2018 (8) TMI 1297 - AT - Customs

100% EOU working under the STP scheme - Private bonded Warehouse - violation of N/N. 141/91 -Cus dt. 22/10/1991 and N/N. 52/2003-Cus. - the only violation alleged against the appellant is that the appellants have violated the condition of the notification and has not used the capital goods on IUT - time limitation. Held that - In the said N/N. 140/91-Cus there was no such condition that at the time of IUT the recipient unit must use the goods. This condition of use by the recipient unit was introduced in the Notification No. 140/1991 by customs notification No.64/2002-Cus dt. 24/06/2002 which is after the transfer of goods to the present unit and therefore this condition of use cannot be made applicable retrospectively. Under the notification No. 140/91 duty can be demanded only from Verifone if there is a violation of any condition of the said notification because the importer of the said goods is Verifone and not the present appellant. Time limitation - Held that - The demand is also barred by limitation as the officers of the Department visited the unit of the appellant on 28/06/2005 and finally issued the show-cause notice on 02/05/2008 which is much beyond the period of limitation. The impugned order is not sustainable on merit as well as on limitation - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Confirmation of demand, redemption fine, penalty under Customs Act, 1962, violation of Notification No. 140/91-Cus, duty on capital goods, extension of warehousing license, limitation period, confiscation of goods.

Analysis:
1. Confirmation of Demand: The appeal challenged an order confirming a demand of ?1,84,14,711/- along with interest, redemption fine of ?80 lakhs, and a penalty of ?10 lakhs under the Customs Act, 1962. The Commissioner upheld the demand, alleging violation by the appellant in the transfer of capital goods under IUT.

2. Violation of Notification No. 140/91-Cus: The appellant argued that the condition of use by the recipient unit was introduced in the Notification No. 140/1991 by customs notification No.64/2002-Cus after the transfer of goods to the present unit. The Tribunal found that the goods had already been used by the transferring entity before the IUT, and duty could only be demanded from the importer, not the present appellant.

3. Extension of Warehousing License: The appellant contended that they had obtained renewal of the warehousing license up to 30/09/2010, which aligned with the warehousing period of the capital goods. The Tribunal agreed, citing a CBEC circular, and held the demand of duty incorrect while the goods were still in the warehouse.

4. Limitation Period: The Tribunal noted that the demand was barred by limitation as the show-cause notice was issued much beyond the prescribed period after the officers visited the appellant's unit. The demand and imposition of fines were deemed legally unsustainable.

5. Confiscation of Goods: The Tribunal held that confiscation of goods and the imposition of redemption fine were not justified, especially when the goods were still in the warehouse under customs control.

6. Precedent and Relief: The Tribunal referred to similar cases where relief was granted to the assesses on identical issues, supporting the appellant's argument against the demand and penalties. The impugned order was set aside, allowing the appeal with consequential reliefs, if any.