2014 (8) TMI 280 - AT - Customs

NEPZ Unit - Contravention of conditions of LOP dated 22.09.1995 - Import of goods at concessional rate of duty for manufacture of excisable goods - Cannulae and Needles were imported duty free by the appellant availing exemption granted under Notification No. 53/97-CUS dated 03.06.97 for use in the manufacture of Disposable syringes with or without needles - Number of of needles were claimed to be waste and scrap - Invocation of extended period of limitation - Held that - When the assessee had shown wastage and scrap of the imported material meant for use in the manufacture of syringes with or without needle, unless the waste and scrap aspect is reconciled for the period November, 96 to April, 2003 it is difficult to reach to any conclusion prematurely about the export or no export of 2,35,54,000 pieces of cannulae. Unless cannulae is properly accounted for it is difficult to hold the manufactured quantity of specific goods were exported. Therefore, it is required to be ensured that the claim of waste and scrap as that is in appeal No. C/580/2008 should not grant undue advantage to the plea of export in the present appeal - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Interpretation of LOP conditions and violation thereof.
2. Imposition of Customs Import Duty and Central Excise Duty.
3. Time limitation for invoking penalties.
4. Allegations of suppression of facts and fraud.
5. Export of goods without proper authorization.

Issue 1: Interpretation of LOP conditions and violation thereof:
The case involved an appeal by the Department against an Order-In-Original, where the Assessee was permitted to manufacture and export syringes and parts of syringes under a revised LOP. The Department alleged that the Assessee exported needles without proper permission, leading to contravention of LOP conditions. The adjudicating authority held that the export of goods not included in LOP shall not be liable to duty. On appeal, the Commissioner observed that the LOPs allowed the manufacture and export of syringes with or without needles, implying that the export of needles, if not explicitly permitted, was not prohibited either. The Commissioner found no suppression of facts on the part of the Assessee.

Issue 2: Imposition of Customs Import Duty and Central Excise Duty:
The Department demanded Customs Import Duty and Central Excise Duty from the Assessee for exporting needles without proper authorization. The duty amounts were recoverable under relevant rules and acts, invoking extended periods of limitation. The Order-In-Original confirmed the duty demands and imposed penalties. However, the Commissioner (Appeals) remanded the case for reconsideration, questioning the applicability of specific rules and the time limitation for the demands.

Issue 3: Time limitation for invoking penalties:
The Commissioner (Appeals) raised concerns about the time limitation for imposing penalties, emphasizing the need for a speaking order in this regard. The Assessee argued that the Show Cause Notice issued was time-barred due to the de-bonding of the unit and the absence of pending dues. The Commissioner held that the demand was not sustainable based on grounds of limitation and no dues against the Assessee.

Issue 4: Allegations of suppression of facts and fraud:
The Department alleged suppression of facts and fraud by the Assessee for exporting goods without proper authorization. The Department contended that failure to disclose such facts amounted to suppression, justifying the invocation of extended periods of limitation. However, the Commissioner (Appeals) found no evidence of suppression on the part of the Assessee.

Issue 5: Export of goods without proper authorization:
The Department argued that the Assessee exported goods in violation of LOP norms, leading to duty liabilities. The Assessee defended that the export of syringes with needles was permissible under the LOP conditions. The Tribunal remanded the case to the Adjudicating Authority for further examination, considering the reconciliation of waste and scrap aspects related to the imported material.

In conclusion, the judgment involved a detailed analysis of the interpretation of LOP conditions, imposition of duties, time limitations for penalties, allegations of suppression of facts, and the export of goods without proper authorization. The Tribunal remanded the case for further examination, emphasizing the need for a comprehensive review of the facts and compliance with legal provisions.