Capital Goods for import Registered with Project Report Irreversible, Concurrent Exemptions Unavailable as Valuation tied to Project Rate: CESTAT [Read Order]

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai has held that the capital goods for import once registered with the Project Report is irreversible and Concurrent Exemptions are not available as the valuation is tied to Project Rate.

The CESTAT dismissed the Customs appeal filed by M/s. Graphite India Limited against the Commissioner of Customs. The appeal arose from an Order-in-Appeal passed by the Commissioner of Customs (Appeals) regarding a discrepancy in the import of capital goods.

The appellant-assessee had registered a Project Contract for the import of capital goods, but it was discovered by the revenue that two items were missing from the registered list.

The Revenue sought clarification from the importer assessee, who responded by stating that they had imported certain items under the Project Contract but had deferred the import of two other items.

The department contended that this was contrary to the instructions of the Board and Standing Order No. 35/87-MCH, which prohibited de-registering goods once they were registered under project import.

Consequently, the Revenue assessed the two missing items namely, Ultrasonic Tester and Direct Reading Spectrometer at project rates instead of normal rates and issued a Demand Notice for the differential duty.

The assessee did not remit the duty and instead filed an appeal before the first appellate authority, claiming that the appeal was not barred by the limitation period. However, the first appellate authority dismissed the appeal as barred by limitation.

The assessee filed appeal before the CESTAT, which remanded the case for de novo adjudication.

The adjudicating authority held that the assessee had failed to meet the Project Import Regulations, leading to the confirmation of the demand for differential duty.

Dissatisfied with the decision, the assessee filed an appeal before the first appellate authority, which was subsequently rejected.

The assessee filed appeal before the CESTAT raising various contentions, including the invalidity and maintainability of the Show Cause Notice (SCN) on the issue of limitation, and the fact that the assessee was unaware of the earlier order and notice sent to the non-existent/defunct company, M/s. Powmex Steels Ltd. which was already merged with the assessee firm.

The assessee was represented by Shri Satyaprem Majumder and the revenue was represented by Shri M. Ambe, the Deputy Commissioner.

The two-member bench consisting of Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member) concluded that the Order-in-Appeal was sustainable in the eyes of the law pointing out that an earlier appeal by the assessee had been accepted by the CESTAT, and the issue of the second SCN was not seen raised during that appeal.

The bench held that by virtue of the doctrine of merger, the orders of the lower authorities had merged with the previous order of this Bench and it is only consequent to the directions of this Bench that the de novo Order-in-Original was passed and therefore, the de novo Order-in-Original is valid.

Furthermore, it was also found that the assessee had not made a convincing case on merits for an intervention by the bench.

The discrepancy in the import of capital goods was seen acknowledged by the assessee, and the denial of concurrent benefit of exemption resulting in the demand for differential duty is deemed lawful.

Consequently, the bench dismissed the appeal upholding the earlier decision and confirming the demand for differential duty.

To Read the full text of the Order CLICK HERE

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