TaxTMI 
TaxTMI 
2010 (3) TMI 418
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....R 376 ("SVA Udyog" for short)? (b) Having followed the judgment of this Court in Bussa Overseas (Supra) in the case of Bussa Export Corporation v. Collector of Customs - 1994 (50) ECR 256 when the judgment of this Court in SVA Udyog Viniyog Ltd. was available, whether the Tribunal was correct in preferring to follow the judgment of this Court in SVA Udyog Viniyog Ltd. and not the direct judgment of the issue in the case of Bussa Overseas (supra)? Introductory Facts : 2. The clearance of two consignments of Neutral Malt Spirit i.e. concentrated whiskey consequent upon import thereof, was sought by the applicant M/s. Mewati & Co. against REP license held by them. The clearances thereof were objected to by the Customs for want of Licence to import these goods, as the items imported did not find use in manufacture of the export product for which the license was granted. 3. Show cause notice for illegal import was issued to the applicant. On adjudication, the import was held to be unauthorised, consequently goods were confiscated. In the appeal before the Collector (Appeals), the order of confiscation was confirmed. The matter was taken up before Tribunal in appeal. Tribunal....
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....xcept for registered contracts to which the relevant provisions would apply. 195(1) The items permissible for import against each export product covered by this policy are given in column 4 of the policy statement given in Appendix 17, read with column 5. 226. The transfer of the licence will not require any endorsement or permission from the licensing authority i.e., it will be governed by the ordinary law. Accordingly, clearance of the goods covered by a REP licence issued under this policy, will be allowed by the customs authorities on production by the transferee of only the document of transfer of the licence concerned in his name. Whenever an REP licence is transferred, the transferor should give a formal letter to the transferee, giving full particulars regarding number, date and value of the licence transferred and the name and address of the transferee, and complete description of the import items for which the licence is transferred. A copy of the transfer letter should be endorsed to the licensing authority who issued the REP licence, for record. This procedure will also apply to subsequent transfers of the same licence. 9. The extent of import replenishment per....
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....components in the manufacture of the product(s) exported except items which have been specifically excluded in Col. 4 or Col. 5. It should be also ensured that only those items are included in the list which are actually used as raw materials and components in the manufacture of the relevant product exported. The licensing authority may, after due scrutiny of the list, exclude therefrom any item which in his opinion is not actually used as raw material/component in the manufacture of product(s) exported. If at any time, it is found that an exporter obtained REP licence under this provision for an item which was not actually used as raw material/component for the manufacture of the product exported against which the REP licence was issued, the licence in question, shall be liable to cancellation. If the licence has been used by the time the irregularity comes to notice, the value of the licence shall be adjusted against the import entitlement of the exporter in any category. These actions will be without prejudice to any other action that may be taken in this behalf under the import and export control regulations. 11. Having taken survey of the relevant terms of the Exim policy, ....
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....facture or export any article. It may merely be a trader. It follows that the transferee importer cannot be required to satisfy the nexus test, i.e., the test of use of the imported goods in the product exported by the original licencee. He submits that this principle is judicially recognised through the Hon'ble Supreme Court upholding the decision of the Tribunal in Goodluck Industries v. Commissioner of Customs [1999 (108) E.L.T. 818 (Tri.)], as reported at [2000 (120) E.L.T. A66 (S.C.)] and the Hon'ble Madras High Court in Commissioner of Customs v. Salem Stainless Steel [2001 (131) E.L.T. 30 (Mad.)]. 14. Mr. Baya submits that as a corollary, the only requirement qua the transferee is that the goods under import must be covered by the REP Licence, i.e., it must be included in the list of items permitted to be imported against the said licence. He submits that it is not in dispute that the REP Licence in question covers "Ethyl Alcohol", without any words of qualification or restriction, either as to its concentration or nature. That it is an admitted position that the 'Neutral Malt Spirit' falls within the meaning of the term "Ethyl Alcohol". 'Neutral Malt Spirit' can therefor....
