Case Law Details
Samarth Corporation Vs Commissioner of Customs (CESTAT Chennai)
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai has delivered a judgment in favor of Samarth Corporation against the Commissioner of Customs. The core issue revolves around the non-furnishing of a bond as mandated by an amendment to a Customs notification. The tribunal’s decision addresses whether such non-compliance amounts to misdeclaration, thereby scrutinizing the implications of demands for interest and penalties.
The controversy stemmed from Samarth Corporation’s importation of plastic granules under the Duty-Free Import Authorization (DFIA) scheme. The imports were subject to conditions set forth in Notification No. 40/2006, later amended by Notification No. 17/2009, which introduced a new condition requiring transferee importers to execute a bond. This bond was to ensure that the imported inputs would be used within six months in the manufacture of dutiable goods.
The Customs Department contended that the failure to furnish the required bond constituted misdeclaration, thereby making the importer liable for duty, interest, and penalties. This led to the issuance of a Show Cause Notice to Samarth Corporation, culminating in the original authority’s confirmation of the demand for duties, interest, and penalties.
However, the CESTAT’s deliberation brought to light several crucial points. Firstly, it acknowledged the judgment of the Hon’ble High Court of Madras in the case of M/s. Tarajyot Polymers Ltd. versus Union of India, which ruled that the amendment introduced by Notification No. 17/2009 could not be applied retrospectively. This precedent was directly applicable to the period in dispute for Samarth Corporation’s imports before 19th February 2009.
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