TaxTMI 
TaxTMI 
2005 (6) TMI 359
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....nst the above mentioned 3 companies as well as their officers, supporting manufacturers/job workers and the transporter. 2. The Revenue has preferred appeals aggrieved by dropping of proceedings while M/s. ISI Bars Limited and its joint Managing Director Shri Sudhir Gupta are in appeal against the confirmation of part duty demand and imposition of penalties. 3. The brief facts of the case as made out in the Show Cause Notice dated 27-7-1995 read with Addendum dated 4-3-1996 issued by the Customs Authorities is that M/s. ISI Bars Limited, M/s. India Steel International and M/s. India Steel International Private Limited (hereinafter referred to as "Licence Holders") had discharged export obligations under various Value Based Advance Licence (VABAL) as well as1 Quantity Based Advance Licence (QBAL) by exporting goods manufactured by them by availing Input Stage Credit under Rule 57A of the Central Excise Rules, 1944 in respect of export goods; that they have exported Stainless Steel Bright Bars by fraudulently misdeclaring the same as 'Stainless Steel Bars and Rods in order to wrongly import items appearing against Sr. No. 717 under heading "Engineering Products" of th....
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.... 66.21 lakhs and therefore, for the Value Based Advance Licences issued during the period, there is no breach of condition v(a) by Notification 203/92. Therefore, he set aside the demand for duty in respect of imported Ferro Silicon and Ferro Chrome made against such licences in the year 1993-94. For the year 1994-95, he accepted the submission of the Licence Holders that exports under Quantity Based Advance Licence are not required to be included in the total value of clearances for home consumption and left it to the competent authority to quantify and recover the correct amounts by reversal. However, he did not accept their contention of non contravention of the condition (v) of Notification No. 203/92 in respect of VABALs issued during the period 1994-95; he therefore, examined the question as to whether duty free material imported against VABALs issued during 1994-95 had been utilised in accordance with the Notification and on finding that there is no allegation regarding diversion or sale of any such duty free material imported against VABALs during 1994-95, held that demand for duty in respect of goods imported under VABALs during this period was not sustainable. 4. ....
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....ollowing grounds : (a) The Commissioner has failed to appreciate that the benefit under Advance Licencing Scheme extended to Licence Holders are substantial and particularly there is lot of flexibility provided in the matter of duty free imports of materials against value based advance. It was incumbent for the beneficiary of advance licence holder claiming the benefit of the Customs Notification No. 203/92 and 204/92 for the items permitted, duty-free to strictly comply with the various conditions and restrictions specified in the said notifications - both with regard to the import items for their utilization as well as certain conditions imposed in regard to the products exported for discharge of export obligations. (b) The Commissioner has erred in not appreciating the seriousness and the nature of various irregularities, which have been detected during detailed investigations committed by M/s. ISI Bars and others, particularly in regard to the various value based advance licences. The Commissioner has failed to take serious note of the fact that for the goods exported for the discharge of export obligations during the years ....
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....ll as duty free imports of inputs as a special dispensation to get immunity from the customs duty liabilities as well as penal action etc. These VABAL beneficiaries were to strictly abide by the conditions laid down in the circular which inter alia stipulated that the licence holders will ensure that the total Modvat credit taken from the inputs uses in the manufacture of the products exported against the value based advance licences is reversed to the satisfaction of the Assistant Commissioner of Excise concerned by 31st January, 1997; an interest at the rate of 20 per cent was also to be paid by such advance licence beneficiaries on the same date. No extension in this period was given by the Government. No doubt the 3 licence holders in the present case claimed that certain amount of Modvat credit was reversed during early 95 itself, but they have failed to take any steps to satisfy the Assistant Commissioner, Central Excise, concerned that this was the total Modvat credit which had been obtained on the various inputs used in the manufacture of export items. Further they have taken no steps to show to the adjudicating authority that the amount due for reversal as well as the tota....
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....or exports. Some reversal was affected much later in early 95 when the abuses had been detected and investigations were started for taking appropriate action. As an exceptional case only the Government had announced a special scheme in January, 1997 mentioned earlier but the conditions of the circulars/instructions of the Board were not satisfied by the licence holders. Therefore, the Commissioner should have upheld the demands and taken suitable penal action instead of dropping proceedings for the irregularities noticed. (g) Considering the totality of evidence brought out clearly with show cause notice, it is clearly established that the imported inputs were disposed off in contravention of the laid down provisions of Notification No. 203/92 and policy provisions and not only the duties demanded for the goods were liable to be confirmed, but penal action justified against there licence holders for who became parties for the various irregularities brought out in the show case notice. 8. From the above, it is clear that the Department does not either allege or find that the Licence Holders had not reversed any amount of credit taken by them or the....