Legal principle

For concessional end-use imports, the end-use condition is satisfied where duty-free goods are used in a loan licensee's or job worker's factory on behalf of the importer, with ownership remaining with the importer and the premises disclosed in the bond, and the Department cannot insist the goods be used in the importer's own factory.

Court decision

The Tribunal allowed the appeal with consequential relief and set aside the impugned order, holding in favour of the appellant that, since the goods were used in the loan licensee's factory on behalf of the appellant with ownership remaining with the importer, there was no violation of the conditions of the Customs Rules/Notification, the matter being squarely covered by FDC Ltd vs CCE, Belapur (2017 (357) ELT 464).

Facts

Intas Pharmaceuticals Ltd imported Lactulose under 33 Bills of Entry (15.09.2017 to 25.03.2019) availing duty-free benefit under Notification No. 50/2017-Cus for manufacture of Lactulose Solutions (LOOZ)/Lactulose Oral Powder (LOOZ Sprinkles). It executed the required bonds with bank guarantees, naming its loan licensee M/s Tuton Pharma, Ahmedabad as manufacturer, and followed the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017; Tuton's premises was declared in the bonds and registered as the appellant's 'additional place of business' under the CGST Act, 2017. The Department denied the exemption benefit on the ground that manufacture took place at Tuton Pharma's premises and not the appellant's own factory, so the importer was not the manufacturer, leading to a Show Cause Notice dated 23.09.2020 and an adverse Order-in-Appeal dated 28.04.2022.

Key provisions

• Rule 3, Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 — Registration
• Section 2(26), Customs Act, 1962 — Definitions
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded