2014 (1) TMI 120 - AT - Customs

Waiver of pre-deposit - Penalty u/s. 114A, 114AA and 112 - Misuse of the licences granted to them under Target Plus Scheme Licences - Held that - goods were imported in the year 2007 more specifically during the period May, 2007 to August, 2007. It is also undisputed that the appellant had produced the relevant documents of Target Plus Scheme Licences to the authorities for claiming benefit under Notification No. 32/2005. The authorities before clearing the consignments could have gone into the details as to the eligibility. We also find that the Show Cause Notice was issued on 28-8-2009 by invoking the extended period of time. On perusal of the condition of Notification which was sought to be pressed into service for extended period of time for confirmation of demand, prima facie, we find that the said condition cannot be pressed into service and demand for extended period cannot sustain - appellant have made prima facie case for waiver of pre-deposit of the amounts only on the ground of limitation - Stay granted.

Summary

Issues:
Waiver of pre-deposit of an amount, misuse of licenses under Target Plus Scheme, misinterpretation of 'broad nexus' theory, violation of conditions of Notification No. 32/2005, time limitation for issuing Show Cause Notice.

Analysis:

1. Waiver of Pre-Deposit:
The appellant filed a Stay Appeal seeking waiver of pre-deposit of a substantial amount along with interest and penalties imposed under various sections of the Customs Act, 1962. The demand was confirmed due to alleged misuse of licenses granted under the Target Plus Scheme. The appellant argued that the demand was time-barred as the Show Cause Notice was issued after a significant delay from the date of import. The Tribunal found that the appellant had made a prima facie case for waiver of pre-deposit solely on the ground of limitation, thereby allowing the application and staying the recovery until the appeal's disposal.

2. Misuse of Licenses under Target Plus Scheme:
The appellant imported galvanized iron sheet coils under licenses granted under the Target Plus Scheme. The appellant claimed that the licenses were obtained after achieving incremental growth in export performance. The dispute arose regarding the interpretation of the 'broad nexus' theory under the Foreign Trade Policy. The appellant argued that the Circular relied upon by the authorities had been struck down by the Delhi High Court in a previous case. The Tribunal noted the importation year, the submission of relevant documents, and the eligibility scrutiny by authorities before clearing the goods. It was observed that the Show Cause Notice issued after a substantial delay could not rely on the extended period for confirmation of demand.

3. Interpretation of 'Broad Nexus' Theory:
The appellant contended that the 'broad nexus' theory should be interpreted more expansively, citing the Circular's invalidation by the Delhi High Court in a previous case. The Tribunal acknowledged the appellant's argument but refrained from making a conclusive determination at that stage, as the case was still under consideration. The Tribunal emphasized the need for further examination and refrained from delving into detailed analysis due to the limited scope of the current proceedings.

4. Violation of Conditions of Notification No. 32/2005:
The Departmental Representative argued that the goods imported were not used in the intended exports and highlighted the actual user condition specified in Notification No. 32/2005. The appellant countered by asserting that the goods were transformed from coil to sheet form before sale, thereby complying with the notification's conditions. The Tribunal considered both arguments but primarily focused on the limitation aspect while granting the waiver of pre-deposit.

In conclusion, the Tribunal allowed the application for waiver of pre-deposit based on the limitation ground, highlighting the importance of timely issuance of Show Cause Notices and the need for thorough scrutiny of eligibility criteria before confirming demands. The judgment underscored the significance of adherence to statutory provisions and the necessity for a robust legal framework in customs matters.