Burden to prove that imported material was used for intended purpose is on importer so as to avail the benefit of exemption.

PJ/Case Law/2013-14/1677

Case:-CIRKITRONICS (P) LTD. Vs. COMMISSIONER OF C. EX., LUCKNOW

Citation:- 2013 (291) E.L.T. 557 (Tri.-Del)

Brief facts:-Material facts of this case are thatthe appellant are manufacturer of printed circuit boards (PCBs). They had imported copper clad laminated sheets at concessional rate under exemption Notification No. 13/97-Cus., dated 1-3-1997 which was available subject to use of the imported material for manufacture of printed circuit boards. The appellant had imported 1800 sheets under Bill of Entry No. 308 dated 7-2-1998 and 2000 sheets under Bill of Entry No. 397 dated 11-2-1998 on payment of duty at concessional rate bringing the goods to the factory, they had availed Cenvat credit of the additional customs duty.

The jurisdictional officer of Central Excise visited the factory of the appellant and checked the end-use register maintained by them and it was found that they have not accounted 710 sheets. The appellant could not explain regarding use of 710 sheets. Show cause notice was issued for differential customs duty amounting to Rs. 30,770/- on the sheets and also for denying the Modvat credit amounting to Rs. 50,169/- of additional customs duty availed by the appellant in respect of these sheets.

Show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 14-3-2001 by which he dropped the proceeding initiated against the appellant. However, the order was reviewed by the Commissioner. On review appeal being filed, the Commissioner (Appeals) vide order-in-appeal dated 29-4-2001 allowed the Department’s appeal and confirmed the duty demand of Rs. 30,770/- and Modvat credit demand of Rs. 50,169/-. Against this order of the Commissioner (Appeals), this appeal has been filed.

Appellant’s contention:-Shri Kapil Vaish, ld. Consultant for the appellant, had contended that the impugned order has been passed ignoring the relevant facts. Ld. Authorised Representative pleaded that perusal of the show cause notice would show that it is not the case of the Department that 710 copper clad laminated sheets were clandestinely removed from the factory of the appellant. He contended that no investigation regarding use of those laminated sheets have been conducted and the Commissioner (Appeals) had ignored the RG-23A Part I register and Form-IV register of the appellant wherein consumption of the aforesaid copper clad laminated sheets were duly recorded. It is further contended that the relevant records were seized during investigation which are still in possession of the Department and, therefore, the appellant is not in a position to establish actual user of those copper clad copper laminated sheets. Thus it is argued that the impugned order is liable to be set aside.

Respondent’s Contention:-Shri A.K. Jain, ld. Jt.CDR on the contrary had argued in support of the impugned order. He has contended that the appellant was operating under exemption Notification No. 13/97-Cus. and, therefore, it was obligatory on his part to maintain end-use register which he did not maintain. Since the appellant did not fulfill the condition of the above Notification, he would not be eligible for duty exemption in respect of import of copper laminated sheets when end-use is not accounted for. It is further submitted that the plea of RUD or copies of RUD not being supplied to the appellant, is an after-thought and it would be seen that neither before the original adjudicating authority nor before appellate authority nor in the grounds of appeal this plea has been taken. Ld. Jt. CDR, therefore, pleaded that there is no infirmity in the impugned order.

Reasoning of Judgment:-After considering submissions made by both the sides records were pursued. The basis of duty demand and the Modvat credit demand in this case is that though in terms of the condition of Notification, the appellant were required to maintain account regarding end-use of the material imported at concessional rate, the end-use register was not properly maintained and that entries in end-use register did not explain the user of 710 imported copper clad laminated sheets. Since the appellant have availed concessional rate under Notification No. 13/97-Cus. and this exemption is subject to end-use condition, the burden is on the appellant to prove that imported material was used for the intended purpose. Since in this case, the records do not show that imported material was used for the intended purpose, bench was thus of the view that concessional rate of duty in respect of 710 imported copper clad laminated sheets was denied as it cannot be said that the same were used for the intended purpose. For the same reason bench was of the view that the Cenvat credit of the additional customs duty availed in respect of those laminated sheets was also not admissible and has been correctly denied. Thus, no infirmity was found in the impugned order and the appeal was dismissed.

Decision:- Appeal dismissed.

Comment:-The essence of this case is that Exemption under Notification No. 13/97-Cus. is subject to end-use condition and burden to prove the same lies on the importer. It is obligatory on the part of the importer to maintain proper records to prove end use of the imported material for the intended purpose.

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PJ/Case Law/2013-14/1677

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