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2016 (11) TMI 465 - BOMBAY HIGH COURT

2016 (11) TMI 465 - BOMBAY HIGH COURT - TMI - Status holder in Star Export House - Whether the Appellate Tribunal is correct in holding that in terms of para 4.1.3 and para 4.1.5 of the Foreign Trade Policy 2004-2009 the appellants could have cleared the resultant products manufactured out of duty free inputs in the domestic market before fulfillment of the export obligation? - import of raw materials against advance licences - N/N. 43/2002-Cus dated 19th April, 2002 and 93/2004-Cus dated 10th S .....

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e Court held that the goods are liable to confiscation. The power of the customs authorities is held to be absolute. - Imposition of penalty u/s 114A - export obligation under the advance authorisation - Held that: - the assessee suppressed the actual consumption of raw-materials and undeclared consumption norms while applying for licences on ad-hoc norm basis. The allegation is of diversion of raw-materials imported duty free for the manufacture of finished goods in domestic market before f .....

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on any of the customs duties that are due from the appellant. - Appeal dismissed - decided partly in favor of appellant. - CUSTOMS APPEAL NO. 23 OF 2015 WITH CUSTOMS APPEAL NO. 5, 4, 6, 7, 11, 12, 13, 18, 19, 49, 51, 52, 53, 54, 55, 56, OF 2015 - Dated:- 27-10-2016 - S.C. DHARMADHIKARI & DR. SHALINI PHANSALKAR-JOSHI, JJ. Mr. V. Sridharan - Senior Advocate with Mr. Prakash Shah i/b. M/s. PDS Legal for the appellants. Mr. Pradeep S. Jetly for the respondents. JUDGMENT: [Per S.C. Dharmadhik .....

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n Trade Policy 2004-2009 (for short FTP ) the appellants could have cleared the resultant products manufactured out of duty free inputs in the domestic market before fulfillment of the export obligation. The parties referred to the facts in Customs Appeal No.23 of 2015 to be representative of all the appeals. We, therefore, take them seriatim. 2 The appellants are engaged in the manufacture and export of bulk drugs since 1996. In addition, the bulk drugs manufactured by the appellants are sold i .....

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proximately 252 advance licences for import of various products. Broadly, the following products were imported against advance licences. Sr.No. Input description Finished goods 1. Pen-Q 7 ACCA, Cefaclor, Cephalexin Monhydrate, 7 AVCA, 7 ADCA, 7ANCA 2. GCLE CEFIXIME 3. Pyridine and Methylene Chloride 7 ACCA, 7 ADCA, Cefaclor, Nimesulide 5 All advance licences involved in the present case have been issued in terms of para 4.1.1 of the Export Import Policy 2002-07 (Exim Policy) or under Para4.1.3 .....

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gainst advance licence; and /or b) Customs duty paid imported raw materials, and /or c) Raw materials from indigenous sources. 7 In view of common storage, handling, manufacture and sale for both export and domestic market, and activity being a continuous activity, it is possible that the exported goods are made using the indigenous raw materials and same final products manufactured out of the imported materials are sold in the local market in India. 8 None of the raw materials imported duty fre .....

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cise duty. In paragraph 8 of the Memo of Appeal in Customs Appeal No.23 of 2015, the details of the export turnover for the past five years of that appellant are set out. It is submitted that the appellants have been contributing substantial amount to the exchequer by way of customs duties, excise duties and service tax. The details of such contribution have been set out also by the appellants in paragraph 9. The case of the appellants is that for the purpose of manufacture of bulk drugs, the ap .....

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il, 2007, the appellants obtained various advance authorizations and imported raw materials without payment of duty. The goods were duly used in the manufacture of final products which were exported out of India towards fulfillment of export obligation. The appellants have fulfilled export obligations and obtained the Export Obligation Discharge Certificate (OBDC for short) from the Director General of Foreign Trade (DGFT for short) on some occasions. If this obligation is not fulfilled, then, t .....

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rizations where M/s. KDL Biotech Limited has been named as the supporting manufacturer. All the advance authorizations involved in the present case have been issued in terms of para 4.1.1 of the Export-Import Policy 2002-2007 (Exim Policy) and also under para 4.1.3 of the Foreign Trade Policy ( FTP for short) 2004-2009. The raw materials imported against advance authorizations were exempt under Notifications dated 19th April, 2002 (Notification No.43/2002-CUS) and 10th September, 2004 (Notificat .....

