TMI Blog2003 (7) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... s has been complied with. 3.0 The basic details of the case are already furnished in the aforesaid admission order dated 19-9-2001 of this Bench. To repeat the essential details alone, according to the SCN dated 6-11-2000, the applicant had been issued with four advance licenses No. 10000906 dated 23-6-97, 10001008 dated 23-7-97, 2042504 dated 8-5-96 and 0005346 dated 22-7-96 under DEEC Scheme, which they got registered with Cochin Custom House. They had imported and cleared goods as per these licenses, availing duty concession permissible as per the prevalent Customs Notifications. Subsequently, they failed to discharge to the satisfaction of the Customs the export obligation cast on them in terms of these advance licenses and, therefore, became liable to pay the duty and interest thereon, in respect of the goods imported and cleared availing exemption. As a consequence, duty of ₹ 3,25,20,531/- has been demanded, along with interest thereon, under the SCN 6-11-2000 read with its corrigendum. The licensewise break up of duty proposed to be demanded as clarified in Commissioner s report dated 30-7-2001 is as under : License No. Duty demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he remaining two licences as stated in para 4.1 above) as against the show caused amount of ₹ 3,25,20,531/-. The applicant has sought for immunity from interest, penalty and prosecution. In this context, it is also pleaded that by the Finance Act of 2003-2004, the interest rate itself has been reduced to 15% with retrospective effect in respect of Notifications 149/95-Cus. dated 19-9-95, 80/95-Cus. dated 31-3-95, and 30/97-Cus. dated 31-3-97 which apply to imports under the licences involved in the proceedings. 5.0 The applicant was heard on 12-8-2002 and 24-3-2003, when Shri Lakshmi Kumaran, Advocate appeared for the applicant, while Shri Nazeer Khan S, Appraiser from Custom House appeared on behalf of Revenue. An Interim Order had been issued by the Bench on 8-11-2002, directing Revenue to work out the duty due proportionate to the extent of failure to meet the export obligation in terms of the advance licenses No. 2042504 dated 8-5-96 and 10000906 dated 23-6-97, pending a final view by the Bench on Revenue s comments on the various pleas raised in the application, as also in subsequent submissions of the applicant, on their failure to discharge the export obligation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign buyer failed to comply, and hence no further export was made resulting in shortfall in meeting the export obligation. 5.4 It is also contended that the entire materials imported have been used by the applicant only for the manufacture of export garments, that the remaining garments are lying in the applicant s factory and that the officials of JDGFT, Cochin have also inspected their (applicants) premises on 14-6-2000 and found that there is no misuse. With reference to export corresponding to realization of US $ 17,670, it is pleaded that the relevant SB No. 1494 dated 8-8-97 was against two advance licences viz. 10000858 and 10000906 and the documents in original were furnished to the Customs Deptt. with the first licence stated above for redemption. Accordingly, it is pleaded that the export entries were not logged in respect of licence No. 100096, which the applicant can get rectified now also. It is, therefore, requested that the export may be deemed valid and export obligation considered discharged to that extent. 6.0 Accordingly, the applicant contests the quantum of duty liability alleged in the SCN, and seeks review. It is prayed that even if export obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... user condition in terms of para 7.4 of the EXIM Policy, 1992-97, and condition No. (v) of the said Notification refers to discharge of export obligation by export of specified products, without any stipulation on realization of the export proceeds. It is also pleaded that even the definition of the phrase export obligation in the EXIM Policy does not refer to such realization of foreign exchange. Condition No. (3) of the licence, itself refers only to the nature of currencies in which export proceeds have to be realized, and does not place a precondition of realizing export proceeds in foreign exchange. The plea of the applicant broadly is that the Customs Exemption Notification 30/97 is not inter-linked with the provisions of the EXIM Policy and that exports per se should be deemed to be in discharge of export obligation, even when sale proceeds of exports are not realised. 6.2 As an alternate plea, and without prejudice to the above stand, the applicant has also contended that they were eligible for the benefit of Notification 32/97 dated 1-4-97 in respect of the subject goods. It is pleaded that the imported materials had been received only for job work and there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dbook of Procedure. It. is urged that as mentioned in para 7.4 of the Policy, a license is issued in terms of Policy and Handbook of Procedure and that even according to condition No. (2) of the license also, all provisions of Handbook and Procedure shall be applicable. 7.1 In response to the Interim Order dated 8-11-2002 directing Revenue to work out the duty liability proportionate to the extent of failure to meet the export obligation, Revenue has reported in relation to licence No. 2042504 that credit can, if at all, be given in the light of the specific directions of the Interim Order only to the export of 39,876 full set of suits and not to the additional 11,796 pants (alone) exported by the applicant. On this basis, the revised duty liability on account of the unfulfilled export obligation is worked out to ₹ 36,03,206/-. However, in regard to license No. 10000906 dated 23-6-97, the Revenue has reiterated that credit cannot be given even in respect of export corresponding to US $ 17,670 realized as export proceeds, as the said export is not endorsed in DEEC Book. Accordingly, Revenue has reiterated the recoverability of the entire duty liability in respect of import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability as under : Licence No. Duty liability 0005346 dt. 22-7-96 ₹ 33,42,344/- 10001008 dt. 23-7-97 ₹ 51,77,170/- 2042504 dt. 8-5-96 ₹ 36,03,206/- 10000906 dt. 23-6-97 ₹ 1,04,02,203/-* Total ₹ 2,25,24,923/- *(Duty liability originally demanded in the SCN read with corrigendum in respect of this licence is only ₹ 1,04,01,598/-. Revenue reports in their letter dated 28-5-2003 that the duty amount has been revised during recalculation). 