Substantive benefit of an exemption notification cannot be denied due to procedural lapses if the importer demonstrates substantial compliance and proves the goods were utilized for the specific end-use purpose intended by the legislation.

Per Mr. VASA SESHAGIRI RAO

This is an appeal filed by M/s. Bharat Heavy Electricals Limited, Delhi (hereinafter referred to as “Appellant”) to assail the Order-in-Original No. 102378/2023 dated 14.06.2023 passed by Commissioner of Customs, Chennai-II (hereinafter referred to as “LAA”).

2. Briefly stated, the facts of the case are that the Appellant imported various goods vide Bill of Entry No. 2295456 dated 10.01.2021 and 29 other bills of entry. Appellant classified the imported goods under Customs Tariff Headings 69039090, 72109090, 73043931, 73045110, 73045930, 73079390, 73269099, 84129090, 84139190, 84149090, 84821090, 84823000, 84832000 and availed benefit of Notification No. 50/2017-Customs dated 30.06.2017 (Sl.No.413 and 414); and thereby paid Basic Customs Duty (BCD) @ 5%, SWS @ 10% and IGST@ 18% at the time of clearance of the goods.

3. During the Post Clearance Audit of the above imports, Department entertained the view that Appellant is not eligible for the benefit of notification No. 50/2017-Customs dated 30.06.2017 as they failed to fulfill condition No. 9 of the notification, which they were required to fulfil for claiming benefit under Sl.No. 413 and 414 of the said notification. Accordingly, after following due process of issuing Consultative letter dated 02.03.2022, the reply to which was not found satisfactory, followed by a pre-notice consultative letter dated 31.10.2022 and personal hearing dated 16.12.2022, a show cause notice dated 02.01.2023 was issued to the Appellant by the LAA with the proposals to: -

i. deny the duty benefit availed under Serial No. 413 and 414 of Notification No. 50/2017-Cus dated 30.06.2017 read with Notification No. 01/2021 dated 01.02.2021 for the goods imported vide Bill of Entry No. 2295456 dated 01.02.2021 and 29 other bills of entry for not complying with the procedures laid down in Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.

ii. demand the total short levied duty amounting to Rs. 4,56,76,673/- (Rupees Four Crore Fifty Six Lakh Seventy Six Thousand Six Hundred and Seventy Three only) under Section 28(1) of the Customs Act, 1962 along with appropriate interest under Section 28AA ibid.

iii. hold the impugned goods valued at Rs. 93,75,80,739/- (Rupees Ninety Three Crore Seventy Five Lakh Eighty Thousand Seven Hundred and Thirty Nine Only) liable for confiscation under Section 111(m) and 111(o) of the Customs Act, 1962 and

iv. impose penalty under Section 112 (a) of the Customs Act, 1962 for rendering the goods liable to confiscation.

4. After following due process of adjudication, the impugned Order dated 14.06.2023 was passed wherein the LAA: -

i. rejected the exemption claimed and the assessment for the goods imported by Appellant vide Bill of Entry No. 2295456 dated 01.02.2021 and 29 other bills of entry and ordered for reassessment of the same denying the exemption benefit claimed under Sl. No. 413 and 414 of the Notification No. 50/2017-Customs dated 30.06.2017.

ii. Confirmed the demand of total short levied Duties of Rs. 4,56,76,673/- (Rupees Four Crore Fifty Six Lakh Seventy Six Thousand Six Hundred and Seventy Three only) arising out of the denial of exemption notification benefit in respect of the goods imported vide Bill of Entry No. 2295456 dated 01.02.2021 and 26 other bills of entry as detailed in the Show Cause Notice, under Section 28(8) of the Customs Act, 1962 along with applicable interest thereon under the provisions of Section 2