TaxTMI 
TaxTMI 
2011 (6) TMI 647
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.... quantity of the raw material seized from the premises of the respondent. A total amount of Rs. 1.12 crores deposited by the party during the course of investigations was proposed to be appropriated towards the demand of duty and interest. Penalties were proposed under Sections 112 and 114A of the Customs Act. The seized goods were proposed to be confiscated under Section 111(o) of the Act. The Revenue is presently aggrieved by the dropping of the above demands and proposals. 2. 43 consignments of zinc dross were imported under eight advance licences claiming exemption under Customs Notifications No. 93/2004 and 94/2004, both dated 10-9-2004. The DEEC Scheme required the respondents to use the exempt raw material in the manufacture of the resultant product specified in the advance licences as also to export the said product. The exemption notifications also contained corresponding provisions. The conditions of the two Notifications are, by and large, identical. Condition (ii) of Notification No. 93/2004-Cus. was to the effect that, where import took place after fulfilment of export obligation, the Shipping Bill particulars including quantity and FOB value of the resultant pro....
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....sal of the resultant product did not amount to breach of any Condition of the Notifications and hence the benefit of the Notifications cannot be denied to them. 3. The learned JCDR for the appellant and learned counsel for the respondent have put forward the respective views. The learned Jt. CDR has particularly referred to para 4.1.3 of the Foreign Trade Policy 2004-09. This para contains provisions relating to advance licences. Its opening sentence reads thus : "Advance licence is issued to allow duty free import of inputs, which are physically incorporated in the export product making normal allowance for wastage)." The Jt. CDR has interpreted this provision of the Policy so as to mean that every quantity of input imported under the advance licence should be physically incorporated in the export product (except waste). In other words, the resultant product specified in the advance licence should be physically exported, in all circumstances obtaining under the DEEC Scheme. If, after discharge of export obligation in full, the importer of zinc dross imports the material and utilizes it for the manufacture of zinc oxide and does not export this product, he will not be entit....
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....d where specific export obligation has been fulfilled before making any import). Contextually, it is pointed out that, where the export obligation has been fulfilled before making any import). Contextually, it is pointed out that, where the export obligation has been fulfilled before making any import, there is no requirement of production of any bond even as per the main provisions of the Policy. It is argued that these provisions of the Policy are in the nature of giving a free hand to the importer who has already fulfilled his export obligation under the advance licences. Therefore, according to the learned counsel, the importer cannot be required to export any more quantity of the resultant product as a condition of Exemption. Referring to the Tribunal's stay order in Arkema Catalyst India Pvt. Ltd, it is submitted that the said order was set aside by the Hon'ble High Court vide Order dated 7-10-2009 in Writ Petition No. 8214/09, wherein the Hon'ble High Court held that the petitioner had complied with the terms of the Advance Licences and had not violated the conditions of Notification No. 43/2002-Cus. 6. After giving careful consideration to the submissions, we note tha....
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.... case may be) of the resultant product to be exported. These provisions appear to throw light on the meaning of para 4.1.3 of the Foreign Trade Policy. The term "export product" used in the Policy should, therefore, be understood as "resultant product" already exported". The Policy requires the imported raw material to be physically incorporated in the export product. Thus, the relevant condition of the Notification is in consonance with the Policy provision. We are, therefore, prima facie of the view that the respondent ought to have exported the resultant product manufactured out of the zinc dross imported after fulfilment of export obligation, so as to claim the benefit of the Notifications. 8. Para 4.1.5 of the Foreign Trade Policy came into force on 8-4-2005, which is not in dispute. The learned counsel heavily relied on this provision to argue that, once the export obligation was completely discharged, the licensee can dispose of the subsequent product in any manner including sale in the domestic market. We note that the subject imports were made over a long period 2003-06. Some of the imports were made prior to 8-4-2005 and other imports after that date. Apart from thi....