TaxTMI 
TaxTMI 
2026 (4) TMI 20
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....ducts, investigation conducted and statements were recorded from various persons and Show Cause Notice dated 15.03.2018 was issued. Thereafter Adjudication Authority as per the impugned Order dated 23.04.2019 confirmed the demand and also imposed penalty on Appellant and co-noticee under various provisions of Finance Act, 1994. Aggrieved by said order, present appeals are filed. 3. When the appeals came up for hearing, Learned Sr. Counsel draws our attention to the impugned order where duty was confirmed and penalty imposed only on the ground that on examination of the laboratory facilities by the DRI during the search operation, it was observed that the Appellant did not have a facility to test the composition of their finished goods. The test reports were manipulated to avail the benefit of DFIA/AA scheme by showing the composition of export goods as prescribed by Standard Input Output Norms (SION). On scrutiny of the copy of the ISO certificate submitted to Customs authorities for the finalization of the AA licenses, it was found that the effective date of the certification had been forged for availing benefits under AA/DFIA schemes. The agency that has issued the aforesaid I....
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....Redemption letter dated 01.09.2021 5. 1010058873 dated 13.11.2014 Redemption letter dated 31.08.2021 6. 1010058942 dated 17.12.2014 Redemption letter dated 01.09.2021 7. 1010059112 dated 21.04.2015 Redemption letter dated 13.01.2017 8. 1010059194 dated 09.07.2015 Redemption letter dated 30.06.2017 9. 1010059219 dated 30.07.2015 Redemption letter dated 15.03.2018 10. 1010059234 dated 11.08.2015 Redemption letter dated 15.03.2018 11. 1010059277 dated 23.09.2015 Redemption letter dated 01.09.2021 5. Learned Sr. Counsel submits that the raw materials were imported for the use in the manufacture of the finished products and export of goods undertaken against the above licenses by opting for factory stuffing under the supervision of Central Excise officer. At the time of shipment, samples were drawn and as per the test report, samples have the characteristics of pre- cured tread rubber, butyl rubber, and binding gum as declared. Nothing contrary to the requirements was found in the test reports. Learned Sr. Counsel also draws our attention to the Notification No. 40/2016-Cus dated 01.05.2016 where the Duty Free Import Auth....
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....er its conditions it is prescribed that:- "(i) that the said authorisation is produced before the proper officer of customs at the time of clearance for (ii) that the said authorisation bears,- (a) the name and address of the importer and the supporting manufacturer in cases where the authorisation has been issued to a merchant exporter; and (b) the shipping bill number(s) and date(s) and description, quantity and value of exports of the resultant product in cases where import takes place after fulfilment of export obligation; or (c) the description and other specifications where applicable of the imported materials and the description, quantity and value of exports of the resultant product in cases where import takes place before fulfilment of export obligation" 8. Learned Sr. Counsel submits that as per above Notification, further it is stated that:- (ix) that the importer produces evidence of discharge of export obligation to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within a period of sixty days of the expiry of period allowed for fulfilment of export ....
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....urpose of export under various export promotion scheme provided the manufacturer-exporter has been awarded with any of the ISO 900 series certification. Other provisions of this Circular No. 57/1997-Cus dated 31.10.1997 will apply mutatis mutandis to such manufacturer-exporter. Circular No. 25/2005-Cus dated 06.06.2005". Learned Sr. Counsel also draw our attention to the Foreign Trade Policy effective from 01.04.2008 where duty exemption provision schemes were made as per the Clause 4.1.5, as reproduced below:- "4.1.5. Advance Authorisation and/or materials imported thereunder will be with actual user condition. It will not be transferable even after completion of export obligation. However, Authorisation holder will have option to dispose off product manufactured out of duty free inputs once export obligation is completed." 10. As regarding DFIA Scheme, Learned Sr. Counsel draws our attention to the Import Policy, where it is stated that:- Scheme 4.4.1 DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. DGFT, by means of Public Notice, may exclude any product(s) f....
