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2011 (1) TMI 1005 - CESTAT, MUMBAIImport of certain raw materials under six advance licences - clearance of the same duty-free under Notification No. 159/90-Cus dated 30.3. 90 - duty-free import of some of the above raw materials under Notification No. 204/92-Cus dated 19.5.1992 during the tenure of Exim Policy, 1992-97 - SCN issued stating that Glycerine imported by assessee was not liable to be exempted from payment of duty under any of the above notifications inasmuch as the input used in the export product was a different commodity, namely Sorbitol - importer availed MODVAT credit on indigenous inputs (Glycerine, Sorbitol and SLS) used in the manufacture of the export product and, therefore, the inputs subsequently imported as replenishment by them and sold in local market were not eligible for the benefit of Notification No. 204/92-Cus on account of breach of Condition No. (vi) thereof - demand of duty and also proposed to impose a penalty on the importer, apart from a proposal for confiscation of the imported goods - whether the benefit of Notification No. 159/90-Cus and No. 204/92-Cus is liable to be granted to M/s Fresh Laboratories in respect of the raw materials imported by them under the six advance licences during the material period. Held that:- The show-cause notice has succinctly brought out the chemical, physical and other differences between Glycerine and Sorbitol. These differences were not disputed by the importer in their reply to the show-cause notice, nor even in the memorandum of appeal before us. If tinplates of thickness of 0.19 mm could be recognized as a commodity different from tinplates of 0.22 mm, in the case of Zenith Tin Works [1994 (4) TMI 183 - CEGAT, NEW DELHI] no hesitation to hold that Glycerine can come nowhere near Sorbitol in material characteristics/specifications. The contention raised by the learned counsel that, as both these materials were covered by the advance licences, duty-free import of any of them should be allowed where the other one was found to have been used in the manufacture of the resultant product, is not supported by any judicial authority and hence cannot be accepted. In relation to Notification No. 204/92-Cus also a firm case for the Revenue. In the instant case, the importer has submitted that demand of duty on five raw materials imported by them cannot be sustained inasmuch as no MODVAT credit had been taken on the corresponding inputs used in the exported product. These are items mentioned at clauses (c) Irish Moss, (d) (SMFP), (e) Flavouring Compound, (h) Stearic Acid (i) Aromatic Chemicals, of para (ii) of the operative part of the Commissioner’s order. In the case of other raw materials imported by M/s Fresh Laboratories, the learned counsel has submitted that whatever MODVAT credit had been taken on the corresponding inputs contained in the exported final product was reversed with interest and, therefore, the benefit of Amnesty Scheme should be granted. We have not found any valid ground to accept these contentions either. First of all, the claim that no credit was availed on duty-paid inputs contained in the exported product, against which the aforesaid five materials were imported as replenishment, has not been substantiated. Secondly, the plea for Amnesty Scheme cannot be considered against breach of conditions of notifications 159/90-Cus and 204/92-Cus. Thus demand of duty raised on M/s Fresh Laboratories has to be sustained. All the goods imported by them were admittedly covered by advance licences and none of those goods were in the prohibited category so as to attract this provision of law. Considering the fact that M/s Fresh Laboratories reversed MODVAT credit to the extent of Rs 18.8 lakhs and paid interest thereon subsequently, and also considering the inapplicability of Section 111 (d) to this case, we are of the view that the penalty of Rs 4 crores imposed on them is harsh thus be reduced to Rs 50 (fifty) lakhs. Where a penalty stands imposed on the partnership firm, there is no reason why there should be separate penalty on a partner under the same provision of law. Therefore, the penalty on Shri Bhupendra J. Shah is vacated. The records indicate that 60 MT of Glycerine imported by M/s Fresh Laboratories were sold to Mahavir Export and Import Company, of which Mr. Yogesh Korani was the proprietor. There cannot be separate penalties on M/s Mahavir Export & Import Co and its proprietor. In the result, we set aside the penalty imposed on Mr. Yogesh Korani and reduce the quantum of penalty on M/s Mahavir Export and Import Co to Rs one lakh.
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