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2016 (11) TMI 303 - CESTAT MUMBAI

2016 (11) TMI 303 - CESTAT MUMBAI - TMI - Confiscation - Notification No. 31/97 dated 1.4.1997 - Penalty - Held that: - the said imports were not intended to be used for the export in respect of which the licence was obtained. Thus the goods are to be treated as imports made, other than under advance licence - Notification 34(RE-98) (supra) regarding floor price restriction becomes applicable to import. - Regarding valuation - merely because floor price has been fixed under ITC Policy, the v .....

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s been filed by M/s. Metalman Industries Ltd. and three others, viz. Shri Vijay Soni, Joint Managing Director, Shri Rajiv L. Soni, Chairman & Managing Director and Shri Mohan Jaykar, Director. M/s. Metalman Industries Ltd. were holding a licence for import of tin plate waste and in terms of the said licence, they were entitled to import under Notification No. 31/97 dated 1.4.1997. The appellant imported certain material duty free under the said licence. At the material time, DGFT Notificatio .....

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he manufacture of export products. The other material was also not used for purpose of manufacture of export products. Since the appellant also could not utilize the material imported against the advance licence towards manufacture of export goods, they paid the duty forgone along with interest and surrendered the special licence. Since the import of tin plate waste was not free, except when the same was imported at a CIF value of US$ 545 MT and above, the Revenue issued a notice seeking to invo .....

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Soni, Chairman & Managing Director and Shri Mohan Jaykar, Director. The appellant replied to the said notice dated 1.2.2000 vide their letter dated 11.12.2000. Subsequently on 17.1.2001 an addendum to the show cause notice was issued seeking to (i) recover duty on the difference in the floor price fixed by DGFT and US$ 300 (value assessed by Customs), (ii) the goods were sought to be confiscated under the provisions of Section 111(o) of the Customs Act also. Duty was demanded invoking the bo .....

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upply of tin plate blanks of the specified sizes and thickness ranging from 0.19 to 0.36 mm and quantity of 3200 MT @ US$ 495 per MT. The said order was confirmed by Som International Pte Ltd. on 14.4.1999 and delivery date was set to be before September 1999. On request of the appellant, Som International Pte Ltd. changed the date of delivery to 31st December 1999 vide their letter dated 16.4.1999. Thereafter on 10.5.1999, the appellant applied to Joint DGFT, Mumbai for grant of quantity based .....

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s signed by Shri Vijay Soni, Joint Managing Director. Subsequently, imports were made by the appellant and value of US$ 288 per MT was declared, but the same was enhanced to US$ 300 while assessment, though no duty was paid as the imports were under an advance licence. 2. Learned counsel for the appellant argued that the imported goods are not liable for confiscation under Section 111(d) of the Customs Act on the grounds that the same have been imported below the floor price notified by DGFT vid .....

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e above, he argued that confiscation under Section 111(d) is not sustainable in law. 2.1 The learned counsel further argued that the Notifications putting restrictions are in the nature of temporary statute and expired on 31.3.1997 with the expiry of policy as the same was issued for five years period from 1992 to 1997. In this regard, he relied on the decision of the Tribunal in the case of Ajay Industrial Corporation reported in 2006 (201) ELT 410. 2.2 He further argued that the imported goods .....

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s held that in case of failure to fulfil the export obligation under DEEC/EPCG licence will not render the goods liable to confiscation under Section 111(o) if the importers have paid duty and interest. He relied on the following decisions:- (i) Suncity Synthetics Ltd. vs. CC reported in 2001 (132) ELT 684; (ii) Paharpur Plastics vs. CC reported in 2002 (141) ELT 363; (iii) Touch Stone Mining vs. CC reported in 2004 (163) ELT 398; (iv) Maruti Udyog Ltd. vs. CC reported in 2001 (132) ELT 340. 2.3 .....

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the Hon ble Supreme Court in the case of Priya Blue Industries vs. CC reported in 2004 (172) ELT 145 (SC). He further argued that the proposal to enhance the value to US$ 545 is barred by limitation since there is no misstatement of facts by the appellant. He argued that at the time of import itself, the Revenue was aware of the DGFT floor price of US$ 545 and nothing prevented the Revenue from assessing the goods at US$ 545 at the time of import. He further argued that the price mentioned in t .....

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In these circumstances, he argued that the declared value cannot be rejected. 2.4 He further argued that the notice and the impugned order are silent on the role played by the three noticees on whom penalty has been imposed. He argued that none of these noticees dealt with the goods or in any way signed any of the documents (i.e. application for advance licence, bill of entry or bond etc.). 3. Learned AR argued that the appellant had entered into an agreement with M/s. Som International Pte Ltd .....

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with the clear intention to avoid the restriction imposed by the Exim Policy in the shape of floor price of the goods. 3.1 The learned AR argued that the goods have been disposed of by the appellant in the domestic market and have not been used by the appellant. The learned AR pointed out that Notification No.31/97 prescribes the following condition:- (vi) that exempt materials shall not be disposed of or utilized in any manner, except for utilization in discharge of export obligation, before th .....

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ed out that the goods have been imported from M/s. Macsteel Intl, South Africa, against L/C dated 5.3.1999. All the invoices for import documents are prior to the issue of advance licence and in six cases, invoice/LC are dated prior to the export order dated 16.4.1999. 3.2 The learned AR further pointed out that the appellant is regularly importing goods from M/s. Som International Pte Ltd. through Mumbai Custom House and has a long standing relationship with M/s. Som International Pte Ltd. 4. W .....

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of the identical thickness. In the instant case, the appellant had obtained the advance licence on the strength of the order of export of material of thickness 0.19 to 0.36 mm. The appellant imported material of 0.45 mm thickness, which could not have possibly been used for the manufacture of the export items. This sequence of events needs to be appreciated in the situation where there was a floor price restriction on the import of the said material. Import of the said goods was restricted unle .....

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er, except for utilization in discharge of export obligation, before the export obligation under the said licence has been discharged in full: Provided that Acetic Anhydride, Ephedrine and Pseudophedrine in respect of which the benefit of this notification is claimed shall be utilized by the importer in his own factory or in the factory of any other manufacturer indicated in the said certificate even after discharge of export obligation. In the current sequence of events, it is obvious that the .....

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