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.... procured inputs shall be subject to payment of applicable additional customs duty / excise duty. While endorsing transferability. authorisation would bear a note as to liability of such additional customs duty / excise duty. However, in case where CENVAT facility has not been availed, exemption from additional customs duty/excise duty would be available even after endorsement of transferability on DFIA. Wherever SIONs prescribe actual user condition and in case of Acetic Anhydride, Ephedrine and Pseudo Ephedrine, DFLA shall be issued with actual user condition for these inputs and no transferability shall be allowed for these inputs even after fulfillment of export obligation. However, for authorisations issued prior to 1.4.2007, exemption from Additional Customs Duty/Excise Duty shall continue to be available even after endorsement of transferability, as provided in FTP (RE-2006). CENVAT Facility 4.4.7 CENVAT credit facility shall be available for inputs either imported or procured indigenously. 4.4.8 - Deleted 11. Learned Sr. Counsel further draws our attention to the Hand Book of Procedure from 27 August, 2009 to 31st March, 2014 ....
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....of DEEC export book as well as verification of credit under the Pass Book Scheme; provided the Inhouse testing facility of the manufacturer exporter has been recognised as follows: (a) the manufacturer exporter has been awarded GMP (Good Manufacturing Practice) certificate by the concerned Drug Controller; or (b) the Inhouse testing facilities are approved by ISI/CSIR/Ministry of Science and Technology or the nodal Ministry; or (c) the manufacturer exporter has been awarded ISO 9002 certification. In such cases, the exporter would have to enclose a copy of the Inhouse Test Certificate with the Shipping Bill. 3. Further, where the samples of the export product have earlier been drawn by the Central Excise authorities and test results of the same are available, these test results can be relied upon for the purpose of exports under the said Schemes provided the said test reports bring out the technical characteristics of the inputs as required to be ascertained under the Scheme(s). The test results obtained from Excise test laboratories shall be valid for six months from the date of their issue, for the purpose of waiving the drawal of samp....
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.... Learned Senior Standing Counsel appearing for the respondents would submit that the assessee himself has given a letter accepting that they have sold the wastage in the local market. 9. On a perusal of the reply given by the assessee dated 15-102009 to the Show Cause Notice dated 16-9-2009, the assessee has not made any unconditional acceptance of any diversion. All that they have stated is that the practice is common in the industry and they were not aware that a letter has to be obtained from the proper officer and they made it clear that they have not hidden any facts and have not caused any reason for the Adjudicating Authority to believe that the facts were suppressed. Therefore, the so called letter issued by the assessee cannot be taken to be a case where the assessee accepted the fact that they have not utilized the raw materials for the purpose for which it was imported. 10. Therefore, we are of the view that the materials which were available cannot be a reason for issuance of the Show Cause Notice dated 16-9-2009. Consequently, the Order-in-Original No. 23 of 2009 cannot be sustained. 11. In the result, the appeal filed by the assessee is allo....
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....he matter of M/s Caprihans India Ltd Vs. CC, Surat (2015 (324) E.L.T 8 (SC). In the present case, appellant fulfilled export obligation on aforesaid Licenses and accordingly Export Promotion (EP) copies were issued by Customs authority and the same were submitted to Director General of Foreign Trade for obtaining Export Obligation Discharge Certificate. Though as per Circular No. 57/97-Cus dated 31.10.1997 and Circular dated 31.10.1997, exemption is given to such in-house test results are provided when the exporter must be awarded with International Organization for standardization of ISO 9000 certification, in Appellant's case, samples were drawn from the export product and test report also available on record. In such cases, test result can be relied upon for the purpose of export and the said scheme provided that the test report bring out the technical characteristics of the inputs required to be ascertained under the scheme. Accordingly the test report for the samples draw by the authorities would be taken into account for the export of the product which did not find anything contradictory to the export obligation. 16. Learned Sr. Counsel further submits that a similar condi....
