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TMI Blog2009 (8) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... s for which EGIPB is an input. They export the transformers under advance licence scheme and since the EGIPB required for manufacture of these transformers for export was procured by them from the appellant company, M/s. Vijai Electricals Ltd. got their advance licenses invalidated in favour of the Appellant company and against supply of EGIPB by the Appellant company to M/s. Vijai Electricals Ltd. for use in the manufacture of transformers for export, the advance licenses were issued to the Appellant company. One such advance licence is the licence No. 1310010073/3/02/00 dated 9-6-03, which was valid for duty free import of 34.925 MT of EGIKP. Against this import licence, the appellant company imported 31.349 MT of EGIKP in September 2003 and filed bills of entry No. 398 and 399 each dated 17-9-03. The import had been made by way of purchase of these goods on high sea sale basis from M/s. Anup Industries, Jaipur who, in turn, had imported these goods from M/s. Sumitomo Corporation, Japan. The goods imported were Tomoegawa product manufactured by M/s. Tomoegawa Paper Company, Japan. Since, the advance licence against which these goods have been imported is not transferable and is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 It is on the basis of the above information provided by various manufacturers of EGIPB that the Department took the view that the imported EGIKP is not an input for the manufacture of EGIPB and, therefore, the appellant company cannot clear the same free of duty under Notification No. 43/02-Cus., dated 19-4-02 against the advance licence produced by them. It is on this basis that a show cause notice dated 17-5-04 was issued to the appellants for :- (a) confiscation of the 31.349 MTs of EGIKP valued at Rs. 29,58,108/- (Rupees Twenty Nine Lakh Fifty Eight Thousand One Hundred and Eight) for the clearance of which the bill of entry No. 398 and 399 dated 17-9-03 had been filed, under Section 110(d), (m) and (o) of Customs Act, 1962; (b) Denying the benefit of Notification No. 43/02-Cus., dated 19-4-02 and since the goods had already been cleared provisionally against bond furnished by the appellant company, for recovery of the duty amounting to Rs. 15,07,526/- (Rupees Fifteen Lakh Seven Thousand Five Hundred Twenty Six) from them ; and (c) Imposition of penalty under Section 112 (a) of Customs Act, 1962 on the appellant company, and on Shri Anup Dhanuka and Shri Alok Dhanuka, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant company in their own factory or procured by the appellant company from indigenous sources. (4) Without admitting about the quality, it is submitted that even otherwise the Notification No. 43/02-Cus., does not say anything about the quality of the input - it says that the description of the goods should be the same. Quality will defer in respect of the same products manufactured by two different manufacturers. (5) The first condition of the Notification No. 43/02-Cus., in very clear terms lays down that the description, value and quantity of the material imported are covered by the said licence and the said licence is produced before the Proper Officer of Customs at the time of clearance for debit. There is no finding that the description, value and quantity of the impugned goods are not covered by the licence or that the licence was not produced at the time of clearance. The goods imported are EGIKP and the licence is valid for the import on 34.925 MT of EGIKP and at the time of import, there was sufficient balance in the licence. (6) The licence against which the clearance was sought was a valid licence issued by the DGFT. If the Customs Department has any doubt about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oo costly to be used for manufacture of EGIPB. When the landed cost of the impugned goods - Tomoegawa EGIKP of Japanese origin, is about Rs. 144/- per Kg. and the landed cost of Electrical Grade unbleached Softwood Pulp to Rs. 22/- to Rs. 24/- per kg., it would be uneconomical to use EGIKP for manufacture of EGIPB. (2) The letters received from M/s. Senapathy Whiteley Pvt. Ltd., Bangalore and M/s. Raman Boards Ltd., Mysore clearly indicate that EGIPB is manufactured from the Electrical Grade unbleached Softwood Pulp which is the most economical process and that it is uneconomical to use imported EGIKP for manufacture of EGIPB. (3) Sale price of EGIPB to M/s. Vijai Electricals Ltd., Hyderabad is lower than the landed cost of the impugned goods. (4) The advance licence against which the duty free clearance of the impugned goods is sought has been issued on actual user basis. The evidence on record indicates that the impugned goods cannot be used for manufacture of EGIPB. 2.3 In rejoinder Shri Bipin Garg, Advocate made the following submissions:- (1) The appellant's selling price of EGIPB to M/s. Vijai Electricals Ltd., Hyderabad was about Rs. 107.27 per kg. while the landed cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cence was not produced at the time of clearance for debit. The only objection of the Department is that as per its inquiry with other manufacturers, EGIKP is not the raw material for manufacture of EGIPB and hence the imported goods were not used for the intended purpose. But on going through the records, we find that the appellant company manufacturers EGIPB from EGIKP and the requirement of EGIKP is met partly by in-house manufacturer of EGIKP from Electrical Grade unbleached Softwood Pulp and partly from procurement of EGIKP from outside. The Form - IV maintained by the appellant company also shows the receipt of imported EGIKP. It has not been disputed by the Department that in the Appellant's factory, first EGIKP is manufactured from unbleached softwood pulp and from EGIKP the EGIPB is manufactured and no evidence has been produced to prove that the imported EGIKP is far superior to the EGIKP produced in house by the Appellant. From the Bills of entry No. 398 and 399 dated 17-9-03 at page 75 and 77 of the Appeal file we find that the landed cost of imported EGIPB is 2981945/32060 = Rs. 93 per kg., not Rs. 144/- per kg. as alleged by Department and if selling price of EGIPB to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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