Excess Weight in Imported Marble Block as part of Trade Practice not Amounts to Misdeclaration: CESTAT set aside Customs Duty Demand [Read Order]

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that Customs Duty is not leviable on Imported  Marble Block used in Manufacturing in EOU. It was found that no check of weighment at the premises of appellants, EOU was done nor any excess was found, to have been cleared or even documented as excess production or clearance of wastage. The department has not even charged them with excess production of clearance in the EOU from clearance of excess marble as such nor has it brought any evidence on record to this effect.

Jain Grani Marmo Pvt Ltd, the Appellants are 100% EOU and engaged in the manufacture and export of marble slabs and tiles. For said manufacturing operations, they import rough marble blocks falling under TI 25151210 by availing the benefit of Notification No. 52/2003-Cus dated 31.03.2003 as amended. The department stated that appellants had mis-declared the weight of imported rough A marble blocks at the time of import. Further, it is also alleged by declaring the lesser weight, the appellants have also violated the policy circular No. 13(RE-08)/2004-2009 dated 30.06.2008 as excess quantity/weight is not covered by the procurement certificate issued in terms of Notification No. 52/2003-Cus. Aggrieved by the order in appeal confirming duties and penalties as below, the appellants have filed the present appeal. 

It was submitted by the appellants that Notification No. 52/2003-Cus grants exemption from customs duty to all goods imported by EOU that are used in the manufacture of finished goods in terms of LOP issued by the development commissioner. Thus, exemption from customs duty is available regardless of the weight of imported goods. The entire premise of 100% FOU is a bonded warehouse. It was settled legal position that there cannot be customs duty demand on the warehoused goods which are used for manufacture in bond for exports.

As per the appellants, demand is also time-barred as a period of import pertains from 13.04.2007 to 19.12.08 and SCN is issued on 31.03.2012. In the absence of any suppression or intention to evade customs duty, demand is barred by limitation. 

It was found that the department has made out a case of excess receipt of weight and clearance of same from the premises of EOU based on various documents maintained by CHA including their registers like arrival/dispatch book, LR book and transfer registers for the period 2007 to 2009. On detailed examination of such record department found certain blocks of marble weighted excess than the weight declared and a case was made out based on the record of such CHA over the quantity shown in the Bill of Entries. The CHA had maintained the record based on weighment slips issued and received from Mundra CFS. The CHA also informed the Bill of Entries was filed based on the bill of lading, invoice, packing list etc.

Further, it is found that no check of weighment at the premises of appellants, EOU was done nor any excess was found, to have been cleared or even documented as excess production or clearance of wastage. The department has not even charged them with excess production of clearance in the EOU from clearance of excess marble as such nor has it brought any evidence on record to this effect. The appellants on the other hand agree that weight might have been in excess as per the trade practice.

A two-member bench comprising Mr Raju, Member ( Technical ) and Mr Somesh Arora, Member (Judicial)  found that the practice as pointed out by the appellant is well established and the case of excess weight made out cannot be sustained, as the same was based on ignorance of such trade practice and department has failed to establish that any excess goods or weight was cleared and not used in manufacture. The Tribunal allowed the appeal.

To Read the full text of the Order CLICK HERE

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