2025-VIL-1014-CESTAT-AHM-CU
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CUSTOMS CESTAT Cases

Customs – Section 112(b)(ii) of Customs Act, 1962 - Re-import of diesel generating sets – Demand of duty and imposition of penalty – Appellants are 100% EOU engaged in manufacture of Diesel Generating (DG) sets – During audit, CERA raised objection that Appellant has been granted Letter of Permission for manufacturing of DG sets, but they have imported DG sets and sold them without undergoing any authorized manufacturing activity – Based on observations of CERA, Department issued show cause notice alleging violation of conditions of Notification No.52/2003-Cus and evasion of Customs duty, by invoking extended period of limitation – Adjudicating authority confirmed demand of duty and imposed equal penalty under Section 112(b)(ii) of the Act – Commissioner (Appeals) upheld order passed by lower authority – Whether invocation of extended period of limitation is justified in facts and circumstances of case – HELD – The issue in matter is contravention of conditions of Notification No. 52/2003-Cus. and consequent demand of Customs duty on re-imported rejected DG sets – Appellant had supplied 5 DG sets to its customer, who rejected 3 DG sets on ground that these are not as per specification – When Appellant had disclosed full facts by way of enclosing supplier’s invoice along with Bill of Entry clearly indicating that rejected DG sets are being sent back to supplier, Authorised Officer allowed duty free import. It was incumbent upon officer to examine either of the conditions of notification are satisfied – Condition No.15 of notification, whose violation is being alleged, should have been seen when goods were re-imported by Appellant – Department woke up after more than four years from date of import and issued show cause notice after CERA raised objection – There is no ground for invocation of extended period of limitation – Without further going into merits of case, Customs duty confirmed by lower authorities is held unsustainable and accordingly, set aside – Penalty imposed on Appellant Section 112(b)(ii) of the Act is also set aside – Appeal is allowed
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