2024 (3) TMI 295 - AT - Customs

Demand duty - imported capital goods, raw materials and consumables - EOU Exemption Notifications No.13/81-Cus. and No.53/97-Cus.- Non-fulfilment of export obligations - reasons beyond the control - pre-condition for issuing a No Due Certificate in order to debond and exit from EOU scheme - interest and penalty - demand of Special Additional Duty - HELD THAT - It is the argument of the appellant that though the raw materials were imported by them, the finished goods could not be exported due to technology failure. It is submitted that the goods at the time of import were intended to be used in finished products which were intended for export and therefore the demand of duty on raw materials cannot be sustained. We are afraid that the said argument is not tenable. The appellant having not fulfilled the export obligation and not used the raw materials for manufacture of finished products for export, the exemption of the notification is not available. Demand of Special Additional Duty - We remand this issue to the original authority who is directed to verify the date of imports made by the appellant and in case, such goods have been imported prior to 1.6.1998, the demand of Special Additional Duty cannot be sustained and will be set aside by the original authority. The appellant is not liable to pay Special Additional Duty for the imports which are made prior to 1.6.1998. Demand of interest - It can be seen that although the Section 28AB was omitted with effect from 8.4.2011, the same has been substituted by Section 28AA. Wherever there is duty liability, the assessee is liable to pay duty along with interest. Mere quoting of a wrong section cannot be a ground to set aside the demand of interest. We do not find any merit in the contention of the appellant with regard to demand of interest. Thus, the impugned order is modified to the extent of setting aside demand of SAD prior to 1.6.1998 after the verification by the original authority. The impugned order is sustained in all other respects. The appeal is appeal is partly allowed with consequential relief, if any, in the above manner.

Summary

Issues involved:
The issues involved in this case relate to the demand of duty on raw materials, the demand of Special Additional Duty, and the demand of interest.

Demand of duty on raw materials:
The appellant imported raw materials intended for use in finished products for export, but due to technology failure, the export obligations were not fulfilled. The appellant argued that the duty demand on raw materials cannot be sustained as the goods were intended for export. However, the Tribunal held that since the export obligations were not met and the raw materials were not used for finished products for export, the exemption of the notification is not applicable.

Demand of Special Additional Duty:
The demand of Special Additional Duty was challenged by the appellant on the grounds that most goods were imported prior to the introduction of the duty. The Tribunal referred to a previous decision and held that goods imported before the introduction of the Special Duty of Customs would not be liable to pay such duty. The issue was remanded to the original authority for verification of the import dates, and if goods were imported before 1.6.1998, the demand of Special Additional Duty would be set aside.

Demand of interest:
The appellant argued that the demand of interest was not sustainable as the show cause notice cited a section that had been omitted. The Tribunal noted that although the cited section had been omitted, it had been substituted by another section. The Tribunal held that the mere quoting of a wrong section was not a ground to set aside the demand of interest, and upheld the demand of interest.

Conclusion:
The Tribunal modified the impugned order to set aside the demand of Special Additional Duty prior to 1.6.1998 pending verification by the original authority. The impugned order was sustained in all other respects. The appeal was partly allowed with consequential relief, if any, in the above manner.