2019 (11) TMI 296 - AT - Customs

STPI units - Unauthorised procurement of inputs - Benefit of N/N. 153/93-CUS - Appellant procured the goods from three Indian manufactures without payment of duty of central excise on the basis of the certificates given by the authorities - It is the contention of the appellant that they had procured the goods from the local manufactures only on the basis of the certificate given by the Superintendent and as such there cannot be any contravention of the permission granted by the Director STPI or the Notification No.153/1993-CUS. - penalties - HELD THAT - The permission to import the goods in terms of the notification was granted, which permission has not been utilized by the assessee, inasmuch as there is no dispute that no imports were made by the appellant and the entire dispute revolves around the procurement of indigenously made goods, without payment of duty. Admittedly the certificate of the Superintendent has permitted the appellant to procure such duty free goods but such permission was subject to the execution of B17 bond. The procurement of the goods from indigenously manufactures is not covered by any exemption notification. The said manufactures have cleared the goods without payment of duty on the basis of the representations made by the appellant by showing the certificates etc. and intimating the manufactures that the goods are entitled to be received by them without payment of duty. The demand stand raised and confirmed against the appellant in terms of the B17 bond, which is only for an amount of ₹ 40,00,000/-(forty lakhs). As such we are of the view that asssesse s liability would be restricted to the amount covered by the said B17 bond - As such we reduce their liability to the interest of ₹ 40,00,000/-(forty lakhs) in toto. Penalties - HELD THAT - The procurement of the goods free of duty, were on the basis of the said certificates issued by the authorities and does not reflect upon mala fide or the assessee so as to invoke any penal action against them - Penalties set aside. Appeal allowed in part.

Summary

Issues:
1. Import of goods free of duty under Notification No.153/93-CUS and procurement from Indian manufacturers without payment of duty.
2. Interpretation of permissions granted by Software Technology Park and Superintendent regarding duty exemption.
3. Initiation of proceedings against the appellant for duty demand, interest, and penalty.
4. Appellant's defense based on permission certificates, B17 bond, and limitation of show cause notice.
5. Revenue's stance on the demand raised and confirmed against the appellant.
6. Assessment of liability based on B17 bond, duty payment obligations, and exemption notifications.
7. Decision on the appellant's appeal, reduction of liability, and setting aside of penalties.

Analysis:
1. The appellant, approved as an Infrastructure Service Provider, imported goods duty-free under Notification No.153/93-CUS and procured items from Indian manufacturers without paying central excise duty during October 2005 to December 2006.
2. Authorities questioned the procurement from indigenous manufacturers, alleging non-compliance with relevant provisions and absence of duty exemption, leading to a show cause notice demanding ?54,91,176. The Adjudicating Authority upheld the demand, interest, and imposed a penalty.
3. Appellant's advocate argued that procurement was based on permissions from the Software Technology Park Director and Superintendent, emphasizing compliance with B17 bond terms. The limitation defense was raised due to the delayed show cause notice issuance in 2013.
4. The Revenue reiterated the reasoning of the impugned order, supporting the demand against the appellant.
5. The Tribunal observed that the appellant did not utilize the permission to import goods under the notification, focusing on the procurement of duty-free indigenous goods with the Superintendent's approval subject to the B17 bond.
6. As the goods were not covered by any exemption notification, the duty liability fell on the appellant as per the B17 bond terms. The Tribunal held that the limitation did not apply due to the provisional assessment clause in the bond.
7. The Tribunal found no merit in the appellant's appeal but reduced the liability to ?40,00,000, the amount covered by the B17 bond. Penalties were set aside as the procurement was based on valid certificates without indicating any malafide intent. The appeal was disposed of accordingly.