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TMI Blog2004 (2) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... and manufactured export products therefrom. Consequently the statements of the exporters were recorded under Section 108 of the Customs Act, 1962 in which they stated that they had applied for and obtained Pass Books. They also submitted documents pertaining to purchase of grey cotton fabrics, job working of such grey cotton fabrics into processed fabrics, conversion of the job worked fabrics into export products, invoices/shipping bills/bill books etc., for the input items as well as export products. 2. The Government of India introduced the Pass Book Scheme with effect from 1-4-1995. The relevant provisions were made in para 54 of the EXIM Policy 1992-97 and corresponding procedural provisions were incorporated in para 114 of the Hand Book of Procedures Vol. 1. The goods imported by a Passbook holder against the credit available in the Pass Book were exempted from payment of Customs duty in terms of Notification No. 104/95-Cus., dated 30-5-1995. The guidelines for use of Pass Book and credit/debit in such Pass Books were contained in the Advanced Licensing Committee (ALC) circular No. 15/95, dated 28-7-1995 issued by the DGFT. Further clarifications were issued by DGFT vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the said General Note 16, the input item for export products covered at Sr. No. 133 was required to be treated as 'Grey Cotton fabrics'. Further, the input "Cotton Grey fabrics (woven) all varieties" was excluded from the purview of the Pass Book Scheme by the DGFT vide PN No. 393 (PN)/92-97 the dated 14-1-1997. Consequently, the export products made out of cotton gray fabrics (woven), would not attract credit against the deemed import content of such input with effect from 14-1-1997. 4. On an analysis of Sr. Nos. 109, 133 and 321 of the SIONs for textile products, as reproduced above, in accordance with General Condition to the Hand Book of Procedures, Vol. II, it appeared that : (a) the export products viz., 100% cotton bed sheets and 100% cotton bed sets consisting of bed sheets with/without pillow cover shall be covered by the specific norms, i.e., Sr. No. 109. (b) the other bed linen items etc., which are in the nature of made ups, shall be covered by SION, Sr. No. 133, up to 16-12-1996. (c) the other bed linen items, where only dyeing and/or printing process have been carried shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 28AB, ibid. The imported goods also appeared liable to confiscation under Section 111(o), ibid as the condition subject to which they were exempted from payment of duty had not been observed. Further, at the time of export, the exporters intentionally mis-declared the SION applicable and the description of actual input used, which was in contravention of procedure prescribed in this behalf by the DGFT. Therefore, export goods as detailed in respective SCNs exported under Pass Books had been exported in contravention of Section 11(1) of Foreign Trade (Development & Regulations) Act, 1992 and appeared liable to confiscation under Section 113(d), ibid. As the exporter by their acts and omissions rendered the imported/export goods liable to confiscation under Section 111/Section 113 and had not paid duty due to wilful mis-statement of facts, they appeared liable to penalty under Section 112(a), Section 114(i) and Section 113A ibid, respectively. 7. The said exporters willfully mis-declared the serial number of the SlONs by which their export product was covered as well as made a wrong declaration at the time of export regarding the input actually used by them for manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned imported goods against which the duty as above had not been paid is held liable to confiscation under Section 111(o) of the Customs Act, 1962 and the impugned exported goods are held liable to confiscation under Section 113(d) ibid. However, as the said goods are not available, I do not order confiscation. (d) A penalty of Rs. 2,26,69,443/- (Rupees Two crores twenty six lakhs sixty nine thousand four hundred and forty three only) under Section 114A of the Customs Act, 1962 and a penalty of Rs. 25,00,000/- (Rupees Twenty Five lakhs only) under Section 114(i) ibid are imposed on M/s. Vigneswara Exports Pvt. Ltd., Mumbai. (e) The amount of Rs. 40,00,000/- (Rupees Forty Lakhs only) deposited voluntarily is ordered to be adjusted against their customs duty and interest liabilities. II. SCN No. DRI/BZU/E/34/97, dated 23-8-1997 against M/s. Divya Textiles. (a) The excess credit amounting to Rs. 95,98,168/- (Rupees Ninety Five Lakhs Ninety Eight Thousand One Hundred and Sixty Eight only) as provided in the passbook is disallowed. (b) The duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 114(i) ibid are imposed on M/s. Badridas Gauridatt Ltd. (e) The amount of Rs. 30,00,000/- (Rupees Thirty Lakhs only) deposited voluntarily is ordered to be adjusted against their customs duty and interest liabilities. IV. SCN No. DRI/BZU/E/38/97, dated 23-8-1997 against M/s. Trend Setters. (a) The excess credit amounting to Rs. 17,93,527/-, (Rupees Seventeen Lakhs Ninety Three Thousand Five Hundred Twenty Seven only) as provided in the passbook is disallowed. (b) The duty not paid amounting to Rs. 17,93,527/- (Rupees Seventeen Lakhs Ninety Three Thousand Five Hundred Twenty Seven only) by utilising the excess duty as above is demanded and confirmed in terms of proviso to Section 28(1) along with interest in terms of Section 28AB of the Customs Act, 1962. (c) The impugned imported goods against which the duty as above had not been paid is held liable to confiscation under Section 111(o) of the Customs Act, 1962 and the impugned exported goods are held liable to confiscation under Section 113(d) ibid. However, as the said goods are not avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Seventy Five Lakhs Sixty Seven Thousand Fifty Nine only) by utilising the excess duty as above is demanded and confirmed in terms of proviso to Section 28(1) along with interest in terms of Section 28AB of the Customs Act, 1962. (c) The impugned imported goods against which the duty as above had not been paid is held liable to confiscation under Section 111(o) of the Customs Act, 1962 and the impugned exported goods are held liable to confiscation under Section 113(d) ibid., However, as the said goods are not available, I do not order confiscation. (d) A penalty of Rs. 