8.0 The Bench has considered the pleas raised by the applicant, the rejoinder from the Revenue and the relevant records produced by both. 9.0 In regard to duty liability in respect of imports against license No. 2042504, the Bench is not persuaded to agree with Revenue s contention that Department can accept only the certificate of DGFT for discharge of export obligation. In respect of post 1995 licences Customs authorities are monitoring authorities for exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,419/-proposed to be demanded in the SCN and ₹ 20,76,793/- admitted by the applicant. Since duty is leviable only on goods imported in respect of which the conditions under relevant exemption notification are not complied with, and liability has been calculated only in respect of the materials imported and not utilized in the finished products and exported, the Bench does not find it necessary to get into debate regarding alterability of export obligation by the license holder on his own, without sanction from the license issuing authority. 10.0 In regard to license No. 10000906, the Bench does not agree with the basic plea of the applicant that the Import Policy and the Customs Exemption Notification are not inter-linked and should not be read together. It is reported by the Respondent Commissioner that Ministry of Commerce/DGFT decides the policy on export, including DEEC Schemes, and on the basis of the Policy, the Customs Department issues corresponding Customs Exemption Notifications to provide appropriate duty exemption envisaged in the Policy. It is an integrated exercise, with announcement of the Policy by Ministry of Commerce, and monitoring and implementation (f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port to GCI countries. Similar provision is available in para 11.2 of the Policy also. According to para 3(24) of the Import-Export Policy 1997-2002, export obligation means ---- the obligation to export the products covered by the license or permission in terms of quantity, value or both, as may be prescribed or specified by the licencing or competent authority . In addition, according to clause (iii) of para 7.4 of the said Policy, Advance licenses shall be issued in accordance with the Policy and Procedure in force and the date of issue of license and shall be subject to the fulfilment of a time bound export obligation and value addition as may be specified . The procedure referred to in Policy is available in the Handbook of Procedures. Para 7.25 of the Hand Book provides that The license holder shall furnish the following documents in support of having fulfilled the export obligation :- (i) Bank Certificate of Exports and Realisation in the form given at Appendix 25 or payment Certificate from the Project Authority in the form given in the Appendix 14B. In the case of Advance Intermediate Licenses and Special Imprest Licenses for supplies to the EPZs/EOUs/EHTPs/STPs, docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner of discharging of the said export obligation. 10.3 It is also observed that the applicant has referred to the decision of Hon ble Delhi High court in the case of Pioneer Silk Mills Pvt. Limited v. UOI [1995 (80) E.L.T. 507], confirmed by Supreme Court [2002 (145) E.L.T. A74], to plead against reading of the provisions of Hand Book of Procedure regarding manner of fulfilment into the Customs Notification 30/97 as the said provision is not specifically referred to in the said Notification. According to the applicant, in the above case before the High Court, the petitioner had challenged invoking of the penal provisions of Central Excise Rules for non-payment of Additional Duty of Excise under the Additional Duty of Excise (Goods of Special Importance) Act, 1997. It had been pleaded in the said case that under Section 3 of the Additional Duties Act, only the provision of Central Excises Act and Rules made there-under in relation to levy and collection of Excise duty are made applicable to the levy and collection of Additional Duty of Excise, and not the penal provisions. The Hon ble Delhi High Court had held that there is no mandate in the Additional Duties Act for levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port promotion scheme to another, because of denial of the benefits of one scheme, but verifying whether the conditions of exemption and export promotion scheme already extended and availed, are satisfied by way of exports and realization of export proceeds. Accordingly, the Board s instructions and the Policy provisions quoted by the applicant are also not relevant to the issue. 10.5 The Bench, therefore, concurs with the Revenue that the applicant has failed to establish complete discharge of export obligation in relation to licence No. 140906 dated 23-6-97 on account of their admitted non-realisation of export proceeds, excepting for the realization of US $ 17,670. However, the applicant would rightly be entitled to liquidation of duty liability proportionate to the export effected, in respect of which US $ 17,670 has been realized. As brought out in para 7.2 above, the Revenue itself has admitted in their report dated 28-5-2003 that the proportionate reduction on this account would be ₹ 4,63,147/- in terms of duty. Though the revised duty liability in relation to this licence has been worked out as ₹ 1,04,02,203/-, as mentioned in para 3.0 above, the SCN itself h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing terms and conditions : (i) The total duty liability due from M/s. Kitex Garments Limited is fixed at ₹ 2,20,61,171/-. The applicant has paid ₹ 1,15,63,990/-admitted in the application and ordered to be paid by the Admission Order No. 12/2001-Cus. dated 19-9-2001 of this Bench, and also a further sum of ₹ 5,65,952/- admitted by them voluntarily subsequent to the Admission Order. Thus, the total amount of ₹ 1,21,29,942/- already paid will be adjusted against the aforesaid settled duty liability of ₹ 2,20,61,171/-, and the applicant shall pay the balance of ₹ 99,31,229/- within 30 days of the receipt of this order, and immediately thereafter inform compliance to both this Bench and the Respondent Commissioner. (ii) M/s. Kitex Garments Limited shall pay simple interest at the rate of 10% per annum, and immunity is granted in terms of Section 127H(1) of the Customs Act, 1962 in excess of the said 10% per annum. The Respondent Commissioner shall work out and inform the applicant the amount of interest due from the date the above duty ought to have been paid till the date of payment, within 15 days from the date of receipt of communic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
