Principal Commissioner of Customs Vs Gimpex Limited (Telangana High Court)
Summary: The Telangana High Court considered three connected Central Excise Appeals filed by the Customs Department under Section 130 of the Customs Act, 1962 against the CESTAT South Zonal Bench, Bangalore common order dated 13.06.2012. The first appeal, Central Excise Appeal No.2 of 2013, concerned M/s. Gimpex Ltd. (GL), which had exported iron ore fines and other minerals during 2004-05 and obtained seven duty credit certificates under the Target Plus Scheme (TPS). Using Transfer Release Advices, GL imported continuous cast copper rods through ICD Hyderabad during September 2006 to April 2007 and claimed the exemption under Customs Notification No.32/2005-Cus.
The Department subsequently investigated the imports, recorded statements under Section 108 of the Customs Act and issued a show-cause notice proposing denial of exemption, recovery of duty under the proviso to Section 28(1), confiscation under Section 111(o), penalty under Section 114A of the Customs Act and other penalties under Section 112. The Department’s central contention was that the imported copper rods had to bear a strict product-to-product nexus with the goods exported by GL and that the extended period of limitation was available because GL had allegedly suppressed material facts.
GL relied on the CESTAT’s finding that there was no wilful suppression or misstatement and contended that the TPS certificates issued by the DGFT had never been revoked, cancelled or modified. It also relied on the then-existing interpretation of “broad nexus” and on the later judicial decisions in Indian Exporters’ Grievance Forum vs. UOI and Essel Mining Industries vs. UOI, which had rejected restrictive DGFT clarifications concerning the Target Plus Scheme. The High Court framed two questions:
