TaxTMI 
TaxTMI 
2015 (8) TMI 56
X X X X Extracts X X X X
X X X X Extracts X X X X
....obligations given in the advance licences. As per this obligation, the assessee was supposed to effect export of 1000 MTs cold rolled non-alloy steel (hard) coils and 1500 MTs of CRCA skin based steel strips/coils totalling 2500 MTs. The value pertaining to these exports was also specified in the licences. The exports were to be effected within the time limits mentioned therein, which was 02.09.2001, but was extended up to 02.09.2004. 2) It is an admitted case that the raw material was used by the assessee itself for manufacturing the specified products. However, no exports were effected by exporting those goods so manufactured from the raw material that was imported duty-free. As per the assessee, after manufacturing of the goods from the raw material, it was found that quality of those goods was not good enough for the purposes of exports. Therefore, instead of exporting this material, the assessee disposed of the said manufactured gods in the domestic market. At the same time, in order to meet the export obligation under the said licences, it arranged the export through one M/s. Steel Company, Gujarat as its supporting manufacturer. M/s. Steel Company, Gujarat arranged the ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the DGFT had amended the licence permitting such an export through third party, it amounted to fulfilling the export obligations as this changed position had to be reckoned. On that basis, allowing the appeal, the order of the Commissioner has been set aside. It is this order of the CESTAT which is under attack in the present appeals filed by the Revenue. 5) The neat submission which is made by Mr. Yashank Adhyaru, learned senior counsel appearing for the Revenue, is that the amendment in the licences, as carried out by the DGFT, is totally inconsequential and extraneous to the issue at hand. He argued that the matter pertains to levy of import duty. The exemption from payment of export duty is provided by Notification No. 30/1997 dated 1.4.1997 where a specific condition is attached to the effect that 'exempt materials shall not be disposed of or utilized in any manner except for utilisation in discharge of export obligation or for replenishment of such materials and the materials so replenished shall not be sold or transferred to any other person'. He argued that when admittedly this condition has not been fulfilled by the assessee, the assessee cannot be allowed the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... concerned, Mr. Banerji argued that the said case pertains to the period prior to 1992 and there is a change in EXIM Policy now. On the other hand, he referred to another decision of this Court in Titan Medical Systems (P) Ltd. v. Collector of Customs, New Delhi (2003) 9 SCC 133 to submit that it should be treated as a case of sufficient compliance. 8) We have given our serious consideration to the respective submissions made by the learned counsel for the parties on either side. 9) Notification No. 30/1997 provides for 'Exemption to materials imported against advance licence with actual user condition'. It is issued by the Central Government in exercise of powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 after arriving at a satisfaction that it is necessary in the public interest so to do. It exempts materials imported in India, against the advance licence with actual user condition in terms of para 7.4 of the EXIM Policy 1997-2000, from the whole of the duty of customs leviable thereon, including the additional duty leviable thereon under the Customs Tariff Act, subject to certain conditions mentioned in this Notification. In this behalf, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es within the value limit of (10%) of the value of the licence which are required to be exported along with the licence which are required to be exported along with the resultant product; and (c) packing materials required for packing of resultant product." 11) From the reading of this Notification, it becomes clear that the material which is imported has to be against an advance licence with actual user condition in terms of para 7.4 of the EXIM Policy 1997-2000. It is not in dispute that the assessee was in possession of such an advance licence issued by DGFT and this licence was with actual user condition, namely, the material so imported was to be used by the assessee itself in its factory for manufacturing the items specified therein. As per Condition No. (ii), the assessee was required to execute a bond at the time of clearance of the imported materials to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions specified in this Notification have not been complied with, together with interest @ 24% per annum from the date of clearance of the said materials. The export obligation was containe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in Notification No. 30/1997, puts the onus upon the assessee to make the exports of the products produced from the material so imported. However, it is the case of the assessee that for certain bona fide reasons (as the bona fides of the assessee have been accepted by the DGFT), as the assessee was not able to export same very goods produced by it from the material imported on which he was given exemption from payment of the import duty, the DGFT allowed the assessee to meet the export obligation through third party. 15) It is also correct that insofar as DGFT is concerned, it has passed Order-in-Original dated 03.08.2011 holding that the export through third party would tantamount to fulfilling the export obligation contained in the licence. However, since the total import entitlement of the firm, as per the amended licences, worked to 2123.1538 MTs and the assessee had imported 2712.41 MTs, it resulted in excess import of 589.26 MTs. Therefore, only on this excess import, customs duty was payable, which was directed to be paid along with interest calculated @ 15% from the date of first import to the date on which last consignment of exports were effected by the assessee thro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not observed, the goods are liable to confiscation. The case of the respondents is that the goods imported by the appellants, which availed of the said exemption subject to the condition that they would not be sold, loaned, transferred or disposed of in any other manner, had been disposed of by the appellants. The Customs authorities, therefore, clearly had the power to take action under the provisions of Section 111(o). 9. We do not find in the provisions of the Import and Export Policy or the Handbook of Procedures issued by the Ministry of Commerce, Government of India, anything that even remotely suggests that the aforesaid power of the Customs authorities had been taken away or abridged or that an investigation into such alleged breach could be conducted only by the licensing authority. That the licensing authority is empowered to conduct such an investigation does not by itself preclude the Customs authorities from doing so. 10. The communication of the Central Board of Excise and Customs dated 13-5-1969, refers to the breach of the condition of a licence and suggests that it may not be possible to take action under Section 111(o) in respect thereof. It is true that the....