2015 (9) TMI 766 - HC - Customs

Benefit of exemption notification no. 29/1999 Used in goods which are sold in domestic market Department challenging impugned order of Tribunal by which benefit of exemption notification No.29/1999 was extended to imported goods, even if it is used in goods which are sold in domestic market instead of using them in export goods Held that - Admittedly neither in orders passed by Commissioner nor Tribunal, recorded relevant portions of Notifications required - There were contradiction between finding rendered by Adjudicating Authority and finding of Tribunal Also statements given by persons concerned are also adverse to extent that there was intention on part of first respondent to use imported goods primarily for local sales In view of contradiction between findings of Adjudicating Authority and Tribunal, present court do not think it fit to answer questions of law, except remanding matter to Tribunal to consider claim of first respondent in light of findings of Commissioner Appeal allowed by way of remand to Tribunal Order of Tribunal set aside Decided against Revenue.

Summary

Issues:
Challenge to Final Order of Customs, Excise and Service Tax Appellate Tribunal regarding exemption notification applicability for imported goods used in domestic market instead of export goods.

Analysis:
The appeal challenges the Final Order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, regarding the applicability of exemption notification No.29/1999 to imported goods used in the domestic market instead of export goods. The questions of law raised include whether the exemption meant for bonafide exporters can be extended to imported goods used in domestic sales, and if such extension aligns with the purpose of the exemption notifications. The Tribunal's decision favored the first respondent, who imported leather labels under a specific notification but was accused of diverting them to the domestic market. The Commissioner found the first respondent's claim as a bonafide exporter to be false, leading to duty recovery, penalty, and interest imposition. However, the Tribunal overturned this decision, citing a lack of explicit conditions in the notifications regarding export volume required to qualify as a bonafide exporter.

The High Court noted discrepancies in the orders of the Adjudicating Authority and the Tribunal, particularly regarding the intention behind using the imported goods for local sales. Due to these contradictions, the High Court decided to remand the matter back to the Tribunal for a reconsideration of the first respondent's claim in light of the Commissioner's findings and statements recorded from involved parties. The High Court deemed the Tribunal's reasoning flawed in stating the absence of a finding that the first respondent was not an exporter, highlighting it as an error on record. Consequently, the High Court allowed the appeal by remanding the case to the Tribunal, setting aside the Tribunal's order, and refrained from answering the raised legal questions due to the remand order. No costs were awarded in this decision.