2024 (3) TMI 701 - AT - Customs

Duty liability - interest - penalty - Duty-free imports against the scrips issued under the target plus scheme of the Foreign Trade Policy - HELD THAT - According to Ld AR, the ineligibility of the exports, against which the scrips had been issued, rendered the exemption granted on the imports to be invalid. Reliance was placed on the decision of the Hon ble Supreme Court in Munjal Showa Ltd v. Commissioner of Customs Central Excise 2022 (9) TMI 1076 - SUPREME COURT . We find that the show cause notice was issued consequent to cancellation of the scrips by the licensing authority which, itself, was prompted by reporting of the issue by the investigating agency. We find that the Hon ble High Court of Telangana had since set aside the cancellation of the scrips for restoration of status quo ante. This had sufficient impact on the outcome in the impugned order as to place it in jeopardy. Thus, it will only be appropriate to have the matter decided afresh, to enable which we set aside the impugned order and restore the dispute before the adjudicating authority for disposal of the show cause notice, preferably, within four months of receipt of this order.

Summary

Issues: Duty-free imports against 'scrips' under the 'target plus scheme' - Duty liability under Customs Act, 1962 - Cancellation of 'scrips' - Validity of duty exemption - Misconstrued outcome of impugned order.

Analysis:
The case involved appeals by M/s Surya Lakshmi Cotton Mills Ltd and Shri Paritosh Agarwal against a duty liability imposed by the Commissioner of Customs, CGST & Central Excise, Nagpur under the Customs Act, 1962. The duty liability amounted to significant sums on clearances made at various customs locations. The duty-free imports were made against 'scrips' issued under the 'target plus scheme' of the Foreign Trade Policy 2004-2009. The show cause notice alleged that the imports were ineligible for duty exemption, leading to the duty liability, interest, and penalties imposed on the importer and the individual. The appeals challenged the order-in-original dated 27th July 2017, which led to the duty liability.

The proceedings were initiated based on the claim that the group companies were eligible for the duty-free imports against the 'scrips'. The 'scrips' were issued on specific dates, and duty exemption was sought on the import of consignments within a specified period. However, the show cause notice disallowed the duty exemption, citing alleged shortfalls related to the export entities. The 'scrips' were subsequently canceled, leading to the confirmation of duty liability. The cancellation was challenged before various authorities, including the High Court, which eventually ruled in favor of the appellants, setting aside the cancellation and restoring the 'scrips'.

The appellant contended that the impugned order was based on the canceled 'scrips', which were subsequently restored by the High Court. The appellant argued that the order should be set aside as the licensing authority had not obtained a stay on the High Court's decision. On the other hand, the Authorized Representative argued that the ineligibility of the exports rendered the duty exemption on imports invalid, citing a Supreme Court decision for support.

The Tribunal found that the cancellation of the 'scrips' had a significant impact on the impugned order, placing it in jeopardy. Considering the restoration of the 'scrips' by the High Court, the Tribunal set aside the impugned order and directed the matter to be decided afresh by the adjudicating authority within four months. The decision aimed to enable a fresh examination of the facts and circumstances in light of the restored 'scrips' and the High Court's ruling.

In conclusion, the Tribunal's decision highlighted the importance of the restored 'scrips' in reassessing the duty liability issue and emphasized the need for a fresh adjudication based on the updated circumstances following the High Court's decision.