ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 09.12.2025
CESTAT Chennai Overturns Duty Demand and Penalty on Godrej Consumer Products Ltd. in Target Plus Scheme Dispute β
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379. ββ
In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has ruled in favor of M/s. Godrej Consumer Products Ltd., setting aside the duty demand, redemption fine, and penalty imposed by the Commissioner of Customs (Appeals β I), Chennai. This decision marks a crucial win for the appellant in a long-standing dispute over the interpretation of the Target Plus Scheme under Notification No. 73/2006-Cus.
Background of the Case
M/s. Godrej Consumer Products Ltd., a manufacturer-exporter of electronic mosquito repellent machines and related products, had imported βPTC Thermistorsβ using a duty credit certificate issued under the Target Plus Scheme. The company utilized the imported goods for manufacturing electronic mosquito repellent machines through a job worker, M/s. β EMOX Device and Company, and subsequently exported the finished products.
The Department alleged that the appellant violated the conditions of Notification No. β 73/2006-Cus, which exempted goods imported under the Target Plus Scheme from customs duty, provided the goods were not transferred or sold. The Department contended that the appellant, as a manufacturer-exporter, was required to use the imported goods in its own manufacturing unit and could not send them to a job worker for processing. β Consequently, a Show Cause Notice (SCN) was issued, demanding recovery of Rs. β 41,24,764/- in duty, along with interest, a redemption fine of Rs. β 25,00,000/-, and a penalty of Rs. β 20,000/-.
The appellant contested the allegations, arguing that the term “own use” under the notification and the Foreign Trade Policy (FTP) includes the use of job workers for manufacturing resultant products. β The appellant relied on various legal precedents and clarifications issued by the Directorate General of Foreign Trade (DGFT) to support its case. β
CESTAT Chennai’s Observations β
After hearing both parties, the CESTAT Chennai bench, comprising Honβble Member β Technical and Honβble Member β Judicial, carefully analyzed the provisions of Notification No. 73/2006-Cus and relevant sections of the FTP. β The bench observed the following:
- No Restriction on Job Work: The tribunal noted that the notification does not explicitly prohibit manufacturer-exporters from utilizing job workers for processing imported goods into finished products. β The condition of “own use” does not mandate that the goods must be processed solely within the premises of the manufacturer-exporter. β
- Clarifications from DGFT: The tribunal referred to Public Notice No. β 113 (RE-2007)/2004-09 dated 15.02.2008, which clarified that job workers can be used for converting imported goods into resultant products under the Target Plus Scheme. β This further supported the appellant’s argument that utilizing job workers does not violate the notification’s conditions. β
- Precedents from Similar Cases: The tribunal relied on previous judgments, including M/s. β Silver Line Plastpack Pvt. β Ltd. v. CCE & ST, Bhavnagar, which held that “own use” includes the use of job workers for processing imported goods. β The tribunal found no evidence that the appellant had transferred or sold the imported goods to the job worker, which would have constituted a violation of the notification. β
- No Evidence of Transfer or Sale: The tribunal emphasized that the investigation did not establish any transfer or sale of the imported goods to the job worker. β The goods were merely sent for processing and returned to the appellant for further activities like testing, repacking, and export. β
Final Verdict
The CESTAT Chennai concluded that the appellant had not violated the conditions of Notification No. 73/2006-Cus and was entitled to the exemption under the Target Plus Scheme. The tribunal set aside the impugned order, including the duty demand, interest, redemption fine, and penalty, and allowed the appeal with consequential relief. β
Key Takeaways
This judgment reinforces the principle that the term “own use” under the Target Plus Scheme includes the utilization of job workers for manufacturing resultant products. β It also highlights the importance of adhering to established procedures and obtaining necessary permissions when sending imported goods for job work. β
The decision is a significant win for M/s. Godrej Consumer Products Ltd. and sets a precedent for similar cases involving the interpretation of customs notifications and FTP provisions. It underscores the need for clarity in government notifications and policies to avoid disputes and ensure smooth compliance by exporters and manufacturers.
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Source: CESTAT Chennai
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