TMI Blog2011 (10) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation discharge certificates and have discharged the appellants from any further obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the advance licensing scheme. Diversion of imported material instead of using in manufacturing - Held that:- it is clear that once the export obligation has been discharged, the importer, operating under the quantity based advance licensing scheme, can utilise the imported material under the said scheme for manufacture of other products in his factory and therefore, the allegation in the show cause notice in the present case that the appellant had utilised the imported product in the manufacture of other products for sale in the domestic market and therefore, they are not eligible for the benefit of Customs duty exemption does not have any legal basis. Appellant's eligibility to import crude Palm Stearine under the advance licences and consequent eligibility for Customs duty exemption thereon - Held that:- crude palm stearine did not satisfy the definition/criterion of 'material' which were permitted to be imported duty free both under the EXIM polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound to have been diverted to their factory at Sewri for the manufacture of other soaps for local sale. (3) A quantity of 839.560 MTs of Palm stearine was used in the manufacture of Pears soap which was exported under DEPB scheme. (4) Balance quantity of 1730.565 MTs of palm stearine was diverted to Sewree and Aurangabad units of M/s HLL for manufacture of other soaps and their subsequent sale in the domestic market. Investigations conducted further revealed that M/s. HLL had utilised only 339.150 Kgs. of Palm Stearine in the manufacture of 1 MT of 'Pears' soap and the remaining quantity of Palm Stearine/crude Palm Stearine was diverted /transferred to their other factories for manufacture of other soaps for sale in the local market even though in the export documents, they had indicated the usage of Palm Stearine @ 676 Kgs per MT of Pears Soap, thereby misdeclaring the usage of the Palm Stearine so as to import excess quantity of the said product without payment of duty and without utilizing the same in the manufacture of the export product. 2.2 Accordingly, a show cause notice dated 29-10-2004 was issued to M/s. HLL, proposing as to why:- (i) Customs duty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 23/06/1997 under DEEC scheme read with Notification Nos. 204/92 dated 19/05/1992, 80/95 dated 31/03/1995 and 30/97 dated 01/04/1997 and EXIM Policy 1992-97 and 1997-2002, along with interest leviable thereon under the first proviso to Section 28 the Customs Act 1962 and also under the provisions and conditions of the abovementioned Notifications; (2) Confiscated Crude Palm Stearine of an aggregate CIF value of Rs. 1,49,99,863/- imported duty free and diverted to other units of M/s HLL under the provisions of sections 111(d) and 111(o) of the said Customs Act and imposed a redemption fine of Rs. 37,50,000/- under Section 125 of the Customs Act, 1962 in lieu of confiscation; (3) Confirmed Customs duty amounting to Rs.2,13,20,122/- along with interest, on Palm Stearine covered under 15 Bills of Entry imported duty free against 20 Advance licences under DEEC scheme read with Notification Nos. 204/92 dated 19.5.1992, 80/95 dated 31.03.95 and 30/97 dated 01.04.97 and EXIM Policy 1992-97 and 1997-2002, under the first proviso to Section 28 of the Customs Act, 1962 and also under the provisions and conditions of the above mentioned notifications; (4) Confiscated Palm Steari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence for the manufacture of Pears soap and the major inputs was Palm Stearine. Based on approved sample, quantity of Palm Stearine was determined as 73.49% and HLL indicated 734.997 Kgs. of Palm Stearine for manufacture of 1 MT of 'Pears' soap on adhoc basis. Accordingly, advance licence No. 1521854 dated 08/07/1992 was issued to M/s. HLL allowing them to inter alia import Palm Stearine oil @734.997 kg. per 1 MT of the finished product. Under the said licence, import took place during the period January to August, 1993 and exports were undertaken during the period from April 1993 to June 1994. In the meanwhile, M/s. HLL applied for the second advance licence based on the adhoc norms mentioned above and the second advance licence No. 1525455 was issued on 14/06/1993 permitting import of specified materials as per the norms mentioned for the 1st licence and the appellant undertook import under the second advance licence during June,1993 and also exports of the finished product was made during April-October, 1994. b) During the period from 15/07/1993 to 02/01/1994 they received complaints about the quality of Pears soap and the entire quantity of soaps exported was rejected. To