2024 (4) TMI 383 - AT - Customs

IGST exemption at the time of import of input materials by the appellant - Advance Authorization Scheme - HELD THAT - It is not disputed that had the appellant paid the IGST at the time of import they would have been eligible for input tax credit. Further admittedly the goods have been used as inputs for manufacture of other goods which have undisputedly been exported to Hindalco. Admittedly DGFT have issue Export Obligation Discharge Certificate to the appellant. It is further noticed that it is not the policy of the Government to export taxes. It is further found that it is a case of contributory negligence on the part of Revenue also as inspite of having registrated the Advance Authorisation and the entitlement of the appellant to exemption under Notification No. 21/2015 CUS have allowed the exemption of IGST also as applicable under Notification No. 18/2015 CUS. The situation being revenue neutral undisputedly no case of malafide is made out against the appellant. In this view of the matter following the ruling of the Apex Court in the NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI 2015 (5) TMI 101 - SUPREME COURT the demand is not invokable by invokation to extended period of limitation. The impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Demand of Customs Duty (IGST) u/s 111(m) of the Customs Act, redemption fine, and penalty u/s 114 A of the Act.
2. Dispute regarding claiming IGST exemption at the time of import based on different customs duty exemption notifications.

Summary:
Issue 1: The appellant challenged the impugned order demanding Customs Duty (IGST) along with redemption fine and penalty. The appellant argued that the demand was made invoking an extended period of limitation, which was not justified as there was no fraud or suppression, and the situation was revenue neutral. The appellant relied on previous Tribunal rulings and an Apex Court judgment to support their case. The Tribunal found that the demand was not sustainable and allowed the appeal, granting consequential benefits to the appellant.

Issue 2: The dispute revolved around the appellant's claim of IGST exemption at the time of import of input materials. The Revenue Authority contended that the appellant was only entitled to claim exemption under a specific customs duty notification and not another. The appellant imported goods for manufacturing final products exported by another entity, and there was confusion regarding the applicable notification for IGST exemption. Despite the Revenue's argument, the Tribunal found that the situation was revenue neutral, and there was contributory negligence on the part of the Revenue. The Tribunal held that the demand for IGST was not valid due to the revenue-neutral nature of the case and set aside the impugned order.

(Order Pronounced in open court on 08.04.2024)