2014 (4) TMI 723 - AT - Customs

Waiver of pre-deposit import of goods under Duty-Free Import Authorisation Scheme (DFIAS) - The applicants were of the view that the condition implied that they should not have availed Cenvat credit of Countervailing duty imported under DFIAS, whereas the Revenue was of the view that no Cenvat credit on any materials used in export goods should have been availed. - Held that - Even though the provisions were very clear the applicants had availed CENVAT credit on inputs used in exported goods and the importers had availed exemption from additional duty of Customs on imported goods The applicants should not have claimed exemption under Notification 40/2006-Cus - Here, the importers have suppressed the fact of availing the CENVAT credit and have claimed the undue benefit in respect of additional duty of customs. Considering information given by the applicants regarding duty liability in respect of bills of entry filed after the amendment each of the parties were directed to make pre-deposit of the sum of the amounts shown in Cols. 4 & 5 against each of the respective applicant and report compliance - Upon compliance with the orders both the parties are at liberty to mention the matter for further disposal of the appeal itself - Stay denied.

Issues:
Waiver of pre-deposit in appeals related to Duty-Free Import Authorisation Scheme (DFIAS) under Notification No.40/2006-Cus.; Interpretation of conditions under the notification; Effect of retrospective amendment through Notification No.17/2009-Customs; Allegations of availing CENVAT credit on inputs used in export goods; Demand of Customs duty due to contravention of amended condition; Dismissal of appeals by Commissioner (Appeals) for non-compliance with pre-deposit condition.

Analysis:

Waiver of Pre-deposit:
Sixteen applications for waiver of pre-deposit were filed in appeals concerning the Duty-Free Import Authorisation Scheme (DFIAS) under Notification No.40/2006-Cus. The appeals were on a common issue, although filed by different parties. The applicants imported goods under the scheme and claimed exemption under the notification. The issue revolved around the interpretation of conditions under the notification, specifically regarding the discharge of export obligations and availing CENVAT credit on imported materials.

Interpretation of Notification Conditions:
There was a discrepancy in understanding the conditions of the notification, particularly in cases where DFIAS was transferred to third parties. The applicants believed that they should not have availed CENVAT credit of Countervailing duty imported under DFIAS, while the Revenue contended that no CENVAT credit on any materials used in export goods should have been availed. This discrepancy led to confusion and subsequent demands for Customs duty based on the newly incorporated condition through Notification No.17/2009-Customs.

Effect of Retrospective Amendment:
The notification was amended with retrospective effect from 19.05.2006, leading to the issuance of Show Cause Notices demanding Customs duty from the applicants for contravening the amended condition. The duty demands were confirmed, and penalties imposed, prompting the applicants to appeal to the Commissioner (Appeals). However, the Commissioner (Appeals) directed the pre-deposit of the entire tax amount as a condition for hearing the appeals, which the applicants failed to comply with, resulting in the dismissal of their appeals under the Customs Act, 1962.

Allegations of Availing CENVAT Credit:
The Revenue alleged that the importers had availed CENVAT credit on inputs used in exported goods, contrary to the provisions of the notification and Foreign Trade Policy. The Revenue argued that the applicants had wrongly claimed exemption under Notification 40/2006-Cus., leading to the suppression of facts regarding availing CENVAT credit and seeking undue benefits in terms of additional Customs duty exemption.

Decision and Pre-deposit Requirement:
After considering the submissions and tabulations provided by the applicants regarding duty liability, the Tribunal directed specific parties to make pre-deposits within a stipulated period. The Tribunal instructed parties at certain serial numbers in the table to comply with the pre-deposit requirements, failing which the balance dues arising from the orders would be waived, and collection stayed until the disposal of all sixteen appeals. Compliance was to be reported by a specified date for further proceedings in the appeals.

This detailed analysis encapsulates the key issues, arguments, interpretations, and the Tribunal's decision in the legal judgment concerning the waiver of pre-deposit in appeals related to the Duty-Free Import Authorisation Scheme under specific Customs notifications.

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