Duty-free import under transferred licence and reversed Modvat credit: prima facie relief limited by revenue protection bond.

A stay application under Customs Notification No. 204/92 was examined on a prima facie basis in a dispute over duty-free import under a transferred DEEC licence after reversal of Modvat credit. The Tribunal noted that the exports had been made on a prior export basis and that the reversal of credit removed the risk of double benefit, making denial of the import concession not readily sustainable at this stage. To protect revenue, however, blanket stay was refused and the applicant was directed to furnish a personal bond for the duty amount so the departmental order could be implemented.

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Issues: Whether stay against the order of the Collector (Appeals) should be granted in view of Condition No. (vi) of Customs Notification No. 204/92 when Modvat credit had been reversed before import under the transferred licence.

Analysis: The request for stay was examined on a prima facie basis. The Tribunal found that the exports had been made on prior export basis, not after obtaining the DEEC licence, and that the subsequent reversal of Modvat credit created a prima facie situation where denial of duty-free import was not justified. The Tribunal also noted that the condition appeared intended to prevent double benefit, and that once one benefit was foregone, denial of the other benefit was not readily sustainable. At the same time, the Tribunal considered it appropriate to protect revenue by requiring a personal bond for the duty amount.

Conclusion: Blanket stay was refused, but the applicant was directed to furnish a personal bond covering the duty amount so that the departmental order could be implemented.

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