Madras HC denies Exemption benefit on Imports made prior to Registration under Customs Rules [Read Judgment]

The Madras High Court has denied the exemption benefit on imports made before the registration under customs rules.

The Assessee M/s.Medreich Sterilab Limited holding that Rules 3 and 4 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 were only procedural in nature and therefore, though the Application for registration under Rule 3 was filed later on and the Registration granted to the Respondent/Assessee to avail the exemption from payment of duty in respect of import under Bill of Entry No.550344 dated 28.6.2003 under which goods imported in question which was cleared by the Customs Authority on 30.6.2003, prior to the date of registration under Rule 3 on 14.7.2003, the Tribunal upheld the order of the lower appellate authority and thereby granted the exemption claimed by the Assessee.

The division bench constituting of justices Vineeth Kothari and Suresh Kumar pronounced the judgment based on an appeal filed by Commissioner of Customs, Chennai.

Rules 3 and 4 of the said Rules 1996 are quoted as

Rule 3. Registration

(1) A manufacturer intending to avail of the benefit of an exemption notification referred in sub-rule (1) of rule 2, shall obtain a registration from the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise having jurisdiction over his factory.

(2) The registration shall contain particulars about the name and address of the manufacturer, the excisable goods produced in his factory, the nature, and description of imported goods used in the manufacture of such goods.

(3) The Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise shall issue a certificate to the manufacturer indicating the particulars referred to in sub-rule(2).

Rule 4. Application by the manufacturer to obtain the benefit.

(1) A manufacturer who has obtained a certificate referred to in sub-rule (3) of rule 3 and intends to import any goods for use in his factory at concessional rate of duty, shall make an application to this effect to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise indicating the estimated quantity and value of such goods to be imported, particulars of the notification applicable on such import and the port of import.

(1A) The manufacturer may, at his option, file the application specified under sub-rule (1), either in respect of a particular consignment, or indicating his estimated requirement of such goods for a period not exceeding one year.

(2) The manufacturer shall also give an undertaking on the application that the imported goods shall be used for the intended purpose.

 The court opined that the learned Tribunal has erred in holding that the Rules are merely procedural or directory in nature and upholding the grant of exemption to the Assessee.

The Court further observed that there is no justification for the learned Tribunal to hold that these Rules are only procedural or directory in nature and therefore it could be applied for the import made at the prior point of time.

While allowing the appeal, the Court noted that the present case is not regarding the valuation of the goods in question or rate of duty, but, the question is of the wrong exemption claimed by the Assessee and granted by the Tribunal.