TMI Blog2019 (6) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 9001 which were not individually sheathed. Therefore, the exemption notification was not available to the products used in manufacture of OFC falling under Chapter heading 9001. Mechanism for recovery of duty - HELD THAT:- The importer may, out of real constraints or practical considerations use the material in some other manner. In such case, the demand under section 28 will not sustain. Further, there are imports in schemes such as EPCG where there is a time limit of 8 years under the Foreign Trade Policies for fulfilment of the conditions. This is clearly beyond the normal period as well as extended period of limitation under section 28. Therefore, Section 28 is the normal section for recovery of duties. Section 143 of the Customs Act provides for recovery of duty, etc., by way of bond which is as much a part of the Customs Act as section 28. However, in order to recover duty under section 143 the bond has to be enforced and demand cannot be raised under section 28 for enforcement of a bond. The usual method of enforcing any bond is by filing of civil suit and the time limit prescribed under section 28 does not apply to any such civil suits - Section 142 provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y sheathed are classifiable under Chapter heading 9001. The assessee procured various items claiming the aforesaid exemption notification available to goods used in manufacture of OFC falling under heading 8544 70. It is the case of the revenue that they have actually used the imported goods for manufacture of products falling under heading 9001 for which the exemption notification is not available. The dispute therefore is regarding the differential Customs duty on inputs. The show cause notice also alleged that penalty is imposable under section 112 on the assessee as well as on Shri Narender Surana (Managing Director), Shri S. Balasubramanian [Director (operations)], Shri B. Shekarnath (Manager-Excise) and authorized representative of the assessee. After following due process the original authority has confirmed the demand of ₹ 22,75,654/- upon the assessee along with interest and imposed penalty of ₹ 5 lakhs under section 112(a)(ii) of the Customs Act. He also imposed penalty of ₹ 2 lakhs on Shri Narender Surana, ₹ 1 lakh on Shri S. Balasubramanian and ₹ 50,000/- on Shri B. Shekarnath. 5. All the goods were imported under the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rate of duty by the customs officers. This exemption notification is a conditional exemption and will not be available to the assessee unless the conditions are fulfilled. An exemption notification being an exception to the general rule must be construed strictly and its benefit cannot be extended to the products imported and used for manufacture of optical fibre cables falling under Chapter heading 9001. Since the conditions required in the exemption notification cannot be verified at the time of import, (as these are post import requirements) the procedure prescribed under Customs (Import of goods at concessional rate of duty) Rules, 1996 has to be followed. Having executed the bond to use the material as per the notification, the appellants have used the imported material clearly in violation of the post importation condition and therefore, duty needs to be recovered and Rule 8 provides for a mechanism for the same. Accordingly, the original authority was correct in confirming the demand and imposing penalties in the impugned order. 9. Having considered both sides, we find that the customs duty is payable as per the Tariff read with any notifications at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a time limit of 8 years under the Foreign Trade Policies for fulfilment of the conditions. This is clearly beyond the normal period as well as extended period of limitation under section 28. Therefore, Section 28 is the normal section for recovery of duties. Alternative methods have been prescribed under the Act itself. Section 143 of the Customs Act reads as follows: 143. Power to allow import or export on execution of bonds in certain cases.- (1) Where this Act or any other law requires anything to be done before a person can import or export any goods or clear any goods from the control of officers of customs and the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that having regard to the circumstances of the case, such thing cannot be done before such import, export or clearance without detriment to that person, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, may, notwithstanding anything contained in this Act or such other law, grant leave for such import, export or clearance on the person executing a bond in such amount, with such surety or security and subject to such condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount may be recovered by following the procedure under section 142. If the bond does not mention so, the normal provisions to proceed upon the bond apply. 13. As is evident the bonds are signed not only under Customs Act but also under different rules and regulations of Customs Act. The rules in question in this case are the Customs (Import of goods at concessional rate of duty) Rules, 1996. Rule 8 of these rules, therefore, does not refer to raising the demand under section 28 but only indicates that the action can be taken for recovery of the amount. One such action can be asking the customs officers to raise a demand under section 28 of the Customs Act, 1962. The other possible action is enforcement of bond. In fact, section 28 does not apply beyond the period of limitation of one year or 5 years indicated therein. However, the bond will be in full force unless it is discharged. In this case, the bond in question reads as follows: 14. A plain reading of the bond says that the assessee would either fulfil all the conditions of the notification or pay the duty within 10 days of demand; in case of failure, he will pay ₹ 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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