2012 (10) TMI 772 - AT - Customs

EPCG Scheme - Revenue contended that the Notification provides exemption to the spare parts for existing plant and machinery whereas as per the EPCG scheme under para 5.1A, spares including reconditioned spares, tools, spare refractories are covered and the Notification during the period in dispute provides exemption only to the spares and not to the catalysts hence the demand is rightly made. - Held that - In the policy, the capital goods also include catalysts for initial charge and under the EPCG scheme for existing plant, the catalysts are separately mentioned in the spares. Catalysts and consumables are separately mentioned in para 5.1A of the Policy. The Notification in question provides exemption from payment of duty in respect of spares as well as consumables. Subsequently, the consumables were omitted for the benefit of the Notification. The applicant was declaring catalysts in the bills of entry and the same were cleared without any objection. In these circumstances, as the catalysts are separately mentioned in addition to consumables in the EPCG scheme for existing plant and also separately mentioned in the definition of capital goods under the policy, prima facie we find merit in the contention of the applicant on merits as well as on time bar. - stay granted.

Issues:
Waiver of pre-deposit of duty, interest, and penalty under Notification No. 97/2004-Cus. dated 17.9.2004 as amended; Allegation of suppression with intent to evade payment of duty; Interpretation of Notification No. 97/2004-Cus. in relation to import of catalysts; Time bar for demand of duty; EDI system constraints affecting declaration of goods.

Analysis:

1. Waiver of Pre-Deposit:
The applicant sought waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 49,12,61,959 under Notification No. 97/2004-Cus. The demand was confirmed after denying the benefit of the said Notification. The applicant imported catalysts claiming benefit under the Notification, but a show cause notice was issued for denying this benefit due to an amendment omitting consumables from the Notification.

2. Allegation of Suppression:
The Revenue alleged suppression with intent to evade payment of duty by invoking the extended period of limitation. The applicant argued that as per the EPCG scheme, catalysts are covered under capital goods for initial setup and for existing plants. The applicant contended that the catalysts are separately mentioned in the EPCG scheme and the Notification, and thus, the suppression allegation is not sustainable.

3. Interpretation of Notification No. 97/2004-Cus.:
The dispute revolved around the interpretation of Notification No. 97/2004-Cus. The Revenue argued that catalysts are consumables and not entitled to the benefit of the Notification, while the applicant asserted that catalysts are covered under the EPCG scheme and the Notification. The Tribunal found merit in the applicant's contention, noting that catalysts were separately mentioned in the EPCG scheme and the Notification, warranting the benefit of exemption.

4. Time Bar for Demand of Duty:
Regarding the time bar issue, the applicant maintained that as the goods were cleared without objection under the EPCG scheme, the allegation of suppression is unsustainable. The Tribunal agreed, observing that the applicant had declared catalysts in the bills of entry, and the demand was time-barred due to the clear declaration and clearance of goods without objection.

5. EDI System Constraints:
The applicant raised concerns about constraints in the EDI system affecting the declaration of goods. The Revenue suggested that the applicant should have declared the goods as spares for replacement if there were system constraints. However, the Tribunal considered the Revenue's argument insufficient, as the applicant had properly declared the goods as catalysts, which were entitled to the benefit under the Notification.

In conclusion, the Tribunal allowed the waiver of pre-deposit of duty, interest, and penalty, staying the recovery during the appeal's pendency. The Tribunal found merit in the applicant's arguments regarding the entitlement to the benefit of the Notification and the time bar for demand of duty, emphasizing the separate mention of catalysts in the EPCG scheme and the Notification. The case was directed for regular hearing due to the substantial revenue involved.

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