2017 (1) TMI 1348 - AT - Customs

Eligibility for Concessional rate of duty - BCD - import of lead calcium positive alloy - certificate of origin - denial on the ground that goods were cleared without examination under the Risk Management System which was a consequence of the importer not having claimed the benefit of the said exemption - Held that - the issue had been settled by the decision of the Tribunal in Zuani Agro Chemicals Ltd, 1995 (7) TMI 221 - CEGAT, NEW DELHI which held that a substantive benefit, if otherwise due, should not be denied merely because of minor procedural infractions. Concessional rate of duty extended - The appellant is entitled to file a refund claim which may be processed and sanctioned subject to verification of documentary evidence to be submitted by the appellant that incidence of duty has not been passed on - appeal allowed - decided in favor of appellant.

Issues involved:
1. Eligibility for preferential rate of duty under Free Trade Agreement with Korea.
2. Classification of goods and eligibility for concessional rate of duty.
3. Authority to recall and reassess bills of entry.
4. Consideration of relevant documents by the original authority.
5. Grant of stay application by Revenue.
6. Examination of goods before clearance and extension of exemption notification.
7. Compliance with the requirement of the exemption notification regarding the country of origin.

Issue 1: The case involved the eligibility of the imports for a preferential rate of duty under the Free Trade Agreement with Korea. The Commissioner of Customs (Appeals-II) directed the lower authority to recall and reassess three bill of entries filed by the respondent in April 2011, as the imports were deemed eligible for the preferential rate of duty under the agreement, which had not been extended to them at the time of clearance from the warehouse. The original authority had denied the concessional rate of 3% 'basic customs duty' (BCD) as the importer did not claim the benefit of the exemption due to lack of possession of the requisite 'certificate of origin' at the time of clearance.

Issue 2: The goods were self-assessed under heading 7801 10 of the Customs Tariff Act, but were actually 'lead calcium positive alloy' with a 'certificate of origin' reflecting a different harmonized system code. The first appellate authority set aside the order of assessment and directed reassessment by the original authority to verify the 'certificate of origin' and grant a refund of excess duty collected if eligible. The original authority rejected the claim for reassessment and denied the benefit of the concessional rate of duty, stating its lack of jurisdiction to recall or reassess bills of entry that had been finally assessed.

Issue 3: The first appellate authority directed the recall of the reassessment of the bill of entry and extended the benefit of the notification under the Free Trade Agreement with Korea. The Revenue appealed against this order and sought a stay, which was dismissed by the Tribunal as the grant of stay would amount to rejecting the grounds put forth by the first appellate authority without proper consideration.

Issue 4: The Tribunal noted that the original authority had not considered the relevant documents entitling the importer to the concessional rate of duty. The Tribunal found that the application for stay by Revenue was unnecessary as the impugned order directed reassessment, and Revenue was not in jeopardy.

Issue 5: The Tribunal considered the argument presented by Revenue regarding the examination of goods before clearance and the extension of the exemption notification. The Tribunal concluded that there was no merit in Revenue's contention that the benefit of the exemption notification should be denied solely because the goods were not examined at the time of clearance.

Issue 6: The Tribunal allowed the appeal, stating that the appellant was entitled to file a refund claim subject to verification of documentary evidence showing that the duty incidence had not been passed on. The stay petition was disposed of accordingly.

Issue 7: The Tribunal referenced previous decisions and held that compliance with the requirement of the exemption notification regarding the country of origin was essential for extending the benefit of the notification, emphasizing substantive compliance with minor procedural infractions to ensure that due benefits were not denied.

The judgment provided a detailed analysis of each issue, addressing legal provisions, precedents, and the specific circumstances of the case to arrive at a comprehensive decision.

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