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..... Commissioner of Cus., Visakhapatanam - 2004 (168) E.L.T 223 (Tri. - Bang.) (iii) Nizam Sugar Factory Vs. Collector of Central Excise, A.P. - 2006 (197) E.L.T 465 (S.C) 19. Learned Sr. Counsel also submits that there is a Central Laboratory within the premises of M/s. Midas Rubber Pvt. Ltd, an associate company of the noticee and the lab is equipped with sophisticated testing machines, most of them are imported, that the appellant had requested the Adjudicating Authority to conduct inspection and to evaluate the facilities available with the Central Lab. Further submits that the Certificate is issued by "The Rubber Research Institute of India, Rubber Board" and that all consignments of export goods were subjected to rheometer test to analyse the composition of the goods. 20. Learned Sr. Counsel also draws our attention to the in-house test report dated 11.09.2015, where the composition of the goods are as per the SION Norms. Learned Sr. Counsel also draw our attention to the statement recorded from Mr. Soby Antony, who was handling the production and inventory control of the unit herein stated that "we are mixing the compound as per the formulation. In case of expor....
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....s drawn the samples, the same has no relevance, as drawal of samples is not amounting to testing of samples. In the instant case, the appellants have submitted their in-house test reports for obtaining the benefits/EODC and later on it is found that the in-house test reports were forged /issued without actual testing, in contravention of Circular No.57/97 Cus date 31.10.1997. Learned AR further submits that in the absence of valid test reports, the appellants cannot claim the benefits of exemption notifications which requires the usage of duty-free raw materials to be used by them for export. In the instant case, the appellants have not proved that they have fulfilled the conditions of the notification Nos.40/2006 Cus dated 01.05.2006 as amended and Notification No.96/2009 Cus dated 11.09.2009. The Hon'ble Apex court has held in the case of Indian Aluminium company ltd. Vs. Thane municipal corporation- 1991 (55) ELT. 454 (S.C) has held that "Even non observance of a procedural condition is not to be condoned if it is likely to facilitate commission of fraud or introduce administrative inconvenience". The Hon'ble Bombay High Court in its decision in the case of CCE & Cus, Ah....
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.... Ε.L.Τ. 402 (S.C.) iv. Commissioner of Customs, Chennai Vs. Ashok Enterprises - 2014 (302) E.L.Τ. 191 (Mad.) v. Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company - [2018] 361 ELT 577 (SC) 25. Heard both sides and perused the records. 26. We find that as per CBEC Circular No. 57/1997-Cus dated 31.10.1997, in case of an exporter availing benefits under the DEPB scheme has in-house testing facilities, samples may not be drawn and inhouse testing results may be relied upon, for availing the said benefits. However, if such in-house test results are to be relied upon, the exporter, inter alia, must have been awarded with an International Organization for Standardization ('ISO') 9002 certification. Further as per the said Circular No. 57/1997-Cus dated 31.10.1997, where the samples of the export product have been drawn earlier by the Central Excise Authorities and the test results of the same are available, these test results can be relied upon for the purpose of export under the said schemes provided the said test reports bring out the technical characteristics of the inputs required to be ascertained under the schemes. Acc....
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....mport conditions. Further as evident from the certificate, ISO certified lab is not mandatory for availing the benefit of scheme and if the exporters are intent to speed up the process of export by avoiding sampling and test report from Customs authority, they have to establish ISO certified laboratory. However, in present case, when samples were drawn by the Department it is presumed that the respondent has not accepted the genuine of the certificate produced by the appellant and test report is also available on record. In the absence of any adverse comments in such test report, no presumption can be drawn that the goods exported by the Appellant are not in compliance with the SION norms as prescribed by the DGFT as per the Import Policy. Law is well settled that substantial right of an exporter cannot be denied on procedural non-compliances. 29. As regards confiscation of the goods, penalty on appellants and confirming the demand by invoking the extended period of limitation, we find that the entire allegation is made on the ground that the ISO certificate produced by the appellant in support the export of goods was showing that they have established the accredited the lab wit....