TaxTMI 
TaxTMI 
2026 (8) TMI 248
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....ng the conditions of exemption Notification, the officers searched their premises on 28.03.2008, and resumed various records relevant to investigation. They recorded statement of Shri Deepak Navinchandra Choksi, Director which revealed that the appellant was removing Beta Napthol under job work challans to M/s Bodal Chemicals Ltd (Unit I & II) Ahmedabad, M/s Shivam Chemicals, Vapi and M/s Cambay Chem Ltd., Cambay for getting 6 Nitro and Gamma Acid manufactured on job work basis. The appellant could not produce any records to show receipt of resultant products from the job workers after completion of job work process. It was alleged that the appellant has violated condition (vii) of the exemption notification No. 93/2004-Cus dated 10.09.2004 which is reproduced as under:- (vii) that the ¹[said licence or authorization] and the materials shall not be transferred or sold: ²[Provided further that where the Bond filed under condition (iii) against the [said licence or authorization] has been redeemed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, the unutilised material may be transferred to any other manufactu....
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....n adjudication proceedings, Learned Commissioner vide impugned order confiscated 2,33,150 Kgs of Beta Naphthol valued at Rs. 2,57,87,560/- under Section 111(o) of the Customs Act, 1962 but did not impose redemption fine as goods were not physically available for confiscation. He confirmed customs duty demand of Rs. 85,56,907/- under Proviso to Section 28 (1) of the Customs Act, 1962 by enforcing the bond executed by the appellant along with applicable interest and imposed an equal amount of penalty under Section 114A of the Customs Act, 1962. He also imposed penalty of Rs. 20 Lakhs upon Shri Deepak N Choksi, (appellant-2). Aggrieved with the above order, the company as well as its Director filed appeal before this Tribunal. 2. The appellant-1 took the following grounds and prayed for setting aside the impugned order:- * The impugned order has been passed without observing the principles of natural justice as their various submissions were rejected by the Commissioner without even discussing and giving findings. * They imported duty free Beta Naphthol under various export promotion schemes and sent to job worker (s) under challan for manufacture of intermediate ....
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....lt in conflict between the policy and the customs Notifications. * In Notification No. 117/78 issued for advance license which is first such notification, the word "sold or transferred" used in the condition allows them sending material to the job worker for manufacture. Thus, apart from licence holder, supporting manufacturer can also be made responsible for export obligation by getting, their name added in the licence. Benefit of advance license notification should not be denied when importer has discharged export obligation. They rely on following decisions:- (i) Vorin Laboratories Ltd. Vs. Cc, Chennai - 2004 (168) E.L.T. 107 (T) (ii) Jay Engineering Works Ltd. Vs CC. Chennai- 2003 (162) E.L.Τ. 680 (iii) U-Foam Pvt. Ltd. Vs. CC, Chennai -2003 (154) E.L.T. 633 (T) (iv) ITC Ltd. Vs. CC, Chennai- 2003 (153) E.L.T. 366 (Tri. Chennai) (v) Centwin Vs. CC, Chennai-2002 (149) E.L.T. 573 (Tri. Chennai) (vi) U-Foam Pvt. Ltd. Vs. CC, Hyderabad-2002 (140) E.L.T. 131 (Tri.) (vii) Standard Industries Ltd. Vs. CC, Trichy-2001 (136) E.L.T. 124 (viii) M. Ravindra Rao, M.D. Vs. CC. Madras-2000 (116) E.L.T. 261 ....
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.... Customs - 2003 (156) ELT 872 (Tri). (ii) Rajyalakshmi Laboratories Ltd. v. Commissioner 2007 (208) E.L.T. 398 (Tri.) (iii) Steel Authority of India Ltd. v. Commissioner 2005 (184) E.L.T. 308 (Tri.) * Levy of interest is not warranted in this case as duty itself is not payable by the appellant. On the same grounds, penalty is also not imposable on them as held in following cases. (i) Collector of Central Excise v. H.M.M. Ltd [1995 (76) ELT 497 (SC)] (ii) Commissioner of Central Excise, Aurangabad v. Balakrishna Industries [2006 (201) ELT 325 (SC)] (iii) Commissioner of C. Ex. &Cus. V. Nakoda Textile Industries Ltd. [2009 (240) ELT 199 (Bom.)] * Penalty under Section 114A is also not imposable as they have not suppressed anything or misstated wilfully. Also, penalty is not imposable in cases involving interpretation as held in following decisions:- (i) Auro Textile v. Commissioner of Central Excise, Chandigarh [2010 (253) ELT 35 (Tri.-Del.)] (ii) Hindustan Lever Ltd. v. Commissioner of Central Excise, Lucknow [2010 (250) ELT 251 (Tri.-Del.)] (iii) Prem Fabricators v. Commissioner of Central Exc....
