cus, arguing that the imported goods did not have a broad nexus with the exported products. The Tribunal held that GL did not establish a broad nexus between the imported copper rods and the exported products of Chemical & Allied Products Group, thus denying the exemption. - M/s. Sree Enterprises (SE): SE exported articles of mild steel and alloy steels, obtained duty credit certificates, and imported copper rods. The Tribunal found that SE established a broad nexus between the imported copper rods and the exported products, thus allowing the exemption under Notification No.32/2005-Cus. 3. Invocation of Extended Period of Limitation: The Tribunal addressed the issue of whether the extended period of limitation under the proviso to Section 28(1) of the Customs Act could be invoked. It was argued that the demand of duty was beyond the normal period and based on a misunderstanding of the relevant provisions of the FTP. The Tribunal held that the extended period of limitation was not invocable as the assessees had a bona fide belief in their entitlement to the exemption, and there was no intent to evade payment of duty. Consequently, the demands of duty on GL and SE were set aside on the ground of limitation. 4. Imposition of Penalties: - Penalties under Section 114A: The Tribunal set aside the penalties imposed on GL and SE under Section 114A of the Customs Act, as the demands of duty were time-barred and there was no intent to evade duty. - Penalties under Section 112: Penalties were imposed on individuals associated with GL and SE under Section 112 for aiding and abetting the misuse of TPS. However, the Tribunal held that since no penalty was imposed on GL and SE under Section 112, penalties on the so-called abettors could not be sustained. Consequently, all penalties under Section 112 were set aside. Conclusion: The Tribunal dismissed the Department's appeal for enhancement of penalty on GL and allowed the appeals of GL, SE, and other appellants. The demands of duty were set aside on the ground of limitation, and all penalties imposed under Sections 114A and 112 were also set aside.
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