TaxTMI 
TaxTMI 
2025 (1) TMI 1647
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.... said Advance Authorizations were issued in terms of Para 4.1 of Chapter 4 of the Foreign Trade Policy 2009-14 (FTP) and the Hand Book of Procedures (2009-14) [Volume (I & II)] by the Directorate General of Foreign Trade, Kolkata for use in the manufacture of export goods viz., Galvanized Transmission Line Towers and Parts. The Appellant imported raw materials (i.e., Zinc Ingots) under Customs Notification No. 96/2009-Cus. dated 11.09.2009, as amended, under the cover of 20 nos. of Bills of Entry between16.03.2011 to 15.11.2012 from Kolkata Sea Port. 2.1. A Show Cause Notice dated 15.02.2018 was issued to the Appellant by the DRI inter alia demanding Customs duty on the impugned goods namely, Zinc Ingots, amounting to Rs.1,27,97,014/- on the ground that against the 4 numbers of Advance Authorizations imported by availing the benefit of exemption Notification No. 96/2009-Cus. dated 11.09.2009, the Appellant has not complied with the conditions laid down therein since the finished goods were partly exported prior to import of the impugned goods and thus the said exported goods, which were manufactured out of indigenous procured raw materials, could not be accounted towards dischar....
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....aw materials/components which are required for manufacture of resultant product and the same need not be used in the export product. In support of this plea, the appellant have cited the following case-laws: - (i) Commissioner of Customs (Import), Mumbai v. Zincollied (Ind) Ltd. [2014 (300) E.L.T. 475 (Tri. - Mum.)] (ii) Jay Engineering Works Ltd. v. Commissioner of Customs, Chennai [2003 (162) E.L.T. 680 (Tri. - Bang.)] (iii) PCL Oil & Solvent Ltd. v. Commissioner of Customs, Kandla [2020 (374) E.L.T. 110 (Tri. - Ahmd.)] (iv) Oblum Electrical Industries Pvt. Ltd. v. Collector of Cus., Bombay [1997 (94) E.L.T. 449 (S.C.)] 4.4. They have also cited Circular No.36/97-Cus dated 16.09.1997 wherein C.B.E.C. has clarified that the word 'required' does not mean that goods imported must be physically incorporated in export product as export product could be manufactured from inputs procured outside the duty exemption scheme; however, imported goods should be of a kind commercially known to be used in export product and covered by description of inputs in licence. The Appellant relies on the decision in the case of Commissioner of Customs (Impo....
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....ication No. 96/2009-Cus. dated 11.09.2009. As per the conditions of the said Notification, the Appellant has to use these goods for the purpose of manufacture of finished goods which are to be exported. We find that the Appellant has completed their export obligation and got the EODC issued by the DGFT authorities. Consequent to issuance of EODC by the DGFT, the Deputy Commissioner of Customs also released the bond executed by the Appellant accepting the fulfilment of export obligation. Thus, we find that the Appellant has complied with all the conditions of the Customs Notification No. 96/2009 dated 11.06.2009 and the provisions of the Foreign Trade Policy. 7.1. We agree with the submission of the Appellant that determination of fulfilment of export obligation falls within the jurisdiction of the DGFT. Once the DGFT accepts the fulfilment of export obligation and the bond has been released, the Customs authorities cannot initiate any proceedings for contravention of the provisions of the Foreign Trade Policy. We observe that this view has been held by the Hon'ble Supreme Court in the case of M/s. Titan Medical Systems Pvt. Ltd. v. Collector of Customs, New Delhi [2003 (151) E.L....
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....n. However, though the fulfilment of EO is not in dispute, impugned order erroneously casts liability of duty and penalty under the Act which according to us is not sustainable. In the instant case before us, as per certain other facts above discloses, the Joint DGFT issued EODCs, certifying that the appellant had discharged export obligation which was cast on them in respect of the advance licenses. It has been contended by the appellant before the Commissioner, that, in view of the said EODC, the case against them, could not survive. However, it must be mentioned here that the Commissioner had failed in considering this effect of undisputed EODC issued by the DGFT in the context of this licenses acting upon which, even the bonds were already cancelled. Moreover, no condition of the exemption was violated and therefore, there cannot any liability of penalty, as well." 7.3. We also find that as per Condition No. (iii) of the Notification No. 96/2009-Cus., the materials imported must correspond to the description and other specifications mentioned in the authorization and need not be used in the export produce. This view is supported by the decision in the case of M/s. S....
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....in this with regard to the utilisation of the exempted material." 7.4. We find that the Explanation (v) to Notification No. 96/2009-Cus. dated 11.06.2009 envisages that "materials" means raw materials/components which are required for manufacture of resultant product and the same need not be used in the export product. We also find that the C.B.E.C. vide Circular No.36/97-Cus dated 16.09.1997 has clarified that the word 'required' does not mean that goods imported must be physically incorporated in export product as export product could be manufactured from inputs procured outside the duty exemption scheme, but imported goods should be of a kind commercially known to be used in export product and covered by description of inputs in licence. In this regard, we find support from the decision in the case of Commissioner of Customs (Import), Mumbai v. Zincollied (Ind) Ltd. [2014 (300) E.L.T. 475 (Tri. - Mum.)] wherein it has been observed that: - "2. The facts in brief are that during the course of investigation it was revealed that the respondents imported 43 consignments of zinc dross under 8 different Advance Licence and these imported materials were not solely u....
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....uld have been used in the export product i.e. goods of a kind which are commercially known to be used in the export product and are covered by the description of inputs in the licence. We further find that in the case of Jay Engineering Works Ltd. v. Commissioner of Customs, Chennai - 2003 (162) E.L.T. 680 (Tri.-Bang.) has observed that "the Revenue's contention that the goods imported are not eligible to the notification on the ground that the said goods do not satisfy the definition of 'materials' in the Notification cannot be upheld as the use of the goods in the goods exported is not a condition precedent in the notification. The use of the imported raw materials is the option of the importer. He can either use it in the export product or import it and keep it in the factory, manufacture the export product using inputs procured from other sources, fulfil the export obligation and thereafter dispose off the raw materials imported as per Standard Input/Output Norms. If the Customs authorities take a view that certain materials are not required for the manufacture, contrary to the view of the Standard Input/Output Norms of the EXIM Policy, it would lead to disharmonious situation,....