TaxTMI 
TaxTMI 
2004 (12) TMI 611
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....f Rs. 20,74,275/- with the corresponding export obligation of Rs. 66,55,025/-. The petitioner-company executed a bond backed by bank guarantee for the requisite amounts. 4.It was further stated that an exporter like the petitioner-company was also entitled to procure the raw material indigenously and make exports, but only with prior permission of the licensing authority and in such a case, raw material could be sold in the market. The petitioner-company was stated to have complied with the export obligations of a higher value than prescribed and the same was done by 22-7-1989. 5.The dispute relates to a part of the consignment imported by the petitioner-company weighing 3536.52 kg. of the value of Rs. 8,37,281/- contained in 60 bales and cleared at the port of Bombay against the bill of entry dated 24-8-1987. The duty involvement in case of such import is stated to be to the tune of Rs. 5,86,808/-. These goods were to proceed to Phagwara but were, however, sent via Bangalore. It was stated that a few of the bales were given for twisting, weaving, etc. Some complaints are stated to have been made and the DRI Authority in a raid seized 51 bales. Thirty of the bales were with t....
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.... involved is of the order of Rs. 5,86,808/-. M/s. Pooja Exporters who obtained the above-mentioned advance licence as a manufacturer-exporter should have utilised the imported silk in their factory at Phagwara. However, instead of bringing the imported goods to their factory, they are alleged to have sold the goods to various parties in Bangalore. The Directorate of Revenue Intelligence, Bangalore seized the duty free imported raw silk from the premises of several firms of Bangalore as per details given below :- Name and Address of the firm Quantity seized 1. M/s. Sri Shivananda Silk Koti, 67/38, Maradi Building, Ct. Street, Bangalore. 2 bales 2. M/s. B.T.V. and Sons, No. 12, Anakallapa Lane, Narayanasettypet, Bangalore-2. 4 bales 3. M/s. Vasavi Silk and Sarees, Shop No. 12, Paras Market, No. 12, Appaji Rao Lane, C.T. Street Cross, Bangalore-2. 10 bales 4. M/s. Laxmi Weaving Factory No. 1, 8th Cross, Magadi Road, Bangalore-23. 1 bale 5. M/s. Shantilal Transport Co., 75-B, Usmankhan Road, Bangalore. 30 bales 6. M/s. Pooja Exporters, 5/81, 1st Floor, Cubbonpet, 26th Cross, Bangalore-2. ....
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.... conducted within its authorised premises (or made available to jobbing units or other units outside for intermediate processing only as part of such production effort). In the non-industrial category, such as hospitals, research and development units or any other institutions, commercial establishments and individuals, the concerned item shall be utilised for its/his own use, i.e., for the purpose for which the item was sought for import."  11.In order to appreciate the controversy, it may also be stated that the Duty Exemption Scheme was specified in Appendix 19 (Chapter XVI) of the said Policy and states that advance licence, namely, Duty Exemption Entitlement Certificate (DEEC) is issued to registered exporters for import of exempt material specified in Annexure-I to the Appendix and the resultant product has to be exported outside the country. Para 16 of the said Appendix provides as under : "Duty Exemption Entitlement Certificate : The licensing authority issuing a licence 16. under this Scheme will also simultaneously issue the connected Duty Exemption Entitlement Certificate in the form given in Appendix XVI-E of the Handbook. These certificates will be issued....
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....ese goods were not utilised and were subsequently seized by DRI, they had not misutilised the goods. The said party was found guilty of abetting in contravention of purchasing 2 bales. M/s. Laxmi Weaving Factory stated that the goods were obtained for testing prior to purchase and as the quality of denier was sub-standard, they requested the seller to take back the material, but before the seller could take back the material, the same was seized by the DRI. Again, they were found guilty. Sri Vasavi Silks and Sarees stated that 10 bales have been offered for sale and 9 bales had been left, but without receiving any payment by the petitioner-company. It was, thus, pleaded that no sale could be said to have taken place as the purchase was not complete. The finding arrived at was that there was an intention to sell. M/s. B.T. Venkataramaiah and Sons stated that the petitioner-company approached them and offered to sell the yarn at which stage the party demanded documents before negotiating the price. Instead of producing the documents, the petitioner-company dumped the bales at the entrance and promised to produce the documents. The goods were seized before they were taken back by the ....
