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2012 (11) TMI 600 - AT - CustomsDemand of duty - 100% EOU - re-import of the exported goods under Notification No. 52/2003, - appellant had given an undertaking to re-export the said capsules within six months from the date of re-import - due to short shelf life, the said capsules could not be marketed and, therefore, the appellant decided to destroy the goods Held that - Due to short shelf life of medicinal capsules, it has deteriorated and it has become unfit for marketing. Therefore, the duty can be demanded only on the value of the deteriorated goods which have to be determined in accordance with sub-section (3) of Section 22 of the Customs Act. It is for the appellant to establish that the goods which they have proposed to destroy has no commercial value whatsoever and no duty liability would be involved - matter remanded back to the original adjudicating authority - appeal is allowed by way of remand.
Issues:
- Duty liability on re-imported goods claimed for destruction outside the unit. - Interpretation of para 6.15(b) of the Foreign Trade Policy 2004-09. - Applicability of Notification No. 52/2003 for destruction of re-imported goods. - Duty demand sustainability based on failure to comply with re-export undertaking. - Consideration of Sections 20, 22, and 23 of the Customs Act for duty abatement on damaged goods. Analysis: Issue 1: Duty Liability on Re-Imported Goods for Destruction Outside the Unit The case involved M/s. Sandoz Pvt. Ltd., a 100% EOU, which re-imported goods and sought to destroy them due to non-marketability. The appellant argued for duty exemption under para 6.15(b) of the Foreign Trade Policy 2004-09. However, the Tribunal emphasized that the Foreign Trade Policy provisions alone cannot abate duty liability. The duty liability must be determined under the Customs Act and relevant notifications. The Tribunal highlighted that re-imported goods are treated as "imported goods" under Section 20 of the Customs Act, subject to duty unless specific provisions apply for remission or abatement. Issue 2: Interpretation of Foreign Trade Policy Provision The appellant relied on para 6.15(b) of the Foreign Trade Policy to support their claim for duty exemption on destroyed goods. However, the Tribunal clarified that while the policy allows destruction without duty payment, the Customs Act and related notifications govern duty obligations. Notification No. 52/2003 did not provide for duty exemption on re-imported goods destroyed outside the unit, as highlighted by the Assistant Commissioner's direction to pay duty. Issue 3: Compliance with Re-Export Undertaking and Duty Demand Sustainability The Revenue argued that the duty demand was sustainable due to the appellant's failure to re-export goods within the specified period. The Tribunal acknowledged the undertaking but emphasized that duty liability is determined by the Customs Act provisions. The failure to comply with the re-export undertaking did not automatically absolve the duty obligation, as duty abatement requires specific conditions under the law. Issue 4: Application of Customs Act Sections for Duty Abatement The Tribunal referred to Sections 22 and 23 of the Customs Act concerning duty abatement on damaged goods. Section 22 allows for duty abatement on damaged or deteriorated goods, subject to specific conditions. In this case, the deteriorated medicinal capsules were deemed unfit for marketing, warranting duty assessment based on the value of the damaged goods as per Section 22(3). The matter was remanded to the original adjudicating authority for determining duty liability based on the Customs Act provisions. In conclusion, the Tribunal allowed the appeal by way of remand, directing a reevaluation of the duty liability on the deteriorated goods in accordance with the Customs Act provisions. The appellant was granted the opportunity to present evidence and arguments to support their claim for duty abatement.
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