75,67,059/- (Rupees Seventy Five Lakhs Sixty Seven Thousand Fifty Nine only) under Section 114A of the Customs Act, 1962 and a penalty of Rs. 7,60,000/- (Rupees Seven Lakh Sixty Thousand only) under Section 114(i) ibid are imposed on M/s. Syntex Corporation. (e) The amount of Rs. 35,00,000/- (Rupees Thirty Five Lakhs only) deposited voluntarily is ordered to be adjusted against their customs duty and interest liabilities. VII. SCN No. DRI/BZU/E/40/97, dated 23-8-1997 against M/s. Texcellence Overseas. (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty of Rs. 1,09,83,391/- (Rupees One Crore Nine Lakhs Eighty Three Thousand Three hundred Ninety One only) under Section 114A of the Customs Act, 1962 and a penalty of Rs. 10,10,000/- (Rupees Ten Lakhs Ten Thousand only) under Section 114(i) ibid are imposed on M/s. Anjani International. (e) The amount of Rs. 35,00,000/- (Rupees Thirty Five Lakhs only) deposited voluntarily is ordered to be adjusted against their customs duty and interest liabilities. IX. SCN No. DRI/BZU/E/41/97, dated 23-8-1997 against M/s. Jindal Worldwide. (a) The excess credit amount to Rs. 22,70,507/- (Rupees Twenty Two Lakhs Seventy Thousand Five Hundred Seven Only) as provided in the passbook is disallowed. (b) The duty not paid amounting to Rs. 22,70,507/- (Rupees Twenty two Lakhs Seventy Thousand Five Hundred Seven Only) by utilising the excess duty as above is demanded and confirmed in terms of proviso to Section 28(1) along with interest in terms of Section 28AB of the Customs Act, 1962. (c) The impugned imported goods against which the duty as above had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs Fifty Seven Thousand One Hundred Twenty One Only) as provided in the passbook is disallowed. (b) The duty not paid amounting to Rs, 30,57,121/- (Rupees Thirty Lakhs Fifty Seven Thousand One Hundred And Twenty One only) by utilising the excess duty as above is demanded and confirmed in terms of proviso to Section 28(1) along with interest in terms of Section 28AB of the Customs Act, 1962. (c) The impugned imported goods against which the duty as above had not been paid is held liable to confiscation under Section 111(o) of the Customs Act, 1962 and the impugned exported goods are held liable to confiscation under Section 113(d) ibid. However, as the said goods are not available, I do not order confiscation. (d) A penalty of Rs. 30,57,121/- (Rupees Thirty Lakhs Fifty Seven Thousand One Hundred And Twenty One only) under Section 114A of the Customs Act, 1962 and a penalty of Rs. 3,06,000/- (Rupees Three Lakhs Six Thousand only) under Section 114 (i) ibid are imposed on M/s. Atul Impex Pvt. Ltd. (e) The amount of Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand only) deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of credit the Assistant Commissioner of Customs required to verify the extent of credit available on the exported product in terms of Notification 104/95, dated 30-5-1995. Subsequently at the stage of import of goods sought to be cleared duty free in terms of the above Notification, he has to examine whether a passbook has been issued to the importer by the designated authority, whether credit was permitted on export products after due verification by customs authorities and whether such passbook containing sufficient credit is produced before the designated authority for debit of duties leviable on the imported goods. At this stage the customs authorities are not empowered to question the correctness of the grant of credit and if such course is permitted the entire procedure of verification prior to grant of credit would become redundant. CBEC circular No. 15/97-Cus., dated 3-8-1997 also clarifies in respect of a similar scheme that the role of the customs authorities in a situation of this type is confined to verifying the correctness of the exporters' declaration regarding description, quantity and FOB value of the export product and that it is for the licensing authority g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serial No. 133 and processed cotton fabrics are not eligible import items in view of the restriction contained in Note 16 added in the General Notes for Textile Products vide Public Notice No. 387/92-97, dated 16-12-1996 to the effect that wherever cotton gray fabrics/yarn is allowed for import the same would mean gray cotton fabrics/yarn unless specifically mentioned otherwise. (By another Public Notice No. 393/92-97, dated 14-1-1997 DGFT declared that cotton fabrics would not be eligible for credit under the passbook scheme. 14. The counter part of the passbook scheme was Notification 104/95 slated 30-5-1995 exempting goods imported by the passbook holders, the relevant clause in the notification from which the dispute in the present appeals arise reads as under : Provided further that such credit, "(1) shall be admissible only in respect of the import items (hereinafter referred to as the inputs) which are specified with quantity restrictions in the Standard Input Output Norms published in the Hand-book of Procedures Volume II........vide the Public Notice No. 121(PN)/92-97, dated 31-3-1992 as amended .......... and which inputs are declared by the exporter to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey purchased gray fabrics and not processed fabrics. However, there is no requirement either in the EXIM Policy or Notification 104/95 that the input actually used should have been purchased by the exporter. In fact since even merchant exporters who directly purchase the export products are eligible to apply for and obtain credit under the passbook scheme, such a requirement (purchase of actual input used in the export product), if read into the scheme would render it in applicable to merchant manufacturers. We therefore agree with the appellants that the fact that they did not purchase processed fabrics actually used in their export product, but purchased gray fabrics and then got such fabrics processed before use in the export products, cannot result in denial of credit in terms of SION serial No. 133. As for the period after 16-12-1996 the accepted position is that the SION serial No. 133 covers only such bed linen items which had been subject to the process of dyeing/printing only whereas serial No. 321 covers made ups whether processed over and above dyeing/printing have been carried out. The material on record shows that the export product in respect of which the benefit unde ..... 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