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....erm, the plain reading of item G-2 under Appendix 17 establishes that the expression is used for restricting its meaning". The Applicant submits, that the Division Bench of this Court has therefore, reconciled the judgments in Bussa Overseas and SVA Udyog Viniyog. 16. On the above premise, Mr. Baya submits that the Tribunal was in error in not following Bussa Overseas, which was a judgment directly on the issue before it, and misdirected itself by following SVA Udyog Viniyog, which is distinguishable in the facts of the present case. Per contra : 17. Mr. Pardeshi, learned Counsel for the Revenue urged that the provisions of Exim Policy for the Replenishment licence expressly prescribed in column 4 of Appendix 17, items to be imported for manufacturing export product. According to him, the export product is a Dye intermediate and chemicals which is used for colouring fabrics. In his submission, the object of policy of replenishment licence is enunciated in paragraph 188 of the policy (extracted supra), whereas, clause 193(1) and 195(1) (supra) clearly state that the input required to be used in export product and the items thereof are prescribed in column 4 of Appendix 17. ....
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....nnot be and could not be allowed to be imported against the said REP licence held by importer for want of its use in export product. Reliance is placed on the judgment of S.V. Udgyog (supra). 21. Mr. Pardeshi urged that the Apex Court has confirmed the judgment of this Court in S.V. Udyog (supra). According to him, the said judgment is the only judgment which is applicable to the facts of the present case. He submits that the judgment in the case of M/s. Bussa Overseas (supra) does not take into account the statutory conditions laid down in the Exim Policy, especially, paragraph 8 thereof, wherein actual use in the export product was insisted upon. While emphasising this submission, he submits that the judgment of this Court in the case of Bussa Overseas (supra) is inconsistent with the statutory provisions, whereas the judgment in SVA Udyog (supra) directly deals with the question sought to be debated. He, thus, contends that the judgment of this Court in Bussa Overseas (supra) is not at all applicable. 22. Mr. Pardeshi, in order to counter the submissions advanced by the petitioner that the transferee is not liable to fulfill actual user condition of the Exim policy, submit....
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.... manner of doubt that it had direct nexus or relation to the export product of synthetic organic dyes including organic pigments. Clause (a) under Item 4 refers to Dye Intermediate and Chemicals in Appendix 3 and use in manufacture of products exported. It is, thus, obvious that the expression dye intermediate and chemical shown in Appendix 3 must be used or capable of being use in manufacture of product exported. 26. The submission of Mr. Baya that Ethyl Alcohol shown in Appendix-3 at Item 179 is a generic term and it need not have any nexus to the export product under clause 1 cannot be accepted. The contention that once the item falls under the generic term Ethyl Alcohol then the imported goods are in accordance with the licence condition cannot be accepted. Assuming for the sake of argument that the Natural Malt Spirit (whiskey) is covered by Ethyl Alcohol in a generic term but that would not entitle the applicant to claim benefits of licence as it was never used for the purposes of manufacturing items covered under - B.16.1. Unless it is shown that the said imported product was used in manufacture of the product exported the import cannot be held under the umbrella of REP l....
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....Division Bench in the said judgment observed that as the licence was issued simplicitor for Ethyl Alcohol without restricting its meaning or scope, as such import for any purpose cannot be faulted. The specific wording appearing in the said judgment in this regard are as under : "In this connection, it may be noted that whenever the Licensing Authorities are empowered to and consider it necessary to specify the kind of commodity with reference to the use to which it is to be put to, that is mentioned in the licence itself. But in these licences nothing of the kind is mentioned." (Emphasis supplied) 31. As against above, the licence in the case in hand contains a specific declaration that Ethyl Alcohol is actually used as raw material and its components in manufacture of products exported. In the light of this declaration, one has to hold that only Ethyl is permitted to be imported under subject licence, which is used in dyes and dyes intermediate. Since the Neutral Malt Spirit (whiskey) is not required to be used either as an input or as a raw material or as a component of the manufactured product to be exported by the original licence holder, the import made by the applic....