TaxTMI 
TaxTMI 
2016 (3) TMI 221
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....Commissioner of Customs, Chennai IV Commissionerate, Custom House, Chennai-600 001" in all future proceedings. 3. The miscellaneous application filed by assessee for taking into account the additional grounds in the appeal is allowed. Both MAs are allowed. 4. Consequent to Hon'ble High Court's order dt. 20.10.2011 in C.M.A. No.2945 of 2005, the appeal is taken up for de novo hearing and decision. 5. The brief facts of the case are that appellants M/s.Ashok Enterprises, Chennai obtained Advance Licence from Jt. DGFT, Chennai declaring themselves as manufacturing exporter having factory at No.183, Walltax Road, Chennai 600 003. Based on the application and the statutory declaration made by the appellant, the Directorate of Foreign Trade issued 12 Advance Licences with actual user conditions for import of SS coils/sheets for manufacture and export of SS utensils by availing the benefits of Customs Notification Nos.30/97 dt. 1.4.1997 and 48/99 dt. 29.4.99. 6. Based on the intelligence that appellant misused the advance licence and contravened the Customs Notification by diverting the duty free imported raw materials instead of utilizing the same for manufacture of r....
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....ecuted towards recovery of duty and other adjudication liabilities; (f) 1 confiscate 638.368 MTs of S.S. Sheets/Coils totally valued at Rs. 3,84,32,021/- imported duty free, under section 111 (o) of the Customs Act, 1962. Since the goods are not available, 1 impose a fine of Rs. 40,00,000/- (Rupees Forty Lakhs only) under Sec 125 of the Custom Act, 1962. (g) I impose a penalty of Rs. 2,57,82,659 along with interest on the duty demanded, under Section 114A of the Customs Act, 1962, on M/s. Ashok Enterprises for rendering the aforesaid goods liable to confiscation." Against this impugned order, appellant preferred appeal before this Tribunal. The Tribunal vide Final Order No.1072/2004 dt. 24.11.2004 allowed the appellant's appeal with consequential relief by relying the DGFT's order dt. 10.12.2003 and the Tribunal held that DGFT order is binding on the Customs authorities. 7. Revenue filed a C.M.A. against this Tribunal's order before the Hon'ble High Court, Madras and the Hon'ble High Court in their order dt. 20.10.2011 in C.M.A.No.2945/2005 set aside the Tribunal order and remanded to the Tribunal. Accordingly, the appeal is restored for ....
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.... as per Notification No.48/99 dt.29.4.99 and 30/97 dt. 1.4.97 they have fulfilled the conditions of Advance licences for actual user condition in the manufacture and fulfilled the export obligation. He relied the following citations :- (1) Hy-Grade Pellets Ltd. Vs CC Visakhapatnam-2004 (171) ELT 177 (Tri.-Del.) (2) King Exports Vs CC Amritsar -2011 (266) ELT 318 (Tri.-Del.) 9. On the other hand, Ld. A.R reiterated the grounds of appeal made in C.M.A. and the Hon'ble High Court order and submits that High Court in their findings relied on Supreme Court order in the case of CCE New Delhi Vs Hari Chand Shri Gopal 2010 (260) ELT 3 (SC) and submitted that any exemption clause should receive strict construction. She explained the allegations brought out in the SCN and particularly drew our attention to statement of Shri R. Goutham Chand, Proprietor of appellant firm (page 77) and statement of Sri J.Krishnan (Page 78) wherein he has clearly admitted that the Proprietor Shri Goutham Chand had taken the premises of 183, Walltax Road, Chennai-3 on rent belonging to Krishnan and there was no rebuttal given. This clearly confirms that appellants are n....
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....eir order dt. 20.10.2011 and perused the records. The issue before us is whether the appellant violated the condition of the Notification No.30/97 dt. 1.4.1997 and 48/99 dt. 29.4.99 as amended and whether they are entitled to the benefit of the said exemption notification availed for import of duty-free materials under Advance Licence as Actual user manufacturer-exporter. The adjudicating authority in his findings discussed the issue in detail and the modus operandi and misuse of Advance Licence and misuse of exemption notification and denied the benefit of exemption notification 30/97 dt. 1.4.97 and 48/99 dt. 29.4.99 on the grounds that the appellants had no manufacturing unit at the declared premises and not used the imported S.S. coils/sheets for manufacture of final product. On the other hand, the appellants relied JDFT's order dt. 10.12.2003 dropping the proceedings in so far as fulfilment of export obligation and cancellation of Bond and the export documents and contended that once the Licensing Authority accepted the export obligation, the Customs has no power to deny the benefit of Advance Licence. 11. The appellants obtained 12 Advance Licences for import of duty fr....
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....nd addresses of factories where the resultant products are manufactured. The address of the factory mentioned as : "M/s.Ashok Enterprises, No.183, Walltax Road, Chennai-600 003" The Part-II of DEEC relates to Export product and the name and address of factories where resultant product manufactured is indicated the same address as figuring in Part 'A' of DEEC Book (Import). The conditions No.3, 5 and 7 of the said licence are mandatory. Condition 3 stipulates that the imported goods shall only be utilised in accordance with provisions of EXIM Policy 1997-2002 and the Customs Notification 50/51/2000. Condition No.5 mandates that the appellant shall maintain a true and proper account of consumption and utilisation of imported goods as per proforma given in Appendix 21 of Hand Book of Procedures and Condition No.7 stipulates that for sensitive items customs should carry out necessary checks. 12. The investigation proved that the so called premises No.183, Walltax Road, Chennai-3 declared by the appellant as the address of factory was actually in possession of one Mr. Krishnan who was running a propriety firm in the name of "Sri Krishna Pol....
