Godrej Consumer Products Ltd. Vs Commissioner of Customs (Air) (CESTAT Chennai)
The Chennai Bench of the CESTAT examined an appeal challenging the denial of customs duty exemption under Notification No. 73/2006-Cus dated 10.07.2006, issued under the Target Plus Scheme. The appellant, a manufacturer-exporter of electronic mosquito repellent products, had imported PTC thermistors using a duty credit certificate issued under the scheme. The imported goods were sent to a job worker for manufacture of finished products, after which the goods were returned to the appellant, processed further, and exported. The appellant reversed and re-availed Cenvat credit in accordance with the job work procedure.
Following an investigation, the Department alleged that sending imported goods to a job worker amounted to a violation of Condition No. 3 of the exemption notification, which prohibits transfer or sale of goods imported under the scheme. A show cause notice proposed denial of exemption, recovery of duty with interest, confiscation of goods, redemption fine, and penalty. The adjudicating authority confirmed the demand, imposed penalties and redemption fine, and the appellate authority upheld the order.
Before the Tribunal, the appellant argued that the notification only restricts transfer or sale of imported goods and does not bar use of job workers. Reliance was placed on the definition of “actual user” under the Foreign Trade Policy, which includes manufacture in another unit, including a jobbing unit. The appellant also relied on a DGFT Public Notice clarifying that job workers may be used for conversion of imported goods into resultant products for “own use,” and that such use does not violate the scheme conditions. Judicial precedents were cited where similar conditions were interpreted to permit job work without constituting transfer.
