TaxTMI 
TaxTMI 
2016 (2) TMI 246
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....il, 1988 to March, 1991, an Import and Export Pass Book Scheme was introduced in order to provide duty free inputs to manufacturer-exporters and export/trading houses for production of goods for export. The scheme provided eligible exporters the facility of duty free raw materials and samples required for the manufacture of an export product. Para 257 (2) of the Import & Export Policy stated that the exemption under the Import Export Passbook issued under the Scheme would be governed by the Department of Revenue Notifications as reproduced in Appendix 14-B and 13-B. In terms of the Scheme, if an exporter had a firm contract, it could approach the licensing authority for grant for benefit of import of raw materials free of duty which would then be required to be put to use to produce the resultant product for export. 3. Under Para 259 (1) of the Policy imports against the pass book was allowed to the extent of import entitlement as specified in Appendix 14-A to the policy. Para 259 (1) reads as under: "259(1) Imports against the Pass Book will be allowed to the extent of import entitlement as specified in Appendix 14-A to this Policy. The import eligibility will be based....
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.... (iii) Natural silk ready-made garments, hosiery and knitwear containing less than 85% but not less than 50% natural silk by weight. O.4(iii) 30% (iv) Natural silk ready-made garments, hosiery and knitwear containing less than 50% but not less than 20% natural silk by weight. O.4(iv) 20% 6. The Petitioner states that he had already obtained a confirmed order for export of pure silk and embroidery garments and that an application had been made for issuance of an Import and Export Passport under the aforementioned scheme. The Petitioner was issued an Import Export Passbook under the aforementioned scheme along with a Export Licence dated 13th December, 1988. The licence was in two parts-one relating to import entitlements and other relating to export obligations. A copy of the said licence has been placed on record. The licence dated 13th December, 1988 mentions at the outset that the FOB value of the export had to be Rs. 20 lakhs. The description of the goods permitted to be imported reads "1500 kgs. of Mulberry raw silk of any Grade other than Dupion Yarn" and the approximate value C.I.F. of the import is indicated as Rs. 10 lakhs. The licen....
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....e Petitioner was, however, that the only obligation under the scheme was to export natural silk garments of the value of Rs. 20 lakhs which it had fulfilled even prior to the making of the import. 12. By the order dated 24th January, 1992, the Assistant Collector of Customs rejected the Petitioner's explanation and concluded that the Petitioner would have to pay the customs duty proportionate to the unutilised mulberry raw silk which was calculated at Rs. 2,08,899. The Petitioner was called upon to pay the aforesaid amount with 18% interest from the date of importation till the date of payment of duty. 13. Aggrieved by the above order, the Petitioner filed an appeal before the CEGAT in which a specific plea was raised that the show cause notice was barred by limitation since it was issued more than six months after the date of clearance of the goods. It was further contended that by a letter dated 23rd January, 1991 the Petitioner had already brought to the notice of the Department the full facts regarding utilization of the raw material. Since the show cause notice dated 26th August, 1991 was in any event issued more than six months after that date, it was time barred. Anoth....
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....ory spares, as specified in the said Import Export Pass book in respect of value, quantity (if any), description and technical characteristics are exported out of India within the period specified in the said Import Export Pass Book or within such extended period as the Export Commissioner in the Office of the Chief Controller of Imports and Exports allow'. 18. Significantly, the notification does not spell out the consequences, if any, of not exporting the resultant goods both in terms of value and quantity corresponding to the imported goods. Even in the licence issued to the Petitioner, the export obligations set out in Part F only spell out the obligation in terms of value and not in terms of quantity. There is no requirement in the licence that the Petitioner is required to fulfil the export obligation both in terms of value and quantity. 19. Interestingly, within a few months of the notification No. 117/88-Cus, a Circular No. 1/88 was issued by the Chief Controller of Import and Exports on 14th July, 1988 clarifying that "where the Pass Book Licences are issued for natural silk in terms of import entitlement percentages given in Appendix 14-A, the export obligation has ....
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....ixed from the said Committee. This is perhaps due to the fluctuation in the international market which might make it impractical for the exporter to meet the value norms as endorsed on the licence. In the present case, the Petitioner having not opted for any change in the value norms as endorsed in the license, the question of the applicability of Para 259 (3) of the Policy does not arise. 22. It is seen that what has been endorsed in Part F of the Licence is consistent with Appendix14-A to the Policy in which the export obligation has been defined as 50% of the value of the imported goods. In the present case, it is not the case of the Respondent that the Petitioner has not fulfilled the export obligation in terms of value. The case made out in the show cause notice is that the Respondent has not fulfilled the obligation in terms of quantity. The impugned order dated 24th January, 1992 refers to paras 257 (1), 261 and 262 (2) and 281 of the Policy and concludes that "even though quantity of natural silk readymade garments to be exported has not been mentioned under Export obligation in Part F of Part 2 of the said Pass Book, the importers were supposed to utilise the entire imp....