2017 (3) TMI 827 - AT - Customs

Scope of SCN - Benefit of N/N. 13/81-Cus - appellant was required to utilise the imported goods for manufacture of products which were to be exported, which the appellant failed to fulfill - Held that - the SCN dated 5th April 1995 required the appellant to pay the amount of duty chargeable and imposition of penalty solely on account of retention of the goods in the warehouse beyond the periods specified in the warehousing licence - The impugned order has solely considered non-compliance with N/N. 13/81-Cus dated 9th February 1981 for upholding the order of the original authority as the detriment to the appellant has been determined on the basis of a finding that has travelled beyond the show cause notice - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty, interest, and penalty under section 117 of the Customs Act, 1962 based on non-compliance with exemption notification no. 13/81-Cus dated 9th February 1981 for a 100% Export Oriented Unit (EOU) importing plastic raw material.

Analysis:

1. Background and Procedural History:
The case involves a 100% EOU that imported plastic raw material and later sought permission to debond the unit. The demand of duty, interest, and penalty was based on the expiration of the warehousing period of the imported goods, rendering them liable for duty. The matter had been remanded twice previously, with the Tribunal directing consideration of the exemption notification no. 13/81-Cus dated 9th February 1981.

2. Contentions and Findings:
The lower authorities held that the appellant was required to utilize the imported goods for manufacturing products meant for export under the exemption notification. The impugned order focused on non-compliance with this notification, leading to the imposition of duty and penalty. However, it was noted that the show cause notice primarily addressed the retention of goods in the warehouse beyond specified periods, not compliance with the exemption notification.

3. Judicial Decision:
Upon review, the Tribunal found that the order solely based on non-compliance with the exemption notification was erroneous. The Tribunal set aside the impugned order and allowed the appeal, emphasizing that the detriment to the appellant had been determined beyond the scope of the show cause notice. The matter was resolved in favor of the appellant due to the misapplication of legal provisions.

This comprehensive analysis highlights the key aspects of the judgment, including the issues addressed, the legal contentions, and the ultimate decision rendered by the Tribunal.