TaxTMI 
TaxTMI 
2026 (9) TMI 1135
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....id notification the export obligation as specified in the Advance Authorization (both in terms of value and quantity) gets discharged by exporting resultant products manufactured in India which are specified in the said Advance Authorization and in respect of which facility under Rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of Rule19 of the Central Excise Rules, 2002 (hereinafter called the "Rules") has not been availed. However, the Appellant was observed to have availed the benefit of sub rule (2) of Rule 19 of the CER,2002 Rules for manufacture of goods being imported inputs to be exported and for fulfilling the export obligations fixed under various Advance Authorizations issued to them. Department observed that in addition to in the duty-free inputs as were imported against the Advanced Authorization the appellant has also used the domestically procured inputs like bottles, caps & labels for manufacture of the IMFL which was subsequently exported. Exports do not of so manufactured goods fulfill of export obligation against Advance Authorizations as it appears to be in direct violation of condition of said Authorization....
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....2 by invoking the extended period of limitation for suppressing the facts of not fulfilling the export obligation. iv) Interest should not be recovered from them on the said Customs duty foregone, (above, under Section 28AA and as undertaken by them under Bond executed at Customs Port, ICD, Tughlakabad at the time of clearance of import consignments; v) Amount of Rs.17.68.481/- (Rupees Seventeen Lakhs Sixty-Eight Thousand Four Hundred Eighty-One only) deposited by them vide TR-6 challan no. 35052 through demand draft no 885843 dated 15.01.201 6 during investigations should not be appropriated against the duty liability under (iii) above, vi) Interest of Rs.1102,346/- Rupees Eleven Lakhs Nine Thousand Three Hundred Forty-Six only) deposited vide TR6 challan no.35052 through demand draft no.885843 dated 15.01.201 6 should not be appropriated against the interest liability as at (iv) above. vii) Amount of Rs.63.864/- (Rupees Sixty-Three Thousand Eight Hundred Sixty-Four only) deposited by them with the DGFT, New Delhi against the admitted shortfall of export obligations in respect of Advance Authorizations no. 0510299217 dated 10.08.2011 and 0510299....
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....lant imported Vetted Malt Scotch. [VMS] This imported Vetted Malt Scotch was incorporated into the Indian Made Foreign Liquor which was subsequently exported. 8. Appellant had only imported of only VMS under advance authorization. While glass bottle/cap/ label which are a part of export products; were procured domestically against Annexure-45 under Rule 19 (2) of Central Excise Rules. Since the material procured under Advance Authorization and Annexure-45 are different from one another and glass bottles, cap, labels have not been imported with VMS, the question of dual benefit availed by appellant does not arise. Hence, it is clear that appellant has not overruled the Notification No. 96/2009-Customs dated 11.09.2009. 9. Further; it is submitted that to make Indian manufactured products competitive in international market the Government of India is providing relief on the duties suffered by those goods including inputs used in the manufacture of export products. The whole purpose is that taxes should not be exported and they should have to be neutralized by granting benefit of Advance authorization i.e. procurement of material without duty, rebate refund of taxes. The appella....
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....irmed that inputs from one authorization were used to meet the obligations of another, violating procedural norms. 13. Learned DR further submitted that the exemption notification has to be strictly interpreted and strict compliance thereof has to be made. The decision of Hon'ble Supreme Court in the case of CCE Chandigarh 1 vs Mahan Diaries reported as 2004 (11) SCC 798, Another decision of Hon'ble Supreme Court in the case of Dilip Kumar and company reported as 2018 (361) ELT 577SC has been relied upon. With these submissions the order under challenge is prayed to be upheld and the appeal is prayed to be dismissed 14. Having heard both the parties the issue to be adjudicated is observed as follows; Whether the appellant/importer has failed to fulfill the export obligation against Advance Authorizations and violated the conditions of the Notification no. 96/2009-Cus dated 11.09.2009 and consequently is liable for recovery of Customs duty along with interest and imposition of penalty under section 114A & 114AA of the Customs Act. 15. To adjudicate the same, we have foremost perused the meaning of Advance Authorization notification no. 96 of 2009 which reads as follows. As ....
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....ents are covered by sub clause (a) of Explanation (v) which are required for the manufacture of resultant product. The packaging materials required for packing of resultant product is mentioned in sub clause (d) of Explanation (v). Thus, to our opinion the legislature has made a differentiation between goods which are required for manufacture of the resultant product and the goods which are used for packaging. In the instant case, the raw material imported for manufacture of resultant product IMFL (as has been specified in the Authorization) is VMS, Vetted Malt Scotch only. Therefore, the provisions of sub clause 1 (viii) of the Notification will be applicable only to that material. The bottles, caps and labels were used for packing and imported but procured domestically under Annexure 45. 19. The difference between " inputs' under Duty Free Import Authorization in Para 4.2.1 and Advance Authorization in Para 4.1.3 has been explained in the case of R.PINTERNATIONAL Versus UNION OF INDIA reported at 2017 (353) E.L.T. 307 (P & H) in the following words: "Similarly, so far as the basic Scheme for DFIA in para 4.2.1 and that for Advance Authorization in Para 4.1.3 are c....