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2021 (1) TMI 152 - AT - CustomsExemption to goods imported by EOUs from payment of Customs Duty - benefit of N/N. 52/2003-Cus dated 31.3.2003 - full exemption to goods procured by EOUs from DTA units from payment of Central Excise Duty - benefit of N/N. 22/03-CE dated 31.03.2003 - import of raw materials like fuses, resistors, gold wire, etc. for manufacture of electronic goods such as hybrid micro circuits, resistors, etc - Violation of condition of notifications or not - further allegation is that the Appellant did not have permission for DTA Clearances - main contention of the appellant appears to be that finished goods were taxable and Central Excise Duty was to be demanded on finished goods and not the Customs duty foregone on inputs imported by them - Confiscation - redemption fine - penalty. Whether the appellants are liable to pay duty on the raw materials which have been used in the manufacture of final products which have been cleared without payment of duty in DTA? HELD THAT:- The appellants have cleared hybrid micro circuits to M/s. ISRO at ‘Nil’ rate of duty claiming exemption under Notification No.21/2002-Cus. dated 1.3.2002 and have cleared crystal oscillators and crystals to M/s. BEL under Notification No.39/1996. In both cases, Customs duty is ‘Nil’ and CVD is exempt subject to the condition that the importer produces the required certificates from Department of Space or the competent authority. The adjudicating authority has given a clear finding that the appellants have produced the required certificates. These facts are not under dispute. As per the Notification, the Customs duty forgone on inputs required to be repaid by the importer under the two conditions: (i) if the finished goods are not excisable and (ii) the finished goods, if imported are liable to ‘Nil’ rate of Customs duty under First Schedule as well as the additional duty (CVD) under Section 3 of Customs Act, 1962. Now, it requires to be seen whether the final goods cleared by the appellant to M/s. BEL and ISRO fulfill the above conditions. The appellants have cleared hybrid micro circuits to M/s. ISRO at ‘Nil’ rate of duty under Notification No.21/2002-Cus. dated 01.03.2002 and have cleared crystal oscillators and crystals to M/s. BEL under Notification No.39/1996. In both cases, Customs duty is ‘Nil’ and CVD is exempt - the finished goods supplied by the appellants to M/s. BEL and ISRO are exempt from payment of customs duty as well as additional customs duty. Therefore, in terms of proviso to Para 3 of the Notification No.52/2003 and the CBEC Circular No.54/2004-Cus. dated 13.10.2004 the appellants are required to pay the duty foregone, on the inputs imported duty-free. There is no confusion in the wordings of either the notification or circular. The appellants argument that revenue should have demanded Central Excise Duty has no relevance as it is found that customs duty foregone at the time of import of raw material by the appellants was correctly demanded and confirmed. Similarly, it is found that the argument of the appellate authority that the appellants did not have the permission from the competent authority to clear the goods on DTA is not based on facts. It is found that the original authority has confirmed the fact of necessary permission being obtained. Imposition of redemption fine and penalty - HELD THAT:- The goods have been cleared after due filing of documents before the authorities. The goods have been cleared well before the issuance of show-cause notice. Goods were not physically available for confiscation - this Bench in the case of COMMISSIONER OF CUS., BANGALORE VERSUS MICROSOFT INDIA (R&D) PVT. LTD. [2014 (6) TMI 19 - CESTAT BANGALORE] held that in case of STPI units, confiscation and penalty are not sustainable as the goods were imported after necessary approvals by STPI - in the instant case too, the import of raw material, on which duty was demanded, was allowed by the customs authorities. We find that the show-cause notice seeks to invoke the provisions of warehousing saying that the imported bonded goods have been removed without payment of duty. The mistake or lapse on the part of the appellant is that they have not repaid the duty foregone on the imported raw materials at the time of clearance of duty-free final goods in the DTA. The proper course of action, in such violations, is to recovery duty along with interest. Duty has been paid along with interest on being pointed out - confiscation and imposition of penalty are not warranted in the instant case. The appeal is partly allowed by setting aside confiscation, redemption fine and penalty.
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