By TIOL News Service

MUMBAI, MAY 12, 2017: THE appellant imported pipe bending machines, parts of pipe line equipment and equipment for construction and for laying pipelines and claimed benefit of exemption under Notification No. 27/2002-Cus . Concessional rate of duty of 15% was discharged along with an undertaking that the imported goods will be re-exported within six months as per the terms of the notification. The appellant also executed a bond and bank guarantee for the Customs duty for 85% (foregone by department) as ordered by the lower authorities.

The main appellant could not re-export the consignments within six months but were exported after six months but before the expiry of one year.

The lower authorities issued SCN for the recovery of duty of 85% along with interest and penalty.

The original authority confirmed the duty demand, interest and penalty. The goods were also held liable for confiscation and a redemption fine of Rs.60lacs was imposed. Penalty of Rs.20lacs was imposed on M/s Link Shipping and Management Systems Pvt. Ltd. for abetment under Section 112(a) of the Customs Act, 1962.

The appellants are before the CESTAT.

It is submitted that since they havere-exported the imported goods within one year, the notification provides for discharge only for further 15% of the Customs duty and there cannot be any confiscation. Reliance is placed on the decision in Arihant Steels = 2004-TIOL-105-CESTAT-DEL.

The AR justified the order of the adjudicating authority.

The Bench extracted the notification and after narrating the facts observed -

+ The claim of the appellant's Counsel that they had sought extension of time for 10 days for re-export of the machinery which was rejected by the department, does not change the position of confirmation of the demand of duty and interest from the appellant in any way.

+ As can be read from the …notification, it clearly states that the imported goods are required to discharge fifteen percent if importer undertakes to re-export the goods within six months from the date of import and in a case not able to do so, he has to pay further fifteen percent of the duty after six months but before the expiry of one year after the import of the goods.

+ In any case the goods have been re-exported after six months but before one year, the clauses of the notification are very clear and the appellant is required to discharge additional fifteen percent of the duty along with interest. To that extent we find that the adjudicating authority was correct in confirming the demands raised for additional fifteen percent of the duty and the interest thereof.

The impugned order was upheld to this extent.

As regards confiscation of the goods, the Bench reproduced section 111(o) of the Customs Act, 1962 and held -

++ Since the imported goods are re-exported within one year of imported goods being cleared there is no violation of the condition of notification 27/2002-Cus. Hence the confiscation ordered by the adjudicating authority is not correct and illegal and needs to be set aside.

++ Since we have set aside the confiscation, the question of imposing any penalty on both the appellants under Section 112 of the Customs Act, 1962 does not arise.

In sum, the demand of the differential customs duty and the interest thereof was upheld and the confiscation ordered and penalties imposed by the adjudicating authority were set aside.

The appeals were disposed of.

(See 2017-TIOL-1596-CESTAT-MUM)