2017 (11) TMI 1121 - HC - Customs

Jurisdiction - Whether the Appellate Tribunal could travel beyond the scope of the allegations levelled in the show cause notice and decide the appeal, rejecting the refund claim of the appellant, on the basis of issues/allegations not raised in the show cause notice? - refund claim - Held that - The contention raised by the appellant is based on the show cause notice dated 20th May, 2002 and even the first authority and second authority have considered the bill of entry and the attachment which was liable for the Jacquard - the show cause notice which was issued for refund is required to be set aside. The appellant is entitled for the refund. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Scope of Appellate Tribunal's decision beyond show cause notice allegations.
2. Assessment of customs duty on imported goods during debonding of 100% E.O.U.
3. Classification of Jacquard machines as part of Weaving machines or independent auxiliary machines.

Analysis:
1. The appellant challenged the Tribunal's order dismissing their appeal, questioning if the Tribunal could decide beyond show cause notice allegations. The show cause notice disputed the classification of Jacquard machines as part of looms for duty calculation. The appellant argued that Jacquard is an integral accessory of weaving machines, enhancing their utility. The authority and Appellate Authority rejected the refund claim, citing separate import of Jacquard machines. However, the Tribunal emphasized that refund claims contrary to assessment orders are not maintainable without challenging the assessment. The Supreme Court precedent highlighted the importance of considering the character and uses of goods for classification, leading the Tribunal to uphold the rejection based on non-challenge of the bill of entry.

2. The issue of customs duty assessment during debonding of 100% E.O.U. focused on the classification of Jacquard machines. The appellant contended that Jacquard is essential for weaving machines, enhancing their functionality. The authority considered Jacquard as an auxiliary machine separately imported, not part of looms, thus ineligible for concessional duty rates applicable to looms. The Tribunal upheld the rejection, emphasizing the finality of assessment orders and the necessity to challenge them for refund claims. The appellant's reliance on the Supreme Court's decision did not sway the Tribunal, which maintained the rejection based on non-challenge of the bill of entry.

3. Regarding the classification of Jacquard machines, the appellant argued for their inclusion as part of weaving machines under a specific notification benefiting textile industry machinery. The appellant's position aligned with the notification's provisions, entitling them to a reduced customs duty rate of 5%. The Tribunal agreed with the appellant, setting aside the show cause notice and ruling in favor of the appellant for the refund. The decision highlighted the relevance of specific notifications and proper classification for duty assessment, ultimately leading to the allowance of the appeal and the issuance of the refund within three months.