Sending Imported Goods To Job Worker For Manufacture Does Not Defeat Exemption Benefit: CESTAT Chennai Grants Relief To Godrej

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that merely sending imported goods to a job worker for manufacture does not violative exemption conditions. Since there was no allegation of the sale of goods, the exemption of benefit under Notification No. 73/2006-Cus dated 10.07.2006 cannot be denied to Godrej. Notification No. 73/2006-Cus dated 10.07.2006, provided customs duty exemption for goods imported against duty credit certificates from the Target Plus Scheme (TPS) for the 2005-06 financial year, allowing duty-free import of inputs/capital goods. Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) observed that neither the show cause notice nor the impugned order alleged that the assessee had sold the imported goods to the job worker. In the absence of any such allegation, merely dispatching the goods to a job worker for manufacture cannot be a ground to deny the exemption benefit. In the case at hand, the assessee/appellant (M/s. Godrej Consumer Products Ltd.) is the manufacturer of electronic mosquito repellent machines, repellent refills, mosquito repellent mats, etc. The assessee utilised the scrip in terms of Notification No.73/2006-Cus dated 10.07.2006 for import of 'PTC Thermistors'. The assessee availed Cenvat credit of the CVD and SAD portion of the duty, thus paid utilising the scrip. In the course of the assessee's business, the assessee sends the imported 'PTC thermistors' and other raw materials to a job worker for the manufacture of electronic mosquito repellent machines. The assessee reversed the credit taken while sending the goods to the job work manufacturer, who sends the manufactured goods back to the assessee on payment of applicable excise duty. The assessee availed Cenvat credit of the same. Thereafter, the assessee undertakes testing, repacking, shrink-wrapping, palletisation, etc., and exports the said goods. A Show Cause Notice (SCN) was issued under section 124 and section 28 of the Customs Act 1962 to the assessee, alleging that the assessee has violated the conditions of the notification while sending the imported material under the scrip to the job worker for manufacture. The notice proposed to deny the benefit of the notification and to recover the duty not paid in respect of the goods imported, along with interest and penalty. The goods imported were ordered to be confiscated under section 111 (o) of the Customs Act 1962, and a redemption fine of Rs.25,00,000/- in lieu of confiscation was imposed under section 125 of the Customs Act. A penalty of Rs.20,000/- under section 114A of the Act was also imposed on the assessee. Aggrieved, the assessee preferred an appeal before the Commission of Customs (Appeals-I), Custom House, Chennai, which was rejected. The Appellate Authority has denied the benefit of the exemption on the ground that a manufacturer exporter who imports the material utilising such script has to use the materials on their own and cannot send them to job work for conversion into certain products. The counsel for the assessee referred to condition 3 of the Notification No. 73/2006, ibid and submitted that the above provisions do not stipulate anything as to the place of use. Therefore, even if the goods are used in a job worker's premises, but for the use of the manufacturer or exporter, then it would satisfy the requirements of the above provision, and there is no violation. The bench, after looking into condition 3 of the Notification No. 73/2006, ibid, and its proviso, noted that the said condition places any embargo on the manufacturer importer utilising the services of a job worker to manufacture the products utilising the imported goods. The Tribunal opined that neither the SCN has any allegation that the assessee has sold the goods to the job worker, nor does the impugned order render such a finding. The bench held that the dispatch of the imported goods by the assessee to the job worker for manufacture is not violative of the condition (3) of the exemption notification No.73/2006, ibid. In view of the above, the Tribunal allowed the appeal. Case Title: M/s. Godrej Consumer Products Ltd. v. Commissioner of Customs (Air) Case Number: Customs Appeal No. 40959 of 2015 Counsel for Appellant/ Assessee: M. Karthikeyan Counsel for Respondent/ Department: Anandalakshmi Ganeshram Click Here To Read/Download Order

Sending Imported Goods To Job Worker For Manufacture Does Not Defeat Exemption Benefit: CESTAT Chennai Grants Relief To Godrej

Mehak Dhiman

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