Availability of benefit under Exemption Notification No. 32/97-Cus

PJ/Case Laws/2011-12/1298

Case: CCE Rajkot V/s M/s Rajoo Engineers Ltd

Citation: 2011-TIOL-1046-CESTAT-AHM

Issue:- Import of raw materials supplied by foreign company free of cost for use in manufacture of machinery on jobwork to be exported - Benefit of exemption under Notification No. 32/97-Cus – whether deniable?

Brief Facts: - Respondents are engaged in manufacture of Plastic Extrusion Plant & Machineries falling under Chapter 84. They had availed benefit of Notification No. 32/97-Cus, dt.1.4.97 read with Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996, for jobbing and the Assistant Commissioner, Central Excise, Division II had issued a Registration Certificate dt.15.12.04 for the same.

Thereafter, respondent were served Show Cause Notice alleging that they had wrongly availed benefit of Customs Exemption Notification No. 32/97-Cus, dt.1.4.97 and Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. It was alleged that the activities of respondent to manufacturer the machinery by utilizing imported parts/components supplied by foreign buyer at free of cost cannot be termed as Job Work and hence the benefit of Notification No.32/97-Cus, dt.1.4.97 cannot be available to them and that the respondent had evaded payment of Customs duty. Recovery was proposed under Section 28 and interest under Section 28AB demanded and penalty under Section 114A was also proposed to be imposed. The Additional Commissioner confirmed the demand of customs duty with interest and also imposed penalty.

In appeal, the Commissioner (Appeal) set aside the impugned order and allowed appeal of the respondent. The Commissioner (Appeal) had given the finding that:

(i) that goods were imported for execution of export order placed on the importer by the supplier of goods for jobbing.

(ii) that the goods so imported were utilized only for export obligation.

(iii) that the FOB value of the resultant products was more than 10% of the C.I.F. value of imported goods.

(iv) that they have done jobbing by following the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996

(v) that the import/export was undertaken through ports specified in the said Notification.

(vi) the imported/exported goods were not falling under prohibited items specified in ITC (HS) classification of exports and import items as declared by the Government of India, Ministry of Commerce.

It was also found that the imported goods were squarely covered under explanation (ii) provided under Notification No. 32/97-Cus dated 01.04.1997.

The Commissioner (Appeal) gave finding that the meaning of Job Work construed by the lower authority vis-a-vis Jobbing provided under Notification No. 32/97-Cus, dt.1.4.97 is different. The word Jobbing as defined in Oxford Dictionary as arrange for contracted work to be done by others have very wide connotation than that of construed by the lower authority, therefore there is a merit in appellants contention. Further, it was held that the lower authority have not brought out either in the Show Cause Notice or in the findings clearly the grounds for denial except stating the respondents manufactured machinery. Any jobbing or job work involves manufacture.

Further, it was noticed that these goods imported are under as per contract order specified in the notification and the resultant product which contained the imported goods have been duly exported to the same supplier who have entered to contract with appellant. I do not find any deviation insofar as availing the exemption notification. As rightly contested by the appellant, assessment, classification, and allowing exemption notification or otherwise has been completed by the Customs authorities at the time of importation.
Hence, Revenue is in appeal before the Tribunal against the said order.

Reasoning of Judgement: - The Tribunal held that after going through the reasoning adopted by the Commissioner (Appeals) and grounds raised by the Revenue, which are only in respect of meaning of Job Work, no infirmity was found in the order of Commissioner (Appeals). The word Jobbing is primarily different from the word Job Work. The same stand correctly understood by the appellate authority and correctly applied. However, the fact that the notification while defining the goods also allows import of hangers for garments indicates that the same covers any item allowed to be imported with the only condition that the same should be used for the export goods. Inasmuch as in the present appeal, there is no dispute that the imported items have been used in the manufacture of machineries, which stand exported by the respondent, the Tribunal found no reasons to interfere in impugned order of the Commissioner (Appeals).

Decision: - Appeal rejected.

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PJ/Case Laws/2011-12/1298

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