2015 (3) TMI 466 - AT - Customs

Waiver of pre deposit - whether the appellant is liable to pay customs duty on such spare parts and components imported and used in the repair/overhaul of engines and exported. - Held that - Prima facie, the appellants have fulfilled the conditions which are required to be fulfilled if they were to import the goods under Notification No. 134/94 and if they were to follow the procedure appropriately. The confusion seems to have arisen because of conflicting advises and appellants own contribution. In any case, the basic objective of the Notification that such parts/components imported are used for repair/overhaul of goods exported/re-exported has been fulfilled. Therefore, in our opinion, at this stage, appellant need not be put to any requirement of pre-deposit. Accordingly, the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Summary

Issues:
- Liability to pay customs duty on imported spare parts and components used in the repair/overhaul of engines and exported.

Analysis:
The appellants imported spare parts and components for repairing engines previously imported by them. The central issue in this case is whether the appellants are obligated to pay customs duty on these imported spare parts and components used in the repair and overhaul of engines that are later exported. The Tribunal heard arguments from both sides extensively over three days. However, the Tribunal decided not to delve into all the details at this stage due to the complexity of the issues involved.

The facts reveal that the appellants sought clarification from the Customs Department and DGFT regarding the importation of spare parts for engine repair and overhaul. They were advised by the concerned Committee to apply for permission to establish a private bonded warehouse and for manufacturing in-bond. Despite this advice, the appellants ended up importing under a notification that was not applicable to them. Subsequently, they applied for a private bonded warehouse license, indicating their intention to import spare parts for repair and re-export of engines. However, confusion arose as the license issued did not include permission for in-bond manufacture. The appellants cleared the imported items under ex-bond bill of entry and exported the repaired engines. The dispute arose because the appellants did not import the components under the correct notification, leading to the rejection of their subsequent claim.

The Tribunal noted that the confusion and conflicting advice from the department, coupled with the appellants' own actions, contributed significantly to the problem. Despite this, the Tribunal found that the appellants had essentially fulfilled the conditions required for importing goods under the correct notification and following the appropriate procedure. The primary objective of using the imported parts for repair and export of engines was met. Therefore, the Tribunal decided that the appellants should not be required to make a pre-deposit at this stage. Consequently, the requirement of pre-deposit was waived, and a stay against recovery was granted during the pendency of the appeal.