TaxTMI 
TaxTMI 
2014 (9) TMI 287
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....eign Trade, on the basis of the application and statutory declaration made by the assessee, issued Advance License with actual user condition for the import of SS Coils/Sheets for using the same in the manufacture of SS Utensils to be exported availing the benefits of Customs Notification Nos. 30/97, dated 1 April 1997 and 48/99, dated 29 April 1999 respectively. 3. While so, the Directorate of Revenue Intelligence received intelligence input regarding the misuse of advance licenses by the importers and contravention of the Customs Notification by diverting the duty free imported raw materials instead of utilizing the same for manufacture of resultant export products. 4. The premises of the assessee was inspected by the officers of the Customs Department and it was found that the premises indicated in the declaration given by the assessee was in the possession of Mr. Krishnan and he was running a propriety concern in the name and style of "M/s. Shri Krishna Polishing Works". The Inspection Team seized incriminating materials and recorded statements of the person in actual possession of the building and the assessee. The Proprietor of the assessee concern in his stat....
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...., [which is the subject matter in C.M.A. No. 1927/2005] and the said appeal was allowed on the basis of the final order passed by the Joint Director General of Foreign Trade dropping further proceedings initiated against the assessee. In short, CESTAT allowed the appeal filed by the assessee solely on the ground that the charges framed against the assessee alleging breach of conditions of the Customs Notifications does not survive in the light of the final order passed by the Joint Director General of Foreign Trade, as the same is final and binding on the Customs Authorities. Accordingly, the order passed by the Commissioner was set aside. Feeling aggrieved by the said order, the Revenue is before this Court. Submissions : 7. The learned Central Government Standing Counsel, in support of the appeal would contend thus :- (i) The order passed by the Joint Director General of Foreign Trade dropping further proceedings against the assessee has nothing to do with the proceedings initiated by the Customs Department. Therefore, the finding given by the CESTAT that the order is binding on the Customs Authorities, appears to have been made on a wr....
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....me Court under Section 130E(b) of the Customs Act, 1962. (iv) The Customs Department has not produced any materials to show that the assessee has misused the advance license issued to them. The order passed by the Joint Director General of Foreign Trade is based on the proceedings initiated by the Customs Department. The Joint Director General of Foreign Trade is the Competent Authority to decide the question regarding violation of the conditions of license or misuse of the advance license. Once a factual finding is given by the Joint Director General of Foreign Trade that licenses were not misused, the Customs Department cannot be heard to say that they are entitled to collect duty on account of misuse of the license. 9. This appeal was admitted on the following substantial question of law :- "Whether the Appellate Tribunal has committed an error of law in holding that the order passed by the Joint Director General of Foreign Trade is binding upon the Customs Authorities or not, when the proceedings are initiated against the respondent under the provisions of the Customs Act ?" Discussion : 10. The assessee appears to have given a declaration b....
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....ioner of Customs. The CESTAT proceeded on the wrong premise that the findings given by the Joint Director General of Foreign Trade is binding on the Customs Department and as such, the Department is precluded from initiating action to levy duty under the Customs Act. Since the order passed by the Joint Director of Foreign Trade was accepted by the CESTAT, no attempt was made to consider the matter independently. Therefore, there is nothing on record to show that the matter was considered on merits. The CESTAT merely followed the order passed by the Joint Director General of Foreign Trade and quashed the order passed by the Commissioner of Customs. 12. Before considering the legality and correctness of the order passed by CESTAT, it is appropriate to deal with the issue of maintainability of the appeal raised by the learned senior counsel for the assessee. 13. The learned senior Counsel for the assessee placed reliance on the judgment of the Supreme Court in Navin Chemicals Manufacturing and Trading Co. Ltd. v. Collector of Customs [1993 (68) E.L.T. 3 (S.C.)] and the subsequent judgment of the Karnataka High court in C.C.E., Mangalore v. Mangalore Refineries & Petroc....
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....onstrued strictly. 18. The customs authorities exercise jurisdiction under the Customs Act. Section 111 empowers the Customs Department to confiscate the goods improperly imported from the place outside India. Section 111(o) deals with confiscation of exempted goods, in case the conditions under which import was permitted was not fulfilled. The jurisdiction of the Director General of Foreign Trade on this issue is entirely different. The said authority is concerned only with the violation of license conditions, which is relevant for the purpose of cancelling the license. It is only when the assessee is given a license, they would be in a position to import materials without payment of duty. The question is whether the importer has satisfied the conditions laid down in the customs notification, is a matter to be decided by the Customs Authorities. The Director General of Foreign Trade has no jurisdiction in such matters. In case it is made out that the assessee has violated the conditions, necessarily, they will be liable to pay duty. 19. The CESTAT was of the view that the order passed by the Director General of Foreign Trade has become final and as such, the issue ....
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....stoms authorities appears to be as to whether there at all was a manufacturing factory or manufacturing unit for utilizing the imported stainless steel sheets and if such manufacturing unit was not there, how the imported stainless steel sheets were actually utilized. It is also true that the further question in that enquiry is going to be as to whether it was the imported material alone which was used in the manufacturing activity. Now, if there was no manufacturing unit available or any such manufacturing unit as would have the capacity to manufacture the goods worth crores of rupees, how was the imported stainless steel utilized. The question would not only be misrepresentation while getting the Advance License but also about the utilization of the imported material, which would squarely fall under Sec. 111(o) of the Customs Act. 23. The order passed by the Joint Director of Foreign Trade indicates that the authority was more concerned about the alleged information given by the licensee stating that they were having manufacturing facility, which was found later as an incorrect statement. While considering the said issue, the Joint Director of Foreign Trade examined the d....
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....ve that they are entitled to the exemption. 27. In Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, 2010 (260) E.L.T. 3 (S.C.), the Supreme Court observed that the exemption clause should receive strict construction. The Supreme Court said :- "Exemption clause - Strict construction 22. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. In Novopan India Ltd. this Court held t....