2013 (11) TMI 242 - AT - Customs

Stay application - Import of human hair - Appellant claimed exemption under Notification No.32/97-Cus. - Department denied exemption on account of violation of Notification No.32/97-Cus. - Held that - apparently there is violation of the notification No.32/97-Cus. The notification clearly defines the term goods to mean that raw materials etc. as are directly related to the export order and supplied free of cost by the foreign buyer. In the present case, it appears that they have remitted the foreign exchange to the foreign buyer. The submission of ld. advocate that said amount could be treated as deposit. We find that Commissioner has given detailed finding on this issue. Hence the submission of learned advocate on this issue will be looked at the time of appeal hearing. Letter dt.9.7.09 as referred to by the appellant was not mentioned in the impugned order. Hence the contention that demand is barred by limitation would be looked into at the time of appeal hearing. It is also noted that applicant executed a bond - Prima facie view not in favour of assessee - Stay granted partly.

Summary

Issues:
1. Waiver of predeposit of duty under Notification No.32/97-Cus.
2. Violation of notification regarding duty payment.
3. Barred by limitation for demand of duty.
4. Misuse of exemption by remitting foreign exchange to foreign buyer.
5. Bond execution affecting the limitation period.

Analysis:
1. The applicant sought waiver of predeposit of duty amounting to Rs.4,13,41,444/- along with interest and penalty under Notification No.32/97-Cus. The advocate argued that they imported 'Human Hair' under the said notification, processed it on job work basis, and exported with wastage. They contended that the duty demand for violation of the notification was unjustified as they had remitted foreign exchange as a security deposit to the foreign buyer, complying with the notification's requirement of supplying goods free of cost by the foreign buyer.

2. The respondent argued that there was a clear violation of the notification, emphasizing that the remittance of foreign exchange to the foreign buyer constituted misuse of the exemption. It was asserted that the applicant failed to inform the proper authority about these payments, indicating a contravention of the notification's provisions. The respondent also highlighted the execution of a bond, suggesting that the normal limitation period would not apply in this case.

3. Upon consideration, the Tribunal found a prima facie violation of the notification No.32/97-Cus. The notification stipulated that goods must be supplied free of cost by the foreign buyer, which was not entirely adhered to as the applicant remitted foreign exchange. The Tribunal acknowledged the detailed findings of the Commissioner on this issue and noted that the applicant's submission regarding the remittance being treated as a deposit would be further assessed during the appeal hearing. The Tribunal also agreed to review the limitation aspect raised by the appellant during the appeal hearing, as the specific letter dated 9.7.09 was not addressed in the impugned order.

4. In light of the above findings, the Tribunal directed the applicant to deposit Rs.75,00,000/- within 8 weeks, as they failed to establish a prima facie case for the complete waiver of the duty and penalty amount. However, subject to this deposit, the predeposit of the remaining duty, interest, and penalty was waived, and the recovery was stayed during the pendency of the appeal. This decision was pronounced in open court, indicating the Tribunal's resolution on the matter.