The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) Non has held that non-furnishing of bond as per amendment of customs notification does not amount to misdeclaration and set aside the demand of interest and penalties.
M/s. Samarth Corporation and M/s. P. P. Products Pvt. Ltd, the appellant had imported plastic granules and cleared them under the DFIA scheme. The period of dispute in these appeals ranges before 19/2/2009 and after such date.
As per notification No.40/2006, the appellants were eligible to avail exemption from basic customs duty and additional customs duty. Later amendment was brought forth in the said notification by Notification no.17/2009 dated 19.02.2009, whereby a condition was introduced. As per condition (iii) (a) the transferee importer has to execute a bond to the effect that the inputs would be consumed within six months in the manufacture of dutiable goods.
The department was of the view that the appellants have mis-declared as they failed to fulfil the condition and are therefore liable to pay duty and penalty. A show Cause Notice was issued to the appellant proposing to demand the duty along with interest on the imported goods and imposing penalties. After due process of law, the original authority confirmed the duty demand, interest and penalties. On appeal, the Commissioner ( Appeals ) upheld the same.
On behalf of the appellant, the counsel Shri B.N. Gururaj appeared and argued the matter. It was submitted that many importers challenged condition (iii) (a) imposed by notification 17/2009 dated 19.02.2009 by which the condition to execute the bond was made applicable retrospectively.
The Tribunal held that as the Show Cause Notice is issued beyond the period of six months as envisaged under Section 28 of the Customs Act 1962, the Show Cause Notice is time-barred. It is submitted by the counsel that the disputed period being the transition period when the notification 40/2006 was amended by adding a condition into it, there is no intention to evade payment of duty and is only a procedural violation. There was no conscious act on the part of the importer to mis-declare or violate any provisions of law.
The plastic granules of various grades were imported by the appellant under duty free import authorization scheme read with Customs Notification no.40/2006-Cus dated 1/5/2006. In appeal no.C/41597/2014, the goods were cleared before 19.02.2009. The Notification no.17/2009-Cus dated 19.02.2009 had brought in condition no. (iii) (a) by which the transferee importer has to execute a bond that the goods will be used within six months in the manufacture of dutiable products.
A two-member Ms Sulekha Beevi C S, Member ( Judicial ) and Mr Vasa Seshagiri Rao, Member ( Technical ) observed that there are no grounds of fraud, misdeclaration or suppression of facts established against the appellant. The only allegation is that the appellant did not fulfil the condition as introduced in the amended notification and that this amounts to misdeclaration. Except that the bond was not furnished as per amendment notification 17/2009 there is no allegation indicating misdeclaration.
Since there is no evidence to establish fraud, misrepresentation or suppression of facts with intent to evade payment of duty, the Show Cause Notice issued on 3.12.2010 and 21.5.2010 invoking the extended period cannot be sustained. The CESTAT set aside the demand, interest and penalties imposed.
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