o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earine (339.150 kg/MT) and Hardened Groundnut Oil (239.400 kg/MT). f) In respect of their 21st, 22nd and 23rd advance licences applied on 01/7/2002, 06/02/2003 and 01/07/2003 respectively, M/s HLL in their applications had specified their input requirement as 339.150 kg of Palm Stearine and 239.400 kg of Hardened ground nut oil per MT of Pears Soap; though initially the DGFT issued the advance licence on that basis, however, subsequently, they amended the input requirement as 676.326 Kg/ MT of Palm Stearine in the advance licences already issued for the reason that once SION is already fixed, the licences can be issued only on that basis. g) In the light of the above, the counsel for the appellant submits that there has been no mis-declaration, mis-representation or suppression of any facts before the DGFT by the appellant and the usage of Palm Stearine and Hardened Groundnut Oil in the manufacture of Pears soap was made known to the DGFT. It was given to understand by the Officers of the DGFT that once SION is fixed for an export product, import of other material than what is mentioned in SION would not be permitted normally and an exporter is not prohibited from using loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption cannot be denied on the ground of usage of imported duty-free material for domestic production or by questioning the norms fixed by DGFT. l) The learned counsel relies on the following judgments/circulars in support of his above contentions. (a) Jay Engineering Works Ltd. - 2003 (162) ELT 680 (T) (b) Kitply Industries Ltd. - 2001 (135) ELT 786 (T) (c) Standard Industries Ltd. - 2001 (136) ELT 124 (T) (d) Galaxy Surfactants Ltd. - 2006 (202) ELT 495 (T) (e) Stumpp, Schuele Somappa - 2006 (194) ELT 437 (T) (f) Aditya Birla Nuvo Ltd - 2010 (249) ELT 273 (T) (g) Sujana Steels - 2007 (218) ELT 542 (T) (h) Jindal Drugs - 2007 (214) ELT 37 (T) (i) Jaysynth Dyechem - 2001 (136) ELT 1429 (T) (j) Jindal Drugs - 2006 (197) ELT 471 (SC) (j) DGFT's letters F.No.01/84/160/11121/a.m.98/des.v/1619 dated 16/07/1997 addressed to M/s Jaysynth Dyechem and Commissioner of Central Excise, Mumbai III. (k) CBEC letter F.No.605/39/98-DBK dated 01/04/1998 in response to representation of Dyestuff Manufacturers, Association m) The learned counsel further submits that once DGFT has certified fulfillment of export obligation against each of the advance licences, such cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be considered to have been sold or transferred to any other person, and they rely on the following judicial decisions: (i) Standard Industries Ltd. - 2001 (136) ELT 124 (T) (ii) Stumpp, Schuele Somappa - 2006 (194) ELT 437 (T) (iii) Jindal Drugs - 2007 (214) ELT 37 (T) (iv) Galaxy Surfactants Ltd. - 2006 (202) ELT 495 (T) (v) Ashok Enterprises - 2005 (186) ELT 497 (T) (q) The learned counsel further argues that duty-free imported materials can be used in the production of goods meant for domestic sale as has been held by this Tribunal in the case of Commissioner of Customs vs. Grand Foundry Ltd. 2005 (186) ELT 594. (r) It is further contended that once advance licence is issued by DGFT as per SION and such licences were not questioned by licensing authority, then customs authorities cannot deny exemption on the ground of any mis-representation or mis-statement and reliance is placed on the following judgments of the Hon'ble Bombay High Court and Hon'ble apex court. (i) Titan Medical Systems - 2003 (151) ELT 254 (SC) (ii) CC (EP) v/s. Jupiter Exports - 2007 (213) ELT 641 (Bom) (iii) Autolite (India) Ltd. - 2003 (157) ELT 13 (Bom) (s) As regards th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th under the EXIM Policy and the Handbook of Procedure relating thereto and also the terms and conditions of the customs notifications governing the advance licensing scheme.The licensing authorities have confirmed the fulfillment of export obligations and have issued EODCs in respect of the advance licences mentioned in the show cause notice and the excess materials were used in the manufacture of products sold in the domestic market or for export only after fulfillment of the export obligation and there has been absolutely no misuse of the scheme and, therefore, no penalty is impossible on the appellant and relies on the following judicial pronouncement in support of the above contention: (a) Pattu Exports - 2007 (213) ELT 545 (T); (b) Galaxy Surfactants - 2006 (202) ELT 495 (T). (w) Composite penalty under section 114A and under section 112(a) (b) without giving any break up is not sustainable as has been held in the following judgments: (a) TELCO - 2006 (196) ELT 308 (T) (b) Thyrocare Services - 2006 (4) STR 200 (T) (c) Wipteh Peripherals - 2008 (232) ELT 621 (T) (d) Explicit Trading Trading - 2009 (240) ELT A-16 (SC) (x) The learned counsel