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.... any portion thereof shall not be sold or otherwise transferred to any other person, or utilized or permitted to be utilized or disposed of in any other manner, without the previous permission of the Committee: Provided that this condition shall not apply in relation to any exempt materials which have been imported for replenishment of the materials used in the manufacture of goods" 3.1 Learned Advocate further argues that the raw-materials have ultimately been used for manufacture of final products. The situation is revenue neutral as they are entitled to Cenvat Credit of CVD and SAD, if any, paid on imported raw materials. He relies on the decision of Hon'ble Gujarat High Court in the case of Aries Dyechem Industries Vs. Commissioner of Central Excise, Ahmedabad reported at 2014 (299) ELT A88 (Guj.) wherein it was held that job worker can clear goods from his premises on payment of duty and under an invoice which cannot be said to be sale of goods by the job worker and the benefit of job work is admissible. He thus, pleads that clearance of Gamma acid and 6-Nitro by the job worker(s) on their duty paying invoice(s) would be covered as return of goods by the job worker....
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.... of these notifications. He also submits that Shri. Deepak. N. Choksi, Director is the person behind above contraventions, and therefore, penalty imposed on him is justified. Reiterating the findings of the learned Adjudicating Authority, he pleads for dismissing both the appeals and upholding the impugned order. 5. We have heard both the sides. The short issue to be decided in this case is whether the appellant have violated the conditions of exemption notification(s) and if so, whether they are liable to pay customs duty along with interest and penalty? 5.1 The facts reveal that appellant was transferring "Beta Napthol" from their factory to various job workers under challan, who also consumed their other raw materials such as oleum, sulphuric acid, liquid ammonia and caustic soda flakes etc for manufacturing of intermediate goods Gamma Acid and 6-Nitro. The job worker(s) supplied these intermediate goods to the appellant under cover of tax invoice. A perusal of sample copy of Tax invoice bearing No. 46 dated 01.07.2007 issued by M/s Combay Chem Limited (as reproduced below) would clearly reveal that the job worker has sold Gamma Acid to the appellant and reduced the value ....
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....ed by customer and where the job workers contribute mainly their labour and skill though done with the help of their own tools, gadgets or machinery. But when the job worker contributes his own raw material to the article supplied by the customers and manufactures different goods, it does not amount to job work. However addition or application of minor items by job worker would not detract it being a job work Like a tailor stitching a shirt or suit out of the cloth supplied by his customer, may use his own buttons, thread and lining cloth and such an activity would amount to job work Return of same article to the customer even after job work not necessary". Further, in Para 24 of the said decision, Hon'ble Court held that- "there is no certainty that the acetic anhydride that is returned is the product of that customer's very own acetic acid....It is a full-fledged manufacture of a new commodity, and must, therefore, pass through all the rigours that such commodities must pass under the Central Excise Law. If Notification 119/75CE cannot be applied, then so be it. The notification cannot be forced to operate in conditions it is not qualified to operate. In the case ....
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....ng the goods manufactured from him. The Revenue in this case had issued show cause notice for non following of the provisions of rule 4(5)(a) of the Cenvat Credit Rules. Likewise, facts in other case laws are also much different than the present case where issues involved is whether appellant has satisfied the conditions of Notification No. 93/2004-Cus to avail exemption from customs duties. As discussed above and in the light of decision of Hon'ble Apex Court in Perfect Engineering case, transfer of only one input "Beta Napthol" by the appellant to the job workers who consumed other inputs from their own account, manufactured intermediate goods and sold the same on tax invoices on payment of excise duty and VAT, cannot be said to be covered as job work. These job workers in fact reflected these transactions as sale in their books of account. They, in other cases where principal had sent all the inputs, shown their activity as job work, issued invoices for job charges only and not paid taxes on them. Therefore, we hold that condition (vii) of the Notification No. 93/2004-Cus., dated 10.09.2004 that importer shall not transfer or sale duty free imported raw materials has been violat....
