Advance licence endorsement requirements under the DEEC scheme governed confiscation and penalty for goods made through other manufacturers.

Advance licence conditions under the DEEC scheme required adherence to the actual user stipulation, and paragraph 120 mandated endorsement of any supporting manufacturer or jobber where production was undertaken by another unit before export. The appellants admitted that part of the export goods was manufactured through other units without such endorsement, so the scheme was violated. On that basis, export of bought-out goods as if they were manufactured by the appellants rendered the goods liable to confiscation and penalty. The confiscation and penalty were upheld in principle, although the redemption fine and penalty were reduced.

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Issues: Whether the export goods were liable to confiscation and penalty for being procured through other manufacturers without the mandatory endorsement of the jobber/supporting manufacturer in the advance licence under the DEEC scheme.

Analysis: The licence was issued to the appellants as manufacturer-exporters under Notification No. 204/92-Cus. and the EXIM Policy required compliance with the actual user condition. Paragraph 120 made endorsement of the name of any manufacturer or jobber mandatory where prior import before export was involved and the goods were to be processed through another manufacturer or jobber. The appellants admitted that part of the goods had been got manufactured by other units, but such names were not endorsed in the licence. On that basis, the requirement of the scheme was violated and the export of bought-out goods as if manufactured by the appellants attracted confiscation and penalty.

Conclusion: The confiscation and penalty were upheld in principle, but the redemption fine and penalty were reduced. The appeal failed on merits except for the reduction in quantum.

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