Customs jurisdiction under Duty Exemption Scheme lies with the port of import, not a separate investigating authority.

Under the Duty Exemption Entitlement Scheme, jurisdiction to test compliance with exemption conditions and raise a demand for short-levied customs duty lay with the customs authority at the port of import, because the licence, DEEC book and duty-free clearance were tied to that customs house. An Indore-based Commissioner could not initiate proceedings for alleged misuse or diversion on the basis of later investigation alone. The tribunal therefore held that the demand, confiscation and penalty were without jurisdiction and set them aside.

---

---

Issues: Whether the Commissioner of Central Excise & Customs, Indore had jurisdiction to demand customs duty and order confiscation in respect of goods imported under the Duty Exemption Entitlement Scheme and cleared through the port of import.

Analysis: The appellate tribunal held that, under the Duty Exemption Entitlement Scheme, the licence, DEEC book, and duty-free clearance were connected with the customs house at the port through which the goods were imported. The authority competent to examine compliance with the exemption conditions and to raise a demand for short-levied duty was therefore the customs authority at the port of import. The tribunal relied on its earlier decisions holding that where imported exempted material is alleged to have been misused or diverted, proceedings must be initiated by the customs house having jurisdiction over the import clearance, and not by another customs authority on the basis of subsequent investigation alone.

Conclusion: The Commissioner at Indore lacked jurisdiction; the demand, confiscation, and penalty order were set aside and the appeal was allowed.

---