2018 (11) TMI 1533 - AT - Customs

100% EOU - Debonding of EOU - Enhancement of value of imported goods - Whether the value of imported goods enhanced at the time of filing of into bond bill of entry can be challenged against the ex-bond bill of entry? - Benefit of N/N. 25/02-Cus dated 01/03/2002 and N/N. 25/99-cus dated 28/02/1999. Challenge to assessment of ex-bond bill of entry as regard enhanced value which was done in into bond bill of entry - Held that - The final assessment is done only in ex-bond bill of entry for home the consumption whereby the customs duty is actually paid when the goods are cleared from the bonded warehouse. The ex-bond bill of entry is final assessment order which is appealable. Hence, the appellant had a legal right to challenge the ex-bond bill of entry contesting all the issues - It is observed that in the into bond bill of entry, value was enhanced over the amount of invoice value without any evidence which is not legal and proper. Therefore, consequently, the enhanced value adopted in ex-bond bill of entry is also not correct - the enhancement of the value is set aside. Entitlement of the exemption notification no. 25/99-Cus dated 28/02/1999 and 25/02-Cus dated 01.03.2002 - denial on the ground that the appellant have not followed the Customs (the import of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996 - Held that - Initially when the goods were imported, the same were received in the factory of the appellant who was 100% EOU and admittedly used within the 100% EOU. The exemption is claimed only at the time of debonding of 100% EOU. The procedure provided under Customs Rules, 1996 is mainly for the purpose of movement of goods from port of Custom up to the factory and use thereof - Even in the case of procedure prescribed under Customs Rules, 1996, similar procedure is followed. Therefore, even if the procedure of Customs Rules 1996 was not followed but practically the similar procedure was followed with reference to notification 53/2003-Cus, if any lapse on the part of the appellant it is mere procedural lapse. For this reason, the substantial benefit of notification no. 25/99-Cus and 25/2002-Cus cannot be denied - the appellant is entitled for exemption under notification 25/2002-Cus and 25/99-Cus. Appeal allowed - decided in favor of appellant.

Summary

Issues:
a) Challenge to the enhancement of value of imported goods at the time of filing into bond bill of entry against the ex-bond bill of entry.
b) Entitlement of the appellant for exemption under notification no. 25/02-Cus dated 01/03/2002 and 25/99-Cus dated 28/02/1999 when Customs Rules, 1996 were not followed during debonding of EOU.

Analysis:

Issue a) Challenge to Enhanced Value:
The appellant, a 100% Export Oriented Unit (EOU), imported goods without maintaining eligibility as per notification no. 52/2003. Upon converting to a Domestic Tariff Area (DTA) unit, they claimed exemption under notifications 25/99-Cus and 25/2002-Cus for capital goods. The revenue objected to the exemption and enhanced the goods' value, leading to a differential duty demand. The appellant challenged this in appeal, arguing that the enhanced value in the ex-bond bill of entry, based on the provisional assessment, could be contested even without challenging the provisional assessment. The Tribunal held that the into bond bill of entry was provisional, and the final assessment in the ex-bond bill of entry could be challenged. The enhanced value without evidence was deemed incorrect, and the original invoice value was upheld, setting aside the enhancement.

Issue b) Exemption Entitlement:
Regarding the denial of exemption under notifications 25/99-Cus and 25/2002-Cus due to non-compliance with Customs Rules, 1996 during debonding, the Tribunal found that the appellant, an EOU, had used the imported goods within the EOU initially. The Customs Rules, 1996 procedural lapse did not warrant denial of exemption as the goods' movement and use were monitored under notification 52/2003-Cus. The Tribunal distinguished cases cited by the Revenue where goods were cleared to DTA units, emphasizing the EOU's controlled environment. As the appellant practically followed similar procedures under notification 52/2003-Cus, the substantial benefit of exemptions could not be denied. Relying on case law and the specific circumstances, the Tribunal held the appellant entitled to exemptions under notifications 25/99-Cus and 25/2002-Cus, setting aside the impugned order and allowing the appeals.

This judgment clarifies the challengeability of enhanced values in the ex-bond bill of entry, emphasizing the distinction between provisional and final assessments. It also highlights the importance of practical compliance over procedural lapses in determining entitlement to exemptions under specific notifications, particularly in the context of EOU operations and Customs Rules adherence.