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....not complete and at best it could be otherwise parting with, though this is disputed by the petitioners. Since there was no show cause notice in respect of the finding arrived at, there could be no question of imposition of penalty. In this behalf, learned Counsel relied upon judgment of the Supreme Court in Metal Forgings v. Union of India, 2002 (146) E.L.T. 241 (S.C.). In that case, it was held by the Supreme Court that show cause notice should be specific about the provisions and the facts on which the same is based. 21.Learned Counsel further submitted that the reliance placed by the authorities and the respondents on para 24(2) of Appendix 19 of the Import and Export Policy is misconceived since at the relevant stage of time, the said Policy was not in existence. The reliance has been placed on this paragraph by the respondents to submit that only in case of merchant-exporters of goods specified in para 6 of Appendix 13 of the Policy the licensing authority may allow the case on merits without insisting on a joint bond with the supporting manufacturer as the said paragraph refers to exporter other than manufacturer-exporter. It was submitted that this is the Policy for the ....
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....ny and states that the same has been so issued by the Deputy Chief Controller of Imports and Exports, relevant portion of the same is as under : " ...to the above importer and covered by the list of materials specified under Pact 'C' of this Certificate would be eligible to exemption from import duty subject to the condition specified in the Notification on the subject. The exempt material will be used in the manufacture of the corresponding resultant product as specified under Part 'E' of this Certificate in the factory/factories of the importer specified in Part 'A' of this Certificate except in respect of ancillaries of the resultant product which may be manufactured in the factory/factories specified in Part 'B' of this Certificate."  25.Part A is the name and address of the factory of the certificate-holder where the resultant product will be manufactured and gives the name of the petitioner-company with the address of Phagwara. Part B is to state the name and address of the factories where the ancillaries to the resultant product will be manufactured. Part B states "as above" and, thus, there is no separate ancillary mentioned. Part C mentions the goods and the qua....
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.... was subject to the conditions applicable in respect of the relevant Import Trade Control Policy Book and the Handbook of Import and Export. DEEC was issued to the petitioner-company in view of the advance licence being issued in terms of Para 16 of the Appendix 19 of the Policy. DEEC itself stipulated that the same was being issued for import of goods specified in Part C, which were eligible to exemption for import duty subject to conditions of the notification. Thus, subject to compliance of export obligations, the goods specified in Part C could be imported. The said Part specifies the goods as mulberry raw silk. The manufactured product is specified in Part E, which is pure silk saree fabric, dupattas made of 100% mulberry raw silk, suit pieces and are to be manufactured in the factory of the importer specified in Part A. Part A specifies the factory of the petitioner at Phagwara. The exception is stated in respect of ancillaries of the resultant product which can be manufactured in factory/factories specified in Part B of the Certificate. However, Part B of the Certificate only stated "as above" which implies that it was to be only at Phagwara. Thus, no ancillary place of manu....
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....as been proceeded against to give an effective reply. The petitioner has relied upon judgment of the Supreme Court in Metal Forgings's case (supra) for the said purpose. The question, however, remains as to whether the petitioner-company was, in fact, put to such notice. 35.The allegation against the petitioners have been clearly and unambiguously mentioned. The notice has been issued under the provisions of Section 4-I of the said Act. However, in the operative paragraph, it has been stated that the petitioner-company should show cause as to why penalty should not be imposed under Section 4-I(1)(a). Specific reference has not been made to Section 4-I(1)(d) since the finding is that no sale has taken place, though certainly the goods were handed over to third-parties. Thus, the general provision was mentioned, though the specific clause has not been mentioned. In my considered view, the petitioner-company was put to notice in view of the allegations that the matter in controversy related to the attempt on the part of the petitioner-company to sell the goods, though specific clause of the provision had not been mentioned. The petitioners undoubtedly parted with the goods. &ems....