Re-Imported Goods Eligible For Customs Exemption: CESTAT Sets Aside 45.82 Cr Duty Demand on Frozen Buffalo Meat [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a customs duty demand of Rs. 45.82 crore in a dispute relating to re-imported frozen buffalo meat.

Allanasons exported frozen buffalo meat under various Shipping Bills and claimed duty drawback under Section 75 of the Customs Act, 1962. Later, a small portion of the exported goods was re-imported due to commercial reasons such as packing issues, shortage of funds with buyers, price renegotiation and foreign exchange fluctuations.

At the time of re-import, the appellant claimed exemption under Notification No. 158/95-Cus. dated 14.11.1995. The department denied the benefit, alleging that the goods were rejected due to microbial contamination and that there was no proper link between the exported and re-imported goods.

The department also alleged mismatch in slaughter dates, production dates, place of slaughter, meat type and quantity. It further claimed that Allanasons had not maintained separate inventory and had mixed the re-imported goods with general stock.

The Principal Commissioner of Customs, Nhava Sheva confirmed differential duty of Rs. 45,82,52,313 and imposed redemption fine of Rs. 6 crore. Penalties were also imposed on Allanasons and other appellants under Sections 112(a), 112(b), 114(iii) and 114AA of the Customs Act.

The appellant’s counsel argued that only about 0.22% of total exports were re-imported. It pointed out that the re-imported goods were examined by Customs officers, sealed, moved to the factory under supervision, processed, and later re-exported. They also repaid the full duty drawback amount with interest.

The appellant’s counsel further argued that Customs had verified the re-export documents and cancelled the bonds executed at the time of re-import. The counsel relied on Bank of India v. CC to argue that once a bond is cancelled, demand cannot be raised alleging breach of bond conditions.

The revenue counsel supported the adjudication order and argued that Allanasons failed to satisfy the conditions of the exemption notification.

The bench comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) observed that the documents established the link between the original export, re-import and subsequent re-export. It also found that drawback had been repaid with interest.

The tribunal held that the benefit of Notification No. 158/95-Cus. was available. It also observed that the alternate benefit under Notification No. 94/96-Cus. could not be denied merely because it was claimed later, when the conditions were fulfilled. The tribunal set aside the duty demand, redemption fine and penalties. The appeals were allowed.

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