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....ocessing to be effected in the factory of the appellant. 8. Accordingly, we find no flaw in the finding of the lower authorities that the duty was liable to be recovered along with consequential penalties." 5.7 Regarding invocation of extended period, the appellant contended that they have not suppressed anything in the case and therefore, extended period is not invokable and the show cause notice dated 14.03.2011 issued for demanding customs duty on imports during 2006-2007 to 2007-08 is time barred. We find that as per condition (iii) of the Notification No. 93/2004-Cus dated 10.09.2004, the importer at the time of clearance of goods had to execute a bond with such surety or security and in such form and for such sum as may be specified by the Deputy Commissioner of customs or Assistant Commissioner of customs as the case may be, binding himself to pay on demand an amount equal to the duty leviable but for the exemption contained herein, on the imported materials in respect of which the conditions specified in the notification have not been compiled with together with interest at the rate of fifteen per cent per annum from the date of clearance of the said materials. ....
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....ms notification in respect of the end use specified therein, the quantity of 805.266 MTs of crude palm stearine valued at Rs. 1,49,99,863/- is liable to confiscation under the provisions of Section 111(o) of the Customs Act, 1962 and we hold accordingly. Consequently the appellant would be liable to penalty under Section 112(a) of the Customs Act, 1962. Since the crude palm stearine was allowed to be cleared in terms of the bond executed with the customs, in lieu of confiscation, redemption fine under Section 125 of the said Customs Act can also be imposed." 5.9 Again in the case of Boroplast Vs. Commissioner of Customs, Mumbai reported at 2017 (357) ELT 345, Mumbai Tribunal held that till the validity of bond, demand does not get time barred as the obligation is continuous till it is fulfilled or as the case may be, till the bond is live. Normal period of limitation under Section 28 of the Customs Act, 1962 does not apply and demand is not hit by limitation. 5.10 In the case of Travel Planners Limited vs Commissioner of Customs, Nhava Sheva reported at 2012 (285) ELT 369, Mumbai Tribunal held that duty demand could be enforced in terms of bond executed at the time of import ....
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.... work challan. They had placed purchase order for supply of Gamma acid and 6-Nitro on them and tried to cover their activity as job work to justify non-fulfilment of conditions of notifications. Therefore, penalty has correctly been imposed on the appellant under Section 114A of the Customs Act, 1962. Accordingly, we uphold the impugned order of learned Commissioner of confiscation of 2,33,150 kgs of imported Beta Napthol under section 111(o) of Customs Act 1962, confirmation of Customs duty of Rs. 85,56,907/- along with interest @15% and imposition of equal penalty under Section 114A of the Customs Act, 1962. 6. The learned Commissioner has imposed a penalty of Rs. 20 Lakhs on the appellant Shri. Deepak N Choksi, Director of M/s Dynamic Industries Ltd under Section 112 of the Customs Act, 1962. The learned Commisioner has observed in the impugned order that Shri. Deepak Chokshi, director of M/s. Dynamic Industries Ltd, Vatva, Ahmedabad is mastermind in the entire episode of obtaining of advance authorization, DFIA and Target + scheme, import of duty free Beta Napthol under the said schemes and the subsequent diversion and sale of the duty free material under the guise of job wo....
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....issioner should have clearly mentioned specific Sub Section and clause of Section 112 under which he sought to impose penalty upon the appellant Shri Deepak Chokshi but it was not done. Therefore, we are of the view that penalty must be imposed upon Shri Deepak Chokshi, director of M/s. Dynamic Industries Ltd under Section 112(a)(ii). In view of the circumstances of the case, it will be proper if the penalty of Rs. 5 Lakhs be imposed upon the appellant Shri. Deepak Chokshi, director of M/s. Dynamic Industries Ltd under Section 112(a)(ii) of the Customs Act, 1962. Consequently, a penalty of Rs. 5 Lakhs is imposed under Section 112 (a)(ii) upon Shri Deepak N Chokshi, Director of M/s Dynamic Industries Ltd. The order of the Learned Commissioner regarding the penalty is modified to this extent. 8. The appeal filed by M/s. Dynamic Industries Ltd is rejected and the appeal of Shri. Deepak N Chokshi is disposed of in terms of this order. (Pronounced in the open court on 19.06.2026) ============= Document 1 ¿cioable goods from a factety 5 370-0 of the Control Excite Rules 1944 AMBAY CHEM LTD. jorvey No. 637, Nt. Kalamsat Village, Dhuvaran Road, Cambay, Phone : (02698) 2855....