further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the appellant declared in their shipping bill the consumption of Palm stearine at 676.326 Kg. per MT of Pears soap while the actual consumption was only 339.150 kgs. Thus there was deliberate mis-declaration on the part of the appellant and the ld. JCDR relies in the decisions of this Tribunal in the case of Dharam Exports vs. CC 2005 (192) ELT 503 and Modern Mills vs. CC 1996 (87) ELT 304. c) In all, in respect of 20 advance licences, the appellant imported a total quantity of 6627.492 MTs of Palm Stearine out of which they sent to their Khamgaon unit only a quantity of 5808.724 MTs where the export product Pears Soap was manufactured. The balance quantity of 818.712 MTs was diverted to their Sewri plant where the final product was not manufactured at all. Even in respect of their Khamgaon unit, out of the 5808.724 MTs of Palm Stearine received, only a quantity of 4057.361 MTs was actually utilised in the manufacture of 'Pears' soap and the balance quantity of 1751.363 MTs were not used for the manufacture of export product under the DEEC scheme. The break up of 1751.363 MTs is as follows:- (1) a quantity of 302.233 MTs was diverted from Khamgaon unit to Sew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant's case can not be considered as a case of replenishment as that pre-supposes use of domestic raw materials of the same kind in the manufacture of goods exported but it is on record that Palm Stearine was not manufactured anywhere in India during the relevant period and hence the appellant could not have sourced it from anywhere in India to later replenish it through imports. (h) The advance licences were subject to 'Actual User Condition'nternational vs. CC [2002 (213) ELT 703]. (i) The appellant had also imported 805.266 MT of crude palm stearine which was not required for manufacture of Pears soap and the said product was used for the manufacture of different varieties of soap cleared to the domestic market in India. Therefore, 'crude palm stearine' could not be considered as 'materials' required for manufacture of export product under notification No. 204/92-Cus and its successor notifications. (j) In the case of Sheshank Sea Foods Pvt. Ltd. Vs. Union of India 1996 (88) ELT 626 (SC), the Hon'ble apex court had held that goods imported duty-free under the advance licensing scheme is disposed of in any manner not provided for in the EXIM policy or in the gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme, wherein a quantity of 839.560 MTs of Palm Stearine oil has been used, the importer has availed double benefit 'once, by importing the goods without payment of duty under DEEC scheme and second by obtaining duty credit under DEPB scheme on a product on which no duty has been paid. This is clear from para 7.25 of the EXIM Policy which states that 'The objective of the DEPB scheme is to neutralise the incidence of Basic Customs duty on the import content of the export product.'. As per Public Notice No. 65/2000 dated 8-6-2000 of the Bombay Custom House, an exporter working under DEPB scheme was required to file a declaration in the shipping bills, inter alia, to the effect that the exporter had not claimed any benefit under the advance licence scheme simultaneously. In the instant case, the appellant had availed the benefits of DEEC scheme in respect of the exports made under DEPB shipping bills which is clearly a violation of the DEPB scheme and, therefore, the importer could not have claimed DEPB benefit on 839.560 MTs of Palm Stearine imported under advance licence scheme.Therefore, the duty demand confirmed in this regard of Rs. 83,29,990/- is correct in law. The ld. JCDR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tearine (MTS) Period of Import Qty of Pears Soap(MT) Exported Qty of P.S utilized in export (MT) Export period Date of redemption by DGFT From To From To 1. 1521854 08.07.92 (i)PS 732.547 18.01.93 27.08.93 656.02 + 348.943 482.602 @73.5% + 118.344 @ 33.915% 27.04.93 17.06.94 02.03.01 2. 1525455 14.06.93 (i)PS 734.997 29.06.93 29.06.93 1036.155 351.412 30.03.94 31.10.94 28.06.99 3. 3498941 04.05.94 (i)PS (iii)HGNO 676.326 07.10.94 28.02.96 1010.801 342.813 02.11.94 04.12.95 29.06.00 4. 3493602 18.04.95 (i).PS 676.000 28.02.96 19.09.96 1013.048 343.575 25.11.95 27.07.96 20.08.99 5 3202979 16.08.96 (i)PS 135.200 21.08.98 21.08.98 200.215 67.903 17.01.97 14.08.98 24.04.00 6. 3202978 16.08.96 (i) PS 405.593 13.06.97 21.08.98 605.229 205.263 16.01.97 28.09.97 21.03.00 7. 3201204 05.02.96 (i).PS 507.000 17.09.96 13.06.97 754.299 255.821 01.08.96 11.01.97 31.03.99 8. 3206078 23.06.97 (i).S (ii)CPS 399.666 25.06.99 25.06.99 600.597 203.692 17.12.97 15.06.99 06.06.00 9. 3204926 27.02.97 (i)PS 368.680 12.03.98 21.08.98 600.345 203.607 09.06.97 11.02.99 06.06.00 10. 