2018 (12) TMI 1195 - AT - Customs

Duty exemption entitlement scheme - Condition of N/N. 203/92-Cus dated 19th May 1992 not complied with - credit on inputs procured locally or otherwise, for use in manufacture of the export goods had not been availed - validity of SCN - Held that - The SCN has been issued on the presumption of availment of input stage credit without any narrative of the scrutiny that led to such conclusion. The very same fault-lines are apparent in the impugned order. The repetition of the standard narration of a SCN with the same tentative conclusion therein does not suffice to hold that all licence-holders, who had not taken advantage of the amnesty scheme by reversal of input credit availed prior to 31st January 1997, have rendered themselves non-compliant. SCN and the adjudication order are found to contain errors that are impossible to repair, or rectify, and, in the face of such irreparable error, the impugned order must be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Noncompliance with condition of duty exemption entitlement certificate scheme, demand of duty and penalty imposed, sufficiency of evidence in show cause notice, deliberate suppression and willful misstatement, defects in show cause notice details, limitation of recovery under section 28 of Customs Act, 1962, errors in show cause notice and adjudication order.

Analysis:
1. The case involved M/s Navbharat Enterprises Ltd being proceeded against for noncompliance with a condition of notification no. 203/92-Cus related to imports against a specific license. The appellant had imported permissible inputs under a duty exemption scheme and fulfilled the export obligation. However, it was found that the appellant failed to evidence non-availment of duty credit on inputs used for export goods. This led to a demand of &8377; 1,00,47,253/- and a penalty under section 112 of Customs Act, 1962, which was challenged in the appeal.

2. The appellant argued that the export obligation was discharged to the extent where certain credits and facilities were not availed, as per the provisions of the notification. They contended that the show cause notice did not ascertain the availment of input credits and did not specify the non-compliant goods used in export. Reference was made to a Supreme Court decision for support.

3. The Authorized Representative argued that the noncompliance was clearly mentioned in the show cause notice and the appellant failed to provide evidence of non-availment of credit. The appellant did not participate in the proceedings or respond to the notice. It was highlighted that deliberate suppression and misstatement were found in documents, justifying the extended period for invoking section 28 of Customs Act, 1962.

4. The Tribunal observed that the show cause notice and annexure lacked crucial details regarding bills of entry and the source of information for duty recovery. The notice was found to have irreparable defects, lacking specifics necessary for proper assessment.

5. It was noted that the recovery under section 28 of Customs Act, 1962 was limited to short-paid or not-paid duty resulting from an assessment of imported goods, which was not adequately documented in this case. The notice presumed availment of input credit without proper scrutiny, leading to errors in the adjudication order. Fundamental investigations were missing, and the demand was quantified based on incomplete data from the license, leading to irreparable errors.

6. Consequently, the Tribunal allowed the appeal, setting aside the impugned order due to the irreparable errors and defects in the show cause notice and adjudication order. The decision was pronounced on 20/12/2018.