Tribunal overturns order against M/s. S.A. Cashews, finding diversion allegations unsustainable. Export obligations compliance considered.

The Tribunal overturned the impugned order against the appellant, M/s. S.A. Cashews, finding the diversion allegations unsustainable. It was held that transferring materials to job workers not endorsed in the license was permissible under Notification No. 18/2015. The appellant's compliance with export obligations through an Export Obligation Discharge Certificate was considered, leading to a favorable outcome. The appeal was allowed, setting aside the original authority's decision and providing consequential relief to the appellant.

---

---

Issues: Alleged diversion of duty-free imported goods under Advance Authorization licenses, violation of actual user condition, confiscation of goods, customs duty, penalty under Customs Act, 1962, compliance with conditions of Notification No. 18/2015-Cus.

Analysis:
1. The appellant, engaged in processing Raw Cashew Nuts (RCN) into cashew kernels for sale/export, faced allegations of diverting duty-free imported RCN to unauthorized units and violating conditions of Advance Authorization licenses. The Directorate of Revenue Intelligence conducted searches and recorded statements, leading to a Show Cause Notice being issued.

2. The department alleged that the appellant diverted RCN to unauthorized units, violating actual user conditions specified in the Foreign Trade Policy (FTP) 2015-20 and Customs Notification No. 18/2015. Only a fraction of the imported RCN reached the authorized unit, leading to non-compliance with relevant provisions.

3. The original authority held the appellant accountable for non-compliance, ordering confiscation of goods, imposition of customs duty, and penalties under the Customs Act, 1962. The appellant contended that dispatching imported RCN to their own units for processing did not constitute diversion or sale, as the title remained with them.

4. The appellant argued that as per Notification No. 18/2015, transfer to job workers for processing was permissible, with the importer remaining responsible for fulfillment of export obligations. The appellant had been issued an Export Obligation Discharge Certificate (EODC), indicating compliance with conditions.

5. The Tribunal, considering previous judgments and the appellant's explanation, found that the diversion allegations were unsustainable. Citing the case of Regin Exports, the Tribunal concluded that transferring materials to job workers not endorsed in the license was permissible, overturning the impugned order against the appellant.

6. The Tribunal set aside the impugned order against the appellant, M/s. S.A. Cashews, allowing the appeal with consequential relief. The decision was pronounced in open court on 18.5.2022, providing a favorable outcome for the appellant in the case.

---