3204 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional customs duty so paid, immediately upon the said inputs entering his factory; (b) If the importer uses the inputs for production of export goods, which are otherwise not excisable or not dutiable or not eligible for Modvat benefit, he may claim drawback in respect of the additional customs duty so paid, immediately upon the said inputs entering his factory; (c) If the importer uses the inputs for manufacture and sale in the DTA of excisable goods, he may claim Modvat in respect of the additional customs duty so paid, immediately upon the said inputs entering his factory; (d) If the importer uses the inputs for manufacture and sale in the DTA of goods which are not excisable or not dutiable or not eligible for Modvat benefit, he shall not be eligible to any rebate or adjustment of the additional customs duty so paid. Notwithstanding anything contained above, exemption from payment of additional customs duty shall be allowed in respect of Quantity Based Advance Licences, issued with Actual User condition to: (a) manufacturer-exporters, on applications made on or after December 1, 1995; and (b) merchant-exporters where the merchant exporter agrees to the endorsement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not be disposed of after the discharge of export obligation and realization of sale proceeds and such materials may be utilised by the importer for manufacture of any other goods." The explanations in the said Notification further defined the term 'materials' as follows: "(iv)'Materials' means (a) raw materials, components, intermediates, consumables, computer software and parts required for manufacture of export product; or, in case of a Quantity based Advance Intermediate Licence, for manufacture and supply to holder of a Special Imprest Licence for producing final goods referred to in sub-clauses (b), (c) and 9d) of clause (iii) of the Explanation, in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 128/94-Customs, dated the 10th June, 1994. (b) ............................................ (c) ..........................................." Similar conditions were prescribed under Notification No. 80/95-Cus dated 31/03/1995 which stipulated that 'exempt materials shall not be disposed of or utilised in any manner, except for utilization in discharge of export obligation, before the export obligation under the said l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion against the appellant is that they had obtained the DEEC licences by misrepresentation / fraud and, therefore, they are not eligible for duty exemption under Notification No. 204/92-Cus and its successor notifications. The contention of the Revenue is that the appellant had not informed the licensing authority the reduced requirement of Palm Stearine in the manufacture of perfumed glycerin soap and the usage of groundnut oil in admixture with Palm Stearine for the manufacture of the said soap. Since licence had been obtained by misrepresentation of facts, in view of the apex court's decision in the in the case of Sheshank Sea Foods Pvt. Ltd. Vs. Union of India cited supra, the appellants are not eligible for the exemption under the customs notification governing DEEC scheme. 6.1 We have perused the records. It is seen that, as early as 24/01/1994, the appellant had informed the licensing authority that the input/output norms fixed on adhoc basis in respect of advance licences already granted needed change and had proposed that instead of Palm Stearine at 0.735 kg. per kg. of export product, the norm should be refixed as Palm Stearine / groundnut oil (industrial grade) @ 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the DGFT intimated that they had issued a public notice No. 277 dated 22/03/1995 prescribing the standard input and output norms (SION) for perfumed glycerin soap wherein the norm prescribed for Palm Stearine was 0.676 kg. per 1 kg. of the finished product. The same norm was prescribed in the Handbook of Procedures for the period April, 1992 to March, 1997 under serial No. 1481 of chemical group. In their letter dated 18/05/1995, the appellant had again written to DGFT requesting for allowing import of Palm Stearine / Groundnut Oil for the manufacture and export of perfumed glycerin soap under DEEC wherein they had once again stated that "Palm Stearine and groundnut oil both form part of our formulation in the manufacture of Perfumed Glycerin Soap. Omitting groundnut oil will result in our inability to produce soap of the right quality." On this basis they had requested to make amendment in the advance licence No. 3493602 dated 18/04/1995 to include groundnut oil (industrial grade) along with Palm Stearine as an item of import and this was reminded vide letters dated 21/12/1995 and 20/03/1996. Thus, the fact that the appellants were using groundnut oil (industrial grade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the licensing