2020 (10) TMI 784 - HC - Customs

Benefit of concession/exemption - N/N. 158/95/Cus - goods re-imported for repair/reconditioning of the goods, when again re-exported beyond the prescribed period of one year including the extension of six months permitted in the Notification - HELD THAT - Since there is no dispute before us from the side of the Assessee that the reimport of the goods which had taken place to repair/recondition the goods in question were re-exported beyond the prescribed period of one year including the period of six months of extended period and therefore, the Assessee had admitted the breach of the condition of exemption from custody duty under the said Notification No.158/95/Cus. Merely because the Assessee could claim the duty drawback later on, and it may give rise to a revenue neutral situation, it cannot be said that the period of one year prescribed in the said Notification is without any meaning. Whether the Assessee/ Importer would actually get such duty drawback or not, is a question which was yet to be determined by the concerned Adjudicating Authority when such a claim of duty drawback was made by the Assessee. Therefore, that issue cannot be prejudged either by the Tribunal or by this Court. On the admitted breach of the Notification No.158/95/Cus, the Assessee/ Importer definitely became liable to pay the custom duty in question, denying the exemption under the said Notification in view of the admitted delay beyond the period of 12 months, for the re-export of the same goods. The learned CESTAT therefore in our opinion was justified in denying the said exemption to the Assessee and also rejecting the Rectification Application filed by the Assessee. What Tribunal has done is nothing but asking the Assessee to comply with the law. Duty Drawback - HELD THAT - The question of claiming duty drawback by the Assessee was yet to arise, when such claim was made in accordance with law. This claim cannot be prejudged and holding it to be revenue neutral situation without that claim being examined would be premature and therefore, the learned Tribunal was justified in denying that relief to the Assessee. So also, we too cannot examine and decide the issue prematurely. Appeal dismissed.

Summary

Issues Involved:
Controversy over Notification No.158/95/Cus regarding re-imported goods for repair/reconditioning and subsequent re-export beyond the prescribed period.

Analysis:
1. The main issue in the judgment revolves around the interpretation and application of Notification No.158/95/Cus concerning re-imported goods for repair or reconditioning, and the subsequent re-export beyond the stipulated period. The Tribunal had previously decided against the Assessee, emphasizing the conditions outlined in the Notification, particularly the time limits for re-importation and re-exportation.

2. The Notification specifies that goods must be re-imported within three years from the date of original exportation and re-exported within a maximum of twelve months from the re-importation date. Failure to adhere to these conditions results in the importer being liable to pay the differential duty, as per the exemption provided in Notification No.158/95-Cus.

3. The judgment emphasizes that the Notification aims to facilitate exporters in repairing or reconditioning goods returned by foreign buyers without incurring additional import duty costs. The strict time limits for re-importation and re-exportation are substantive conditions to prevent misuse and ensure compliance.

4. The court refers to a Supreme Court case to illustrate the importance of substantive conditions in such notifications. Non-compliance with substantive conditions, like the time limits in this case, is not condonable as it could lead to fraud and administrative inefficiencies.

5. The Assessee's argument regarding the revenue-neutral situation due to the ability to claim duty drawback upon re-export is considered. However, the court upholds that the breach of the prescribed time limit under the Notification renders the Assessee liable to pay the custom duty, regardless of potential duty drawbacks in the future.

6. The court dismisses the Assessee's reliance on a previous Supreme Court judgment, stating that the present case solely concerns compliance with Notification No.158/95/Cus conditions. The issue of claiming duty drawbacks is premature and cannot be decided without proper examination and adjudication.

7. Ultimately, the court affirms the Tribunal's decision to deny the Assessee the exemption under the Notification due to the admitted breach of the re-exportation time limit. Compliance with the law is emphasized, leading to the dismissal of the appeals filed by the Assessee.

This detailed analysis of the judgment highlights the key legal arguments, interpretations of the Notification's conditions, and the court's reasoning for upholding the Tribunal's decision.