2004 (11) TMI 234 - AT - Customs

Tribunal Overturns Order: Export Obligations Fulfilled, Customs Violation Charges Dismissed, No Penalties Imposed.

BHARATH STEEL CORPORATION Versus COMMISSIONER OF CUSTOMS, CHENNAI

BHARATH STEEL CORPORATION Versus COMMISSIONER OF CUSTOMS, CHENNAI - 2005 (186) E.L.T. 565 (Tri. - Chennai) Issues Involved:1. Violation of conditions of Customs Notifications No. 30/97 and No. 48/99.2. Misuse of Advance Licences under the DEEC scheme.3. Validity of the JDGFT's order in relation to the Customs authorities' findings.Summary:1. Violation of Conditions of Customs Notifications No. 30/97 and No. 48/99:The appellants imported Stainless Steel Coils (SS Coils) duty-free under Advance Licences issued by the DGFT under the DEEC scheme, clearing the goods under Customs Notifications No. 30/97 and No. 48/99. The department, through DRI, investigated and found that the appellants did not have a factory at the declared address and had diverted the imported raw material to the domestic market, violating the conditions of the Customs Notifications and EXIM Policy 1997-2002. Consequently, a show-cause notice was issued demanding duty of Rs. 73,38,846/- on 154.523 MTs of SS Coils, proposing confiscation and penalty.2. Misuse of Advance Licences under the DEEC Scheme:The Commissioner of Customs adjudicated the show-cause notice, denying the benefit of the Customs Notifications for the entire import, demanding duty and interest, ordering confiscation of the SS Coils, and imposing a penalty. The appellants contended that they had utilized the imported raw material for manufacturing SS utensils either in their declared factory or in job workers' premises due to lack of electricity supply. They argued that the entire raw material was used for manufacturing export goods, and there was no evidence of domestic diversion.3. Validity of the JDGFT's Order in Relation to the Customs Authorities' Findings:The JDGFT, acting on DRI's request, issued a show-cause notice to the appellants under Sections 13 & 14 of the Foreign Trade (Development and Regulation) Act, 1992. The JDGFT's order dated 5-1-2004 was in favor of the appellants, certifying full discharge of export obligation. The Commissioner of Customs, however, held that the Customs authorities were responsible for verifying compliance with the Customs Notifications and EXIM Policy, and the JDGFT had exceeded his jurisdiction.Judgment:The Tribunal, after hearing both sides, found that the appellants had duly fulfilled their export obligation, as certified by the licensing authority. The JDGFT's order, being a quasi-judicial order, had become final and binding on the department, as no appeal was preferred against it. The Tribunal held that the charge of breach of conditions of the Customs Notifications did not survive in view of the JDGFT's order. Consequently, the benefit of the Notifications could not be denied, and no penal action was warranted. The impugned order was set aside, and the appeal was allowed.Operative Part:The appeal was allowed, and the impugned order was set aside. The operative part of the order was pronounced on 4-11-2004.