2018 (5) TMI 1478 - AT - Customs

100% EOU - violation of import conditions - N/N. 53/97-Cus. Dt.3.6.97 - case of the department is based on the allegation that respondent did not use the imported raw materials for manufacture of final products, but removed them as such which is violation of condition of notification - time limitation. Held that - the Department was informed that the appellants are not able to use the goods for manufacture of adaptors and chargers as intended by them due to the deterioration of the quality of goods due to long storage. The department had given permission to clear to job worker for redrawing. This itself would show that the goods have become unusable, and have to be considered as rejects/wastes. Thus the allegation that respondents removed the imported goods as such is without basis and not acceptable. Time limitation - Held that - Respondents have paid duty on clearing the goods in 2003 itself. However, the SCN was issued only in 2006 beyond the normal period alleging suppression - there is no evidence to support the allegation of suppression of facts - In the absence of such evidence, the SCN issued invoking extended period is time barred. Demand cannot sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Import of raw materials without paying duty under Notification No.53/97-Cus.
2. Allegation of not using imported raw materials for manufacturing finished products.
3. Liability for duty payment on imported materials.
4. Time-barred Show Cause Notice (SCN) invoking extended period.
5. Clearance of goods as rejects/wastes.

Analysis:
1. The appellant, a 100% EOU, imported raw materials under Notification No.53/97-Cus. exempting duty for manufacturing goods for export. Officers found surplus raw materials when production shifted to emergency lamps due to market conditions. Department alleged duty liability as raw materials were not used for intended products.

2. The department argued that the imported goods were cleared without being used for manufacturing, violating the notification conditions. Appellant contended that goods became obsolete due to long storage, making them rejects/wastes eligible for concessional duty. The Commissioner (Appeals) set aside the demand, interest, and penalties.

3. The respondent explained that imported raw materials became unsuitable for intended use due to deterioration from long storage, leading to clearance as rejects/wastes. The department's case lacked evidence of suppression, and the SCN issued in 2006 was time-barred, as goods were cleared in 2003 with duty paid.

4. The Tribunal concluded that the appellant informed the department about unusable raw materials, obtained permission for alternative processing, and paid duty upon clearance. The SCN invoking extended period lacked merit, as no evidence supported suppression allegations. The demand was deemed unsustainable, and the appeal by the department was dismissed.

5. The judgment highlighted that the goods were not removed "as such" but as rejects/wastes due to quality deterioration, as evidenced by prior notifications to the department. The Tribunal found no basis for the allegation of removing goods "as such," supporting the appellant's contention of clearance as rejects/wastes. The impugned order was upheld, and the cross objection filed by the assessee in the department's appeal was disposed of.