2020 (9) TMI 856 - AT - Customs

Flexi Tank Containers - durable goods or not - Benefit of exemption N/N. 104/94-Cus dated 16/03/1994 - entire emphasis of the Revenue is that the subject Flexi Tank Containers are not repeatedly used - scope of SCN - Time Limitation. HELD THAT - Tribunal in various cases has categorically held that merely because the container does not have repeated use, the nature of durability cannot be rejected. The only criterion to be seen is that whether the container in itself is durable in nature. As per the nature of container and use thereof, it is clear that the container imported by the assessee is durable. Moreover, even taking reference from the above judgments, we find that on comparison basis also, all the packing containers which were subject matter in the above cases, the Flexi Tank Container is much durable. Therefore, applying the ratio of the judgments in the above cases, in our view, it is clear that the Flexi Tank Containers imported by the assessee is durable container. Consequently notification no. 104/94-Cus is available to such containers. We also observe that neither the Show Cause notice nor Order in original, raise any dispute that Flexi Tank Containers are strong enough to withstand and endure the rigours of sea waves. Therefore, durability of the containers in isolation is not in dispute. Only because the containers do not have repeated use, the containers which are otherwise durable benefit of notification cannot be denied - reliance can be placed in the case of M/S. SAM AGRI TECH. LIMITED VERSUS CCE, C ST, HYDERABAD 2017 (4) TMI 678 - CESTAT HYDERABAD . Scope of SCN - HELD THAT - Learned Counsel also pointed out that apart from the issue of durability, the Adjudicating Authority has also taken a ground for denying the exemption that re-export of the Flexi Tank Containers was not done by the present assessee but by the exporters of liquid cargo and also on the ground that exporters to whom the appellant has sold the Flexi Tank Containers have claimed drawback by factoring in the process of Flexi Tank Containers in the exports. We find that this allegation was not raised in the show cause notice. Therefore, this particular finding is beyond the scope of show cause notice. The Adjudicating Authority cannot raise any new grounds in the Adjudication Order which was not raised in the Show Cause Notice. Time Limitation - HELD THAT - There is no dispute on the fact that the appellant have made a correct and true declaration of description of the goods in their Bills of entry. The goods have been physically examined by the Custom department and examination report has been submitted. As per the condition of notification, the appellant had executed the bond which after fulfilment of condition that re-export of the container duly filled with liquid cargo bond has been cancelled. The appellant with a bonafide belief claimed the exemption notification 104/94-Cus without making any mis-declaration. The Custom department has very consciously after satisfying themselves allowed the exemption notification and not only that they have cancelled the bond after satisfying that export obligation is fulfilled. In this undisputed fact, there is no suppression of fact on the part of the assessee and custom department was free to interpret in their own manner whether the exemption to be allowed or not. Therefore, it cannot be said that there is any suppression of fact, mis-statement or misdeclaration on the part of the assessee - Appeal is unsustainable also on time bar. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Eligibility for exemption under notification 104/94-Cus.
2. Definition and interpretation of "durable containers."
3. Validity of the show cause notice and the invocation of the extended period of limitation.
4. Imposition of redemption fine and penalties.

Issue-Wise Detailed Analysis:

1. Eligibility for Exemption under Notification 104/94-Cus:
The primary issue was whether the imported Flexi Tank Containers qualified for the duty exemption under notification 104/94-Cus. The appellant argued that the Flexi Tank Containers, constructed with multiple layers of polyethylene and an outer covering of woven polypropylene, were durable enough to withstand the rigors of transport by road, rail, and sea. The containers were used for transporting liquid cargo and were re-exported after use. The appellant provided evidence of the containers undergoing various tests such as Rail Impact Test, Puncture Resistance, and Temperature Tolerance, demonstrating their durability. The Tribunal referenced several previous judgments, including Dimasuki Tea Co. Ltd. vs CC and CC vs Assam Company (India) Ltd., which held that durability is not solely dependent on repeated use but on the container's ability to withstand a sea voyage. Consequently, the Tribunal concluded that the Flexi Tank Containers were indeed durable and eligible for the exemption.

2. Definition and Interpretation of "Durable Containers":
The Tribunal examined the term "durable" as used in the notification. The Revenue's contention was that since the Flexi Tank Containers were used only once and not repeatedly, they could not be considered durable. However, the Tribunal, relying on previous judgments, clarified that durability does not necessarily imply repeated use. It emphasized that the containers' ability to withstand the impact of a sea voyage was sufficient to classify them as durable. The Tribunal cited various cases, including CC vs Indofil Chemicals Company and Sam Agri Tech Ltd. vs CC, to support the interpretation that durability is a relative term and containers can be considered durable even if they are not reused.

3. Validity of the Show Cause Notice and the Invocation of the Extended Period of Limitation:
The appellant argued that the show cause notice issued on 17/10/2014 was time-barred as the goods were imported and cleared between January 2011 and June 2012. The Tribunal agreed, noting that the appellant had made a correct and true declaration of the goods in the Bills of Entry, and the Customs department had duly examined and assessed the goods, granting the exemption. The Tribunal found no evidence of suppression of facts or misstatement by the appellant, ruling that the extended period of limitation could not be invoked. The Tribunal referenced decisions like Northern Plastic Ltd. vs Collector and Commissioner vs Gaurav Enterprises to support its conclusion that the demand was unsustainable on the grounds of being time-barred.

4. Imposition of Redemption Fine and Penalties:
The Tribunal addressed the imposition of redemption fine and penalties under sections 111(m) and (o) of the Customs Act, 1962. The appellant contended that the goods were not liable for confiscation as there was no mis-declaration. The Tribunal agreed, stating that no redemption fine could be imposed since the goods were not available for confiscation. The Tribunal also noted that the Adjudicating Authority's findings on the re-export of the containers by exporters and the claim of drawback were beyond the scope of the show cause notice and therefore nullified. The Tribunal cited judgments such as Prince Khadi Woollen Handloom Prod Co-op Indl. Soc. vs CCE and CCE vs Ballarpur Industries Ltd. to reinforce that findings beyond the show cause notice are not tenable.

Conclusion:
The Tribunal ruled in favor of the appellant, M/s JR Roadlines Pvt. Ltd., allowing the appeals and granting the exemption under notification 104/94-Cus. The Tribunal dismissed the Revenue's appeal, affirming that the Flexi Tank Containers were durable and eligible for the exemption, and that the show cause notice was time-barred. The imposition of redemption fine and penalties was also set aside.