Order date – 10 August 2022

Facts – 

• The appellant, Jai Balaji Industries Ltd., is engaged in the manufacture of iron and steel items. During the period from 04-11-2009 to 30-07-2013 they imported several sets of refractory materials/bricks for relining and also for maintenance purposes under the EPCG scheme covered by Chapter 5 of the Foreign Trade Policy (FTP) read with Notification No. 102/2009-Cus dated 11-09-2009 and 103/2009-Cus also dated 11-09-2009.
• Former notification relates to imports at zero rate of duty under the EPCG scheme whereas the latter relates to imports at 3% rate of duty under the EPCG scheme. 
• As per the department, the definition of “Capital Goods” included only those refractory bricks/materials which were required for the initial lining of the furnace.  Hence, the refractory bricks used for relining or maintenance of the furnace were not covered by the definition of ‘Capital Goods’ and hence, not eligible for exemption from duty under the EPCG scheme.   

Issue – 

• Whether ‘capital goods’ fall under the exemption notifications ‘102/2009-Cus’ and ‘103/2009-Cus’?

Order – 

• The Tribunal observed that the definition of ‘capital goods’ not only includes refractories for initial charge but also those imported as replacement for the purpose of re-lining or maintenance of the furnaces. Therefore, held that the Appellants have correctly availed the benefit of the two exemption notifications. 
• The Tribunal further pointed that the show cause notice is time bar and the extended time limit of 5 years can be invoked only if there are grounds to hold that the Appellant had wilfully misstated or suppressed facts from the department. 
• Here, the officers were aware of the use of refractory bricks and they still certified the correct use/installation of the imported capital goods under the said Notifications. This means that the Customs Authorities were satisfied that the Appellant had fulfilled the conditions of the notifications and there was no short levy or non-levy. Hence, charge of wilful misstatement or suppression of any facts cannot sustain.
• It was also observed that the Board’s Circular dated 30.09.2009 cited by the learned authorized representative does not reflect the correct position of law and in any case, the said Circular is not binding on us. 
• Thus allowed the Appeal both on merits as well as on limitation.