authority and consequent denial of Customs duty exemption under Notification No. 204/92-Cus and its successor notifications are not legally sustainable as in the instant case the licensing authority has not questioned the appellant with regard to the usage of various items in the manufacture of export products and have issued advance licences in accordance with the standard input/output norms prescribed in the policy. Once advance licences have been issued for a given quantity and for a given value, the Customs cannot deny benefit of Customs duty exemption in respect of such quantity and value of import on extraneous grounds for which they have no jurisdiction to investigate. Therefore, so long as the terms and conditions of advance licences have not been violated by the appellant, the benefit of customs duty exemption under the aforesaid notifications cannot be denied or withheld and we hold accordingly 6.3 The next issue for consideration is whether once the licensing authority certified that export obligation has been fulfilled whether such certification is final and binding on the Customs authorities. This issue came before this Tribunal in the case of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Supreme Court held that once an advance licence was issued and not questioned by the licensing authority, the Custom authorities cannot refuse exemption on an allegation that there was any misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf." The ratio decidendi laid down in the above judgments applies to the facts of the present case. In the instant case also, the licensing authority has accepted the fulfillment of export obligation and have issued export obligation discharge certificates and have discharged the appellants from any further obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the advance licensing scheme. If at all they felt that the appellant had violated any of the terms and conditions of the licences, they should have referred the matter to the licensing authority for appropriate action rather than taking action suo motu. 6.4 Revenue has raised a contention that the appellant had not used all the Palm Stearine which they had imported but part of the material had been diverted for use in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermediates and utilize the imported basic raw materials for manufacture of other products in his factory. As regards the third point, so long as the inputs authorised in the import licence are the ones which are commercially known to be used in the export product, the importer can import such inputs." 6.6 From the above clarifications issued by the licensing authority as also the Central Board of Excise and Customs, it is clear that once the export obligation has been discharged, the importer, operating under the quantity based advance licensing scheme, can utilise the imported material under the said scheme for manufacture of other products in his factory and therefore, the allegation in the show cause notice in the present case that the appellant had utilised the imported product in the manufacture of other products for sale in the domestic market and therefore, they are not eligible for the benefit of Customs duty exemption does not have any legal basis. 6.7 The above view is also supported out by a number of judicial pronouncements. In the case of Jaysynth Dyechem Ltd. vs. Commissioner of Customs (Export Promotion), Mumbai, cited supra this Tribunal had occasion to exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufacture of other goods sold in the domestic area, etc. does not sustain and consequently the penal proceedings on account of the same also will not sustain. 7. The next issue for consideration relates to the appellant's eligibility to import crude Palm Stearine under the advance licences and consequent eligibility for Customs duty exemption thereon. The advance licences issued indicate the product eligible for import as 'Palm Stearine'. It does not say whether such Palm Stearine should be crude or refined or should be conforming to any quality parameters. It has been contended on behalf of the appellant that in the absence of any such restrictions in the advance licence(s), it is not for the Customs to deny the benefit of exemption on the ground that exemption will not be available in respect of crude Palm Stearine. 