The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to the Bank of Nova Scotia by quashing the Customs duty demand of approximately 13.5crores on the ground of non-violation of conditions of exemption notification.
The Bank of Nova Scotia, the appellant assessee was a ‘Nominated Agency’ under the Foreign Policy and as per the scheme introduced by the Government of India – ‘Export against supply by Nominated Agency’, the assessee imported gold/silver/platinum without payment of customs duty and supplied the same to various exporters for the manufacture of jewelry and subsequent export.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand of Customs duty of Rs.13,53,67,882/- and Rs.2,44,32,057/-respectively was confirmed along with interest.
Gopal Mundhra, Rishi Raju, and Suvranil Saha, the counsels for the assessee contended that the provisions of the Exemption Notification 57/2000 read with erstwhile Circular No. 24/98 states that non-realization of sales proceeds by exporters will result in demand of Customs duty foregone from the Nominated Agency and no duty can be demanded from the assessee.
Faiz Ahmed, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee violated the conditions prescribed in the exemption notification and that the demand raised by the revenue was as per the law and liable to be sustained.
The Bench observed that when the notification has not stipulated any condition to the effect the nominated agency should ensure the realization of sale proceeds of the exported goods.
Also observed is that in the case of Sandur Micro Circuits Ltd Vs CCE, Belgaum, the court held that a new condition that does not form part of the Notification cannot be introduced through a Circular.
The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) quashed the customs duty demand while allowing the appeal filed by the assessee.
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