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Issues:
Violation of conditions of Value Based Advance Licence and DEEC Book for importing aniline oil leading to duty recovery, confiscation of goods, and penalty imposition. Analysis: The appellants were granted Value Based Advance Licence and DEEC Book for importing aniline oil with the condition to export sulphanilic acid. The Customs notification exempted import duty under certain conditions, including the discharge of export obligations within a specified time limit and no availing of Modvat credit under specific rules. The Department alleged that the appellants violated the condition by suppressing Modvat credit availed during exemption, leading to a show cause notice for duty recovery, confiscation of goods, and penalty imposition. The Commissioner ordered duty recovery of Rs. 17,86,537/- with interest under Section 28AB of the Customs Act and imposed a penalty of Rs. 5 lakhs on the appellants due to the alleged violation. The appellants, through their counsel, clarified that they had voluntarily reversed the Modvat credit availed before the show cause notice was issued. They communicated the reversal details to the Central Excise authorities and highlighted a similar issue faced by other importers under Value Based Advance Licence. The Central Board of Excise and Customs issued a Trade Notice relaxing the condition in the notification ex post facto, requiring exporters to reverse incorrectly availed Modvat credit with interest to avoid Customs duty payment. The Board's instruction aimed to prevent adverse impacts on export trade and administrative burdens from enforcement actions. Upon review, the Tribunal found that the appellants had complied with the Board's instruction by reversing the Modvat credit with interest before the specified deadline. Consequently, the demand for duty recovery was deemed unsustainable. The Tribunal noted that the Board's amnesty eliminated the need for penalty imposition, considering the general relaxation provided. As a result, the appeal was allowed in favor of the appellants, absolving them from duty recovery, confiscation of goods, and penalty charges. In conclusion, the Tribunal's decision was based on the appellants' proactive reversal of Modvat credit, aligning with the Board's guidelines to rectify the issue and avoid duty payment. The Tribunal acknowledged the Board's efforts to address similar issues faced by exporters under Value Based Advance Licence, emphasizing the importance of compliance with conditions to prevent adverse consequences on trade and administrative processes.
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