7.1 The appellant has relied on the judgment in the case of CC v/s. Aditya International (cited supra) wherein this Tribunal considered a case where the advance licence specified 'sewing thread' as an item eligible for import while the item imported was silk sewing thread. The Customs sought to deny exemption under Notification No.204/92-Cus on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 04/08/2004 in reply to certain queries put to him by the investigating officer, had stated that the diverted Crude Palm Stearine had been used for manufacture of toilet soap for the domestic market. All these statements have been recorded under section 108 of the Customs Act, 1962 and have not been retracted and therefore, they have substantial evidentiary value. These statements make it abundantly clear that Crude Palm Stearine could not have been used for manufacture of Pears soap because its IV and FFA content were much higher than what was required and it was never used in the manufacture of Pears soap and was straightaway diverted from the port (at the time of import) itself to the Sewree unit of M/s HLL for manufacture of soap for the domestic market. Thus crude palm stearine did not satisfy the definition/criterion of 'material' which were permitted to be imported duty free both under the EXIM policy and the relevant customs notifications. The material imported should be capable of being used in the manufacture of the export product. Crude Palm Stearine did not also satisfy the criterion stipulated in the customs notification that 'the materials are required for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The allegation is that the appellants have obtained the input Palm Stearine without payment of duty under advance licence. Some of the products manufactured out of the inputs imported duty free have been exported under claim for DEPB. Whether DEPB credit would be admissible in respect of inputs imported under duty free under the DEEC scheme, after fulfillment of export obligation under the said scheme. 8.1 A similar issue came up before the Hon'ble High Court of Bombay in the case of Pradip Polyfils Pvt. Ltd. vs. Union of India, cited supra. The Hon'ble High Court held as follows: "The endorsement made on the licences clearly show that the DEPB licences have been issued against the export of Polypropylene Filter Plates and accessories as contained in the shipping bills furnished by the petitioners. Whether an item falls under Chapter 39 of ITC classification or not is for the licensing authorities to consider before issuing the licence. Even after the issuance of the licences, the licensing authorities have not taken any steps to declare that the said licences were wrongly issued. Once the licensing authorities have held that the export product is covered under the DEPB Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies to the facts of the present case and accordingly the denial of DEPB credit amounting to Rs. 2,35,20,388/- on the ground of fraudulent availment can not be sustained for want of jurisdiction by the Customs authorities. The jurisdiction in this regard lies with the licensing authorities and the customs authorities, could, at best refer the matter to the licensing authority for necessary action.We should, however, make it clear that merely because we have held the denial of credit is not sustainable, it does not mean that there is no breach of the conditions relating to DEPB scheme. In fact, the very availment of double benefit in respect of a single export, that is availment of duty exemption under DEEC and grant of credit DEPB militates against the grant of benefits under the two export promotion scheme. It is, in fact, a mockery of the schemes and a fraud played by the appellant on the exchequer. Therefore, the licensing authority is at liberty to take appropriate action against the appellant in accordance with the law, if they so desire. 9. The last issue for consideration is whether customs authorities can demand import duty on the inputs imported duty free and which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons or under the DEEC licence on the Palm stearine used in the manufacture of Pears Soap exported under DEPB scheme. When the scheme itself permits that the materials imported in excess of actual use can be used in the manufacture of other goods which may be sold in the domestic market by the manufacturer himself, there can not be any objection to the export of the manufactured product also. No doubt, there is a mis-declaration when the exports are made under claim for DEPB. In such cases, what is legally possible is to deny the DEPB credit on such exports and not denial of exemption under customs notifications relating to DEEC. Such action for denial of DEPB credit can be taken only by the DGFT authorities and the customs have no jurisdiction in that matter as held in the preceding paragraphs. For a violation in respect of exports made under DEPB scheme, action has to be taken under that scheme itself and it does not stand to reason that action can be taken under DEEC scheme when no violations have been committed with respect to that scheme. Therefore, the demand of duty amounting to Rs.83,29,990/- towards duty foregone under the DEEC scheme in respect of inputs which have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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