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....roved that there is no such factory of the appellant in the said premises. Thus, they failed to comply with the condition of the notification. 14. The appellants relying on Membership certificate issued by FIEO has no relevance to the fulfilment of conditions of notification. Similarly the certificate obtained from the Superintendent of Central Excise has no relevance when the appellant is not registered with Central Excise for manufacture of excisable goods. When these facts were putforth by the Revenue with precision, the department has duly discharged the burden of proof and it is for the appellant to establish with credible evidence and to prove to the contrary. 15. The Hon'ble Supreme Court in the case of CC Madras Vs D.Bhoormal (supra) held that the department would be deemed to have discharged the burden if it adduced evidence direct or indirect. The relevant paragraphs of Supreme Court order are reproduced as under :- 40. In the case before us, the circumstantial?evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector. There was no violation of th....
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....hey had utilized the imported S.S coils/sheets in the manufacture of resultant product in their above declared factory address, the appellants chose to take shelter under JDGFT's order that they have fulfilled export obligation. 16. In this regard, the Hon'ble Madras High Court order dt. 20.10.2011 reported in 2014 (302) ELT 191 (Mad.) while allowing the Revenue appeal clearly held that the Department is entitled to proceed against the entitlement of duty exemption availed under Customs Notification No.30/97 dt.1.4.1997 and 40/99 dt. 29.4.1999 as amended. The relevant paragraphs of the Madras High Court's order are reproduced as under :- 14. The question that falls for our consideration in this appeal is as to whether, the assessee is entitled to the benefits of Customs Notifications. The Rate of duty is not in dispute. The entitlement of the assessee to the benefits of the customs notification alone is the issue. Therefore, the appeal is clearly maintainable before this Court. We, therefore, reject the contention raised by the learned senior counsel for the assessee with regard to maintainability. 15. The license issued to the assessee described th....
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....uthorities. 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. ... ... .... 21. In Sheshank Sea Foods Pvt. Ltd. v. Union of India [1996 (88) E.L.T. 626 (S.C.)], the issue before the Supreme Court was whether the Customs Authorities were right in initiating proceedings for the alleged violation of the terms of advance licenses. The licensee in the said case contended that the Licensing Authority [Director General of Foreign Trade] alone had the jurisdiction to investigate the alleged violations. The Supreme Court negatived the said contention and observed that the breach is not only of the terms of the license, it is also a breach of the conditions incorporated in the Exemption Notification, upon which the assessee obtained exemption from payment of Customs Duty and therefore, the terms of Section 111(o) enable the Customs authorities to investigate the matter. 22. A Division Bench of this....
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....mption. 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 The law is well settled that a person who claims exemption 22. 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 that a person, invoking an exc....
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..... coils imported under the DEEC Advance Licences and cleared duty free under the said exemption notification and failed to comply the condition of the notification and the adjudicating authority rightly denied the benefit of exemption notification. 17. In this regard, the Hon'ble Supreme Court judgement in the case of Seshank Sea Foods Pvt. Ltd. Vs UOI (supra) held the powers of customs under Section 110 and Section 111 (o) and Section 124 of the Customs Act for breach of condition of exemption notification. The relevant paragraphs are reproduced as under :- 9. Section 111(o) states that when goods are exempted from Customs duty subject to a condition and the condition is 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). 10. We do not find in the provisions of the Import and Export Policy ....
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....tice and the importer look a technical stand that because the licences were seized by the DRI prior to the period of expiry, it has disabled them from discharging the export obligation. Though the past conduct of the importer is not the subject matter of the show cause notice/adjudication in question, we cannot be asked to turn a blind eye to the allegations made in the show cause notice which remains unrebutted to the following effect. (vii) M/s. Gaur Impex has not made any export so far even though they have already made imports of 445.162 mts., of Copper Scrap free of duty by availing benefit of Customs Notification No. 48/99 during the period from September, 2001 to November, 2001; (viii) Since the Copper Scrap totally weighing 445.162 mts., imported duty free and already cleared against the licence in question was not actually used by the importer for manufacture of resultant export products, it appears that they have diverted the said goods for the purpose other than for manufacture of resultant export products and thus violated the conditions of the aforesaid Customs Notification and DEEC Scheme (Annual Advance Licence). Hence the said 445.162 mts, of Coppe....
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.... at merit rate and in respect of the Bank Guarantee furnished 50% has been released pursuant to interim orders of this Court and that the Department is retaining Bank Guarantee to the tune of Rs. 15,00,000/-. In view of the order passed by us in this Appeal, the Department shall be entitled to appropriate the said sum of Rs. 15,00,000/- towards the duty and penalty demanded and initiate appropriate proceedings for recovery of the balance amount from the 2nd Respondent in accordance with law. The Hon'ble Supreme Court had upheld the above Madras High Court's order and dismissed the SLP filed by M/s.Gaur Impex as reported in Gaur Impex Vs Commissioner (supra) The above Hon'ble High Court decision and the Court's judgements are squarely applicable to the facts of the present case. 19. The appellants relying on the Tribunal decision in the case of Hy-Grade Pellets Ltd. Vs CC Visakhapatnam (supra) and King Exports Vs CC Amritsar (supra) in support of fulfillment of export obligation is no longer applicable in view of the apex Court judgements of Seshank Sea Foods Pvt. Ltd. Vs UOI (supra) and M/s.Gaur Impex Vs CC (supra) discussed above. The appellants relying on JG....