Whether the exemption notification given to bona fide exporters can be availed by the consignee for using the same in the goods sold in domestic markets?

PJ/CASE LAW/2015-16/3002

Case:- COMMISSIONER OF CUSTOMS (AIR), CHENNAI VersusARAVIND FASHIONS LTD.

Citation:- 2015 (321) E.L.T. 662 (Mad.)

Brief facts:-This appeal is filed by the Department challenging the Final Order No. 851 of 2007, dated 12-7-2007 [2007 (217)E.L.T.453 (Tribunal)], passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, by raising the following questions of law :
(a)        Whether the Tribunal is right in holding that the benefit of the exemption Notification No. 29/1999 can be extended to the imported goods, even if it is used in the goods which are sold in domestic market instead of using them in the export goods?
(b)        Whether the finding of the Tribunal is not against the object and purpose of exemption notifications, which are meant for bona fide exporters only?
(c)        Whether the exemption notification given to bona fide exporters can be availed by the consignee for using the same in the goods sold in domestic markets?
They are surprised to note that neither in the show cause notice nor in the orders passed by the Commissioner of Customs (Airport), who adjudicated the case, and the Tribunal, which decided the appeal in favour of the first respondent, the relevant portions of Notification Nos. 20/1999, 11/1997 and 23/1998 are extracted, so as to consider the scope of the said notifications.
They find that in this case, the first respondent imported a consignment of leather labels valued at Rs. 13,93,800/- under Bill of Entry No. 120836, dated 2-3-1999 and claimed benefit of Notification No. 20/1999, under which labels, stickers, etc., imported by bona fide exporters are exempted from payment of the whole of basic Customs duty and additional duty of Customs. The department, however, was of the view that the first respondent diverted the imported labels to domestic market and accordingly, a show cause notice was issued proposing to recover the exemption availed. In the adjudication, the Commissioner found that the first respondent had made false claim that they are bona fide exporter for availing the benefit of exemption and accordingly, duty was demanded, apart from imposing penalty and interest.

Appellant’s contention:-Shri P. Mahadevan, Central Govt. Standing Counsel appeared for the Appellant.

Respondent’s contention:-Aggrieved by the said order, the first respondent went on appeal to the Tribunal. The Tribunal held that the adjudicating authority has not rendered a finding that the first respondent was not an exporter and accordingly, set aside the order passed by the Commissioner holding that denial of exemption benefit as per the notifications and imposing penal liabilities on the first respondent is not sustainable.

Reasoning of judgment:- In view of the contradiction -between the findings of the adjudicating authority and the Tribunal, they do not think it fit to answer the questions of law, except remanding the matter to the Tribunal to consider the claim of the first respondent in the light of the findings of the Commissioner and the statements recorded from the persons concerned in relation to the import. That apart, they find the reasoning of the Tribunal that there is no finding by the adjudicating authority that the first respondent was not an exporter is clearly an error apparent on the face of the records.
For the foregoing reasons, this appeal is allowed by way of remand to the Tribunal. The order passed by the Tribunal is set aside. In view of the remand order passed by them, they do not propose to answer the questions of law raised in this appeal. No costs.

Decision:- Appeal allowed by way of remand to Tribunal.

Comment:- The analogy of the case is that Denial of exemption by Department on imported leather labels having not been used in export product, set aside by Tribunal. Department file the appeal before High Court challenging the Order of Tribunal, raising the questions of law.But High Court found the contradiction between the findings of the adjudicating authority and the Tribunal, therefore they have not answered the questions of law and remanded the matter to the Tribunal.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/3002

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