2013 (10) TMI 1258 - AT - Customs

Benefit of the Notification 97/2004-Cus., dated 17-9-2004 - Import of catalysts - Ommission of consumable from benefit of Notification - Whether appellant are entitled to claim exemption for catalyst imported as spares or not - Held that - as the FTP 2004-2009 and EPCG licence issued thereunder, clearly specifies that catalysts are different from consumables and are covered under para 5.1A of the policy as spares, catalysts, etc. Therefore, following the decision of Suttons & Sons (India) P. Ltd. (1994 (2) TMI 298 - HIGH COURT OF CALCUTTA) the Notification in question is to be read harmoniously with the provisions of FTP 2004-2009. The provisions of Foreign Trade Policy shall prevail over the Notification of the Customs authorities as the customs authorities do not have any power to curtail the import unless such curtailment is warranted by the import policy. Therefore, during the impugned period the appellant are entitled for the benefit of the Notification No. 97/2004 as amended - as per Notification 97/2004-Cus., dated 17-9-2004, the exemption for spare parts is given at Sr. No. 5 but the allegation against the appellant is that they have cleared the catalyst at Sr. No. 1 as capital goods. This allegation against the appellant is not sustainable as in the EDI system. Sr. Nos. 1 & 2 were generated but did not include Sr. No. 5. As per the FTP para 5.1A the appellant are allowed to import catalyst . Para 5.1A deals with only spare parts, catalyst and at the time of clearance of goods, the EPCG licence were produced by the appellant before the customs officers for endorsement in their licence. Therefore, after examining the licence, the goods were assessed and allowed to be cleared duty free. In that situation, the allegation of suppression against the appellant again does not survive. Admittedly, in this case goods were imported during the period 2007-2008 and show-cause notice have been issued on 31-3-2010 invoking the extended period of limitation on the ground of suppression with an intend to evade payment of duty. As the allegation of suppression is not sustainable against the appellant, therefore, the demand against the appellant is time-barred - Decided in favour of assessee.

Summary

Issues Involved:

1. Denial of benefit under Notification 97/2004-Cus. for imported catalysts.
2. Nature of catalysts as consumables or spares.
3. Applicability of extended period of limitation due to alleged suppression of facts.

Issue-wise Detailed Analysis:

1. Denial of Benefit under Notification 97/2004-Cus.:

The appellant challenged the order confirming customs duty, penalty, and redemption fine, arguing that the imported catalysts were eligible for benefits under Notification 97/2004-Cus. They claimed the catalysts were covered under the EPCG scheme, which allowed import of capital goods, including catalysts, for existing plants. The Revenue denied this benefit, stating that catalysts were consumables, which were omitted from the Notification by an amendment in 2007. The appellant argued that the catalysts were spares, not consumables, and thus still eligible for the benefit.

2. Nature of Catalysts as Consumables or Spares:

The appellant contended that catalysts should be considered spares as per the Foreign Trade Policy (FTP) and EPCG scheme, which allowed import of catalysts for existing plants. They argued that the deletion of the word 'consumables' from the Notification did not affect the import of catalysts as spares. The Revenue argued that catalysts were consumables as they were substantially or totally consumed in the manufacturing process and thus not eligible for the benefit under the amended Notification. The Tribunal found that the FTP and EPCG scheme treated catalysts as distinct from consumables and allowed their import as spares, supporting the appellant's contention.

3. Applicability of Extended Period of Limitation:

The appellant argued that the extended period of limitation could not be invoked as there was no suppression of facts. They had declared the catalysts in the bills of entry and claimed the benefit under the EPCG licence, which was cleared without any objection from customs authorities. The Revenue argued that the appellant misdeclared the catalysts to avail duty exemption and thus the extended period of limitation was applicable. The Tribunal found that the appellant had acted in accordance with the EPCG licence and FTP, and the customs authorities were aware of the nature of the goods. Therefore, the allegation of suppression was not sustainable, and the demand was time-barred.

Conclusion:

The Tribunal held that the appellant was entitled to the benefit of Notification 97/2004-Cus. as amended, for the imported catalysts, which were considered spares under the FTP and EPCG scheme. The deletion of the word 'consumables' from the Notification did not affect the import of catalysts as spares. The Tribunal also found that the extended period of limitation was not invocable as there was no suppression of facts by the appellant. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.