2018 (9) TMI 588 - AT - Customs

Demand of Customs Duty - benefit of N/N. 32/97-Cus denied - loss of goods and remission of Customs duty - Held that - The appellant intimated to the Commissioner of Customs JNPT regarding loss of goods and remission of Customs duty, however, the Commissioner has not responded. This has been recorded by both the lower authorities but it was contended that since, there is no reply from the Commissioner of Customs JNPT, they cannot wait for the same and accordingly proceeded to confirm the demand and upholding the same - once the appellant have written letter for loss of their goods and remission of duty, without any decision on their request by the Commissioner of Customs JNPT, both the lower authorities should not have proceeded with deciding a Show cause notice. Matter remanded to the adjudicating authority. The commissioner of Customs JNPT is also directed to dispose of the letter dated 16.04.2003 submitted by the appellant only, thereafter, the adjudicating authority would pass the De-novo adjudication order - appeal disposed off by way of remand.

Summary

Issues:
1. Demand of Customs duty on imported goods used in manufacturing and destroyed in fire.
2. Demand of Central Excise duty on finished goods destroyed in fire.
3. Compliance with Notification No.32/97-Cus for exemption from Customs duty.
4. Premature confirmation of demand without response from Commissioner of Customs JNPT.

Analysis:

Issue 1: The appellant engaged in manufacturing goods destroyed in a fire, leading to a demand for Customs duty on the imported materials used. The adjudicating authority did not demand Excise duty on the finished goods destroyed, citing a remission order by the Commissioner of Central Excise. The appellant argued that the insurance claim received for the job work charges should be considered as payment realized on account of exports, thus fulfilling the conditions for exemption. The Tribunal found the confirmation of the demand premature due to the lack of response from the Commissioner of Customs JNPT regarding the loss and remission of duty. The matter was remanded for further adjudication post a response from the Commissioner.

Issue 2: The demand for Central Excise duty on the finished goods destroyed was not pursued by the authorities, given the remission order by the Commissioner of Central Excise. The appellant's appeal was based on the argument that the insurance claim received should be treated as payment realized on account of exports, aligning with the conditions of the Foreign Trade Policy Handbook of procedures 2004-9. The Tribunal found the confirmation of the demand premature due to the lack of response from the Commissioner of Customs JNPT, leading to a remand for further adjudication.

Issue 3: The appellant contended that the goods cleared for export, even though destroyed, should be considered as exported goods, thus meeting the conditions of Notification No.32/97-Cus for exemption from Customs duty. Citing a judgment by the Tribunal in a similar case, the appellant argued that the denial of the exemption was not legal. The Tribunal, however, focused on the procedural aspect of the lack of response from the Commissioner of Customs JNPT, leading to a remand for further consideration.

Issue 4: The Tribunal highlighted the premature nature of the confirmation of the demand by the lower authorities due to the absence of a response from the Commissioner of Customs JNPT regarding the loss and remission of duty. It was deemed improper for the authorities to proceed with the decision without awaiting a response. As a result, the Tribunal set aside the confirmation of the demand and the first appellate order, remanding the matter for proper consideration post a response from the Commissioner.

In conclusion, the Tribunal remanded the case for further adjudication, directing the Commissioner of Customs JNPT to respond to the appellant's letter regarding the loss and remission of duty. The matter was to be re-evaluated by the adjudicating authority once a decision was made by the Commissioner.