TaxTMI 
TaxTMI 
2006 (11) TMI 67
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....nd 128/94 dated 10-6-94. Instead of using the imported material, the appellants had diverted and sold them in the local market for huge profits in violation of the DEEC Scheme and Customs Notification governing duty free imports. The DRI conducted elaborate investigation and consequently Show Cause Notices were issued to the appellants. The CBEC appointed the Commissioner of Customs (Adjudication), Customs Mumbai as common Adjudication Officer for all the three Show Cause Notices. The Adjudicating Authority passed the impugned dated 18-12-2001. The gist of the order is as follows :- (a) Denial of exemption under Notifications in respect of the imports made. (b) Confirmation of demand of Customs duty of Rs. 6,07,67,478/- under proviso to sub-section (1) of Section 28 of the Customs Act, 1962 in respect of clearances through Mumbai Port. (c) Equal penalty under Section 114A in respect of the above amount in (b). (d) Demand of Customs duty of 50,83,301/- under proviso to sub-section (l) to Section 28 of the Customs Act in respect of clearances through Kandla Port. (e) &n....
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....aterials have been imported have already been manufactured and supplied as required under this Notification, the importer may use the said materials for the manufacture of any other goods." (iii) It is submitted that export obligation had been completed and export proceedings realized. It is the understanding of the appellant that the restrictions has been only for disposing off the material prior to completion of the export obligation and receipt of export proceedings. (iv) In view of the fact that the import had been done in this case after the export obligation was completed clause (viii) of the Notification 204/92 itself would require that the order passed by the Original Authority is liable to be set aside. (v) The Apex Court (Full Bench) in the case of East India Commercial Co. Ltd., Calcutta v. CC, Calcutta, reported in 1983 (13) E.L.T. 1342 (S.C.) held that breach of condition of the licence is not a breach of the relevant Order. Section 167(8) of Sea Customs Act, 1878 (corresponding to Sections 111(2) and 111(e) of Customs Act, 1962). The infringement of a condition in the import licence not to sell the imported good....
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....ospective operation. (b) Stumpp, Schuele and Somappa Ltd. v. CC (Exports), Chennai -2006 (194) E.L.T. 437 (Tri.-Bang.), wherein it is held that once export obligations have been fulfilled and the raw materials imported for replenishment to be used in the manufacture of goods, no duty can be demanded. (c) Dolphins Drugs (P) Ltd. v. CC, Mumbai - 2000 (115) E.L.T. 552 (T) = 1999 (35) RLT 80 (CEGAT) wherein it is held that the benefit of the Notification should not be denied on the ground that part of production of final products containing imported raw materials is cleared for home consumption when export obligation is fulfilled during extended period. (d) Kitply Industries Ltd. v. CC, New Kandla - 2001 (135) E.L.T. 786 (Tri.-Kolkata), wherein it has held that import is permissible when export obligations had already been discharged by appellant prior to imports against advance licence and exact correlation is not to be made between export already made and imports of materials made subsequent to such export. (e) Vorin Laboratories Ltd. v. CC, Chennai - 2004 (16....
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....he two licences by the licensing authorities has reached the finality. (iv) The correct legal position is that the goods imported against the licences are not transferable under any circumstances and the end product shall contain the inputs imported. Refer para 67 of the EXIM Policy, para 127 of the Handbook of Procedures, proviso to condition 5 of the Customs Notification 260/92, condition 6 of the Customs Notification 128/94 and the specific conditions prescribed under the said licences. Therefore, the sale, which is admitted and proved, is in total violation of the very DEEC Scheme and the Customs Notification. (v) On verification of the claim of the appellant that the deemed exports were made by utilizing domestic inputs much before the actual import of the impugned goods, it is seen that they had claimed Modvat credit on the domestic inputs utilized in export product. They paid the Excise duty on the export product and refund of terminal duty was availed. Thus, there is no resultant incidence or suffering of any duty by them even with respect to the goods manufactured by utilizing the domestic inputs. Hence, there is no basis or locus ....
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....nbsp; South India Exports v. Joint Director of Foreign Trade - 2004 (177) E.L.T. 57 (Mad.) (b) Sheshank Sea Foods Pvt. Ltd. v. UOI - 1996 (88) E.L.T. 626 (S.C.) (c) Kamath Packaging Ltd. v. UOI - 1991 (55) E.L.T. 304 (Kar.) (d) Pooja Exporters v. Asst. Director, D.R.I. - 1989 (41) E.L.T. 21 (Kar.) (e) Sriram Mills v. UOI- 2000 (123) E.L.T. 448 (A.P.) (f) Mysore Silk International v. CC, Bangalore - 2004 (178) E.L.T. 739 (Tri.-Bang.) (g) Bombay Hospital Trust v. CC, Sahar, Mumbai - 2005 (188) E.L.T. 374 (Tri.-LB) (h) Dewan Rubber Industries Ltd. v. CC, Meerut-I - 2004 (172) E.L.T. 201 (Tri.-Del.) (i) Bihariji Enterprises v. CC, New Delhi - 2001 (136) E.L.T. 912 (Tri.-Del.) 6.We have gone through the records of the case carefully. The following factual position is not under dispute :- 6.1The appellants obtained two Special Imprest Licences from the DGFT with certain conditions. They also executed LUT with t....
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....his licence and goods imported against it are not transferable under any circumstances. 2.The end product shall contain imported inputs. Imports of inputs are permitted as per para 56 of the Exim Policy 92-97 (as amended on 1-4-93) and are allowed duty free subject to custom Notification no. 260/92 dt. 27-8-92 as amended." From the above, it is very clear that the appellants have to use the imported goods in the end product. If they had sold it in black market and still maintain that they are innocent, none can accept their contention. 6.6Next, let us go through the relevant provisions of Notification 128/94. Para 6 of the Notification is reproduced herein below :- "6.that the exempt materials are utilized for the manufacture of final goods and no portion of such materials shall be loaned, transferred, sold or disposed of in any other manner. 7................................................ Provided................... Provided that where final goods in respect of which the said materials have been imported have already been manufactured and supplied as required under this notification, the importer may use the said materials for the manufacture of any other....
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.... been fulfilled. In view of this legal position, the appellants are liable to discharge the duty liability on the impugned goods. 6.7The learned Advocates for the appellants made a point that the Show Cause Notice has not invoked Section 111(o) and, therefore, the impugned order goes beyond the scope of the Show Cause Notice. We have gone through the Show Cause Notice. There is a clear narration of the violation of Section 111(o) of the Customs Act for non-fulfilment of the conditions of the relevant Notifications even though in the operative portion of the Show Cause Notice, this section has been omitted. In a case like this, we should take into account the entire notice and the absence of the provision of Section 111(o) in the operative portion cannot make the entire notice invalid. The investigations and the Notice have clearly brought out the facts that the appellants have sold the goods cleared free of duty in blatant violation of the conditions of the Notification. Hence, the goods are liable for confiscation under Section 111(o) of the Customs Act. 6.8A point was made that Section 114A for penalty cannot be invoked in view of the fact that the violations relate to a pe....