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2017 (11) TMI 1529 - AT - CustomsBenefit of N/N. 94/96-Cus - DEEC Scheme - goods reimported for reprocessing/reconditioning, claiming Notification No.158/95-Cus - As the subject goods could not be re-exported within the period of six months prescribed in the said notification, they sought extension for re-export - Whether differential duty can be levied on goods re-imported with full duty exemption under Notification No.158/95-Cus. when the repaired/reconditioned goods have been exported only after expiry of the period prescribed in that notification? - Revenue neutrality - Whether the demands made on this score in these appeals can be set aside even on the grounds of revenue-neutrality? - Held that - A close look at the conditionalities of the notification would reveal that the legislature has sought to clip any possibility of misuse. For example, by requiring that such goods are re-imported not beyond the period of three years from the date of their export. So also, to prevent any misuse of facilitating provisions by way of retention of goods in India, the notification also requires that after reconditioning/repair, the re-import goods shall have to be re-exported within a maximum period of 12 months from the date of such re-import. These time limits prescribed both, for re-importation as well as the re-exportation, in our view, are substantive conditionalities and not merely procedural. It is also not the case that when being required to pay duty forgone in the event of non-compliance of Notification No.158/95-Cus., the importer is left high and dry with no other remedy. Indeed, such importer, even if he has to discharge differential duty liability, provided he eventually re-exports the re-imported goods at some point, will surely be eligible to claim drawback towards the duties suffered on the goods exported - once the substantive post-importation condition of Notification No.158/95-Cus. is not satisfied or complied with, the importer will have no other option but to pay an amount equal to the difference between duty levied at the time of re-import and the duty leviable on such goods at the time of importation, but for the exemption contained in Notification No.158/95-Cus - decided in favor of appellant. Whether the appellants can claim the benefit of another N/N. 94/96-Cus or otherwise? - Held that - Appellants have contended that since they have missed the bus in respect of Notification No.158/95-Cus., they should be nonetheless allowed to claim the beneficial provisions of Notification No.94/96-Cus. However, in view of the discussions supra regarding Notification No.158/95-Cus. and Notification No.94/96-Cus., we are unable to find much merit in this contention. Both these notifications have been issued for different situations and different reasons. Notification No.94/96 does not require that the re-importation is for the purposes of repair or reconditioning. There is also no requirement in that notification mandating re-export of the goods of the re-imported goods. In other words, Notification No.94/96-Cus. seeks to cover only those situations where the importer does not have any declared intent to immediately re-export the re-imported goods, as long as the duty liability specified in Col.3 of that notification is discharged. The importer can leave the goods undisturbed e.g., in their factory or premises, without any pressing need for their re-export. That however is not the case with Notification No.158/95-Cus which seeks to cover a situation where the goods are re-imported within 3 years, only for repair or reconditioning and proximate re-export thereafter - the contention of the appellants that they can very well claim alternative benefit of Notification No.94/96-Cus is misplaced - decided against appellant. Appeal allowed in part.
Issues Involved:
1. Differential duty levy on re-imported goods under Notification No.158/95-Cus. 2. Revenue-neutrality of the demand. 3. Applicability of Notification No.94/96-Cus. as an alternative. Issue-wise Detailed Analysis: 1. Differential Duty Levy on Re-imported Goods under Notification No.158/95-Cus.: The appellants re-imported goods for repairs/reconditioning under Notification No.158/95-Cus., which mandates re-export within six months (extendable by another six months). Failure to comply with this condition led to the issuance of a Show Cause Notice (SCN) and subsequent demand for differential duty. The core issue was whether differential duty could be levied when the goods were re-exported beyond the prescribed period. The Tribunal noted that Notification No.158/95-Cus. is a special provision facilitating duty-free re-importation for repairs, provided the goods are re-exported within a stipulated period. Non-compliance with this substantive condition necessitates payment of the duty forgone at the time of re-importation. 2. Revenue-neutrality of the Demand: One appellant argued that the demand should be set aside on the ground of revenue-neutrality, as they would be entitled to claim duty drawback under Section 74 of the Customs Act, 1962, upon re-export. However, the Tribunal held that the conditions of Notification No.158/95-Cus. are substantive and must be strictly complied with. The duty forgone must be paid if the re-export condition is not met, irrespective of potential duty drawback claims. 3. Applicability of Notification No.94/96-Cus. as an Alternative: Appellants contended that they should be allowed to claim the benefit of Notification No.94/96-Cus. if they failed to comply with Notification No.158/95-Cus. The Tribunal examined Notification No.94/96-Cus., which provides duty exemption for re-imported goods without requiring re-export. The Tribunal found significant differences between the two notifications. Notification No.94/96-Cus. applies to goods re-imported under various export schemes (DEEC, EPCG, DEPB) and does not mandate re-export. In contrast, Notification No.158/95-Cus. specifically facilitates re-importation for repairs/reconditioning with a mandatory re-export condition. The Tribunal held that the appellants could not switch from one notification to another to bypass the conditions of Notification No.158/95-Cus. The Supreme Court's ruling in Indian Rayon and Industries supported this view, emphasizing that importers must comply with the conditions of the notification under which they initially claimed benefits. Conclusion: The Tribunal affirmed that: - Differential duty is leviable if re-export conditions under Notification No.158/95-Cus. are not met. - Revenue-neutrality does not negate the requirement to comply with substantive conditions of the notification. - Appellants cannot claim the benefit of Notification No.94/96-Cus. as an alternative to Notification No.158/95-Cus. All appeals were dismissed, upholding the orders of the lower authorities.
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