2018 (4) TMI 968 - AT - Customs

100% EOU - Empty drums after use of the inputs were sold by the appellants in DTA - suitable for repeated use - Department took the view that such clearances will attract customs duty in view of condition No.4(b) N/N. 52/2003-Cus. as amended - whether the drums in which the inputs have been imported are suitable for repeated use? - Held that - the empty drums have been sold only as scrap to merchants and to their employees. For the purpose of the notification the test of being suitable for repeated use in our view is whether the drums are being reused for containing and transporting the very same goods in which they had initially arrived. There is no such allegation or evidence brought forth. Benefit of notification remains allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of condition No.4(b) of Notification No.52/2003-Cus.
2. Liability of customs duty on the sale of imported empty drums.
3. Applicability of duty on drums procured domestically.
4. Reusability of empty drums as per notification.

Analysis:
1. The main issue in this case revolves around the interpretation of condition No.4(b) of Notification No.52/2003-Cus regarding the liability of customs duty on the sale of imported empty drums by a 100% EOU engaged in the manufacture of bulk drugs. The department contended that such clearances attract customs duty based on the condition of the notification.

2. The Commissioner (Appeals) upheld the duty demanded on the sale of imported empty drums but ruled that no duty could be demanded for drums with inputs procured domestically. The lower appellate authority directed the adjudicating authority to rework the duty payable on the sale of imported drums. The appellant argued that the drums were not sold as such but as scrap, and hence no duty should be imposed.

3. The appellant relied on a case law to support their argument, emphasizing that no duty should be demanded on the clearance of empty drums procured domestically. However, the department argued that duty can be demanded on reusable goods as per the notification's conditions and cited relevant case laws to support their stance.

4. The Tribunal analyzed the facts and contentions presented by both sides. They concluded that the empty drums were sold only as scrap and were not suitable for repeated use in containing and transporting the same goods. Therefore, the drums were considered used packing material unsuitable for repeated use, exempt from duty as per the provisions of the notification. The Tribunal distinguished the case laws cited by the department, stating they were not applicable to the current appeal.

5. Ultimately, the Tribunal found merit in the appeal and allowed it with consequential relief, if any, as per the law. The judgment highlighted the importance of reusability and the specific nature of the goods in determining the applicability of customs duty as per the notification's conditions.