In a major relief to M/s. Intas Pharmaceuticals Limited, the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that benefit of customs duty cannot be denied to loan licensee importer.
The issue involved is whether the appellant can be ousted from the eligibility for benefit of Notification No.50/2017-cus dated 30.7.2017 solely because the (duty-free) goods imported by him were used in the factory of loan licensee, i.e. M/s Tuton Pharma, Ahmedabad, and not the appellant’s own factory.
The Department’s objection for denying the benefit of the exemption Notification is that the said manufacturing activity was carried out not at the Appellant’s factory but at the premises of M/s Tuton Pharma, GIDC, Ahmedabad and, therefore, the Appellant, as an importer, is not the manufacturer. Very significantly, the said premises of M/s Tuton Pharma was duly declared in the Bonds and also duly registered as “additional place of business” Appellant in terms of the CGST Act, 2017.
Willingdon Christian, Advocate who appeared for the appellant submitted that neither the subject Notification nor the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 make it mandatory that the use of the imported goods should be at the importer’s own factory. In other words, once the importer has utilized the imported goods for the specified purpose, the benefit of the exemption cannot be denied, even if the process has taken place in the factory of loan licensee/job worker.
It was further submitted that neither the subject Notification nor the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 prescribe any mandatory condition for use of imported goods in the importer’s own factory. There is nothing in the exemption Notification or the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, to prohibit an importer from sending imported goods to a loan or a job worker for processing or manufacture of the intended final product.
A Two-Member Bench comprising Somesh Arora, Member (Judicial) and C L Mahar, Member (Technical) relied on the judgment in FDC Limited vs. CCE, Belapur and wherein it was observed that “We are of the considered view that even though the factory is of the loan licensee but use is on behalf the appellant therefore there is no violation of condition of the Customs Rules, 1996. Since we are deciding the appeal on above discussion and merits of the case, we need not to address other issues raised by the Counsel.”
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