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o August 2007. The said investigation culminated into the issuance of show-cause notice F. No.DRI/MZU/INV-04/07-08- URL/3533 dated 24th April, 2009. 12 It is significant that DRI vide letter No. DRI/BZU/G/INV-04/07-08/4150 dated 14h May, 2009, intimated the DGFT also to initiate action against the appellants on the alleged misuse of the duty exemption scheme by the appellants. 13 In response to the said letter, the DGFT vide letter F. No.F-3/17/DRI/AM 07/ECA II/AD-229 dated 4th June, 2009 inform .....

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w cause notice proposed to demand interest, confiscate the goods and impose penalty on the appellants and officers/employees of the appellants. 15 Annexure-H to the show cause notice gives the breakup of the demand on the basis of various issues raised in the body of the show cause notice. 16 During the course of investigation, an amount of ₹ 3 crores has been paid by the appellants, a fact mentioned in paras 4 and 18 of the show-cause notice. 17 The learned Commissioner of Customs (Adjudi .....

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ods manufactured out of duty free materials imported against advance licence cannot be cleared into domestic market. b) Actual consumption of the manufacturer is efficient than specified in Standard Input Output Norm (SION) is violation of the para 4.28(v) of Handbook. c) Goods are liable for confiscation under section 111(d) & (o). d) Even though the goods are not available, fine is imposable. Relied upon in Weston Components Ltd. Vs. CC - 2000 (1) (115) ELT 278 (SC). e) Penalty under secti .....

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nfirms the demands as per the show cause notice and particularly Annexure-B onwards to the same. It is submitted that the demand raised in Annexure-B and B-1 to the show-cause notice pertains to fifteen advance authorizations. All such advance authorizations have been issued based on Standard Input Output Norms ( SION for short) published by the DGFT. Annexure B gives the break-up of the demand of ₹ 4,42,90,312/- month-wise and advance authorization-wise. It also gives the break-up of vari .....

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cause notice Annexure-wise, the case of the department with regard to each of these demands, that the provisions relating to advance authorization in the FPT or the Customs Notification do not bar the authorization holder from using the surplus quantity of the inputs for manufacture of resultant product cleared in the domestic tariff area. It is submitted that para 4.1 of the FTP states that the Duty Exemption Scheme enables duty free import of inputs required for export production. 20 With rega .....

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r s order dated 31st January, 2011, has not been accepted by the CESTAT on this point. 21 After inviting our attention to para 4.1.3 of the Policy 2004-2009, Mr. Sridharan would submit that the term physically incorporated only means that capital goods or unrelated inputs shall not be allowed as raw materials under the Advance Licence Scheme. Similarly, unconnected products which are not capable of being used should not be imported. Mr. Sridharan submits that, for example, for export of fabrics .....

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port product, it only refers to the description, quality etc. of the inputs which are allowed to be imported under the advance licence. It does not mean that the imported duty free materials to be actually used in the manufacture of final product exported. 22 This is also evident from para 4.12 of the Handbook, which reads as under : Exports/supplies made from date of EDI generated file number for an Advance Authorisation, may be accepted towards discharge of EO, shipping / supply document(s) sh .....

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s, the exports made from the date of receipt of an application for an advance licence by RA also will be taken into consideration for discharge of export obligation under the advance licence to be issued. In such cases, the raw material which will be imported under such advance licence would certainly be after the exports were made. In such a situation, the duty free imported material could not have been used at all for the manufacture of final products which were exported prior to such import. .....

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energy, catalysts as allowed to be imported duty free against advance licence. Relevant portion of para 48 of EXIM Policy (edition June 1992, page 2 of the Volume-I compilation) is reproduced hereunder : 48. An Advance Licence is granted for the duty free import of raw materials, components, intermediates, consumables, parts, spares including mandatory spares, packing materials and computer software. 26 A doubt was raised as to whether fuel, oil, energy and catalysts can also be imported duty fr .....

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lder is free to fulfill the export obligation out of indigenous raw materials. 28 The above submissions are supported by the decisions of the CESTAT in the case of CC (II) Vs. Zincollied (Ind.) Ltd. - 2014 (300) ELT 475 (T) (page Nos.1 to 3 of the Volume II compilation) 29 Even the CESTAT in the impugned order does not dispute this legal position. The CESTAT in paras 13 & 15 of impugned order refers to para 4.1.3 of the Policy and accepts the submissions of the appellants that the term physi .....

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e duty free materials in the domestic market and fulfilling export obligation by exporting resultant product manufactured from inputs obtained from indigenous sources. 25 Mr. Sridharan then went on to point out that prior to April 2000, the conditions of the Customs Notifications were stringent and provided that the imported duty-free raw materials against advance licenses shall be utilized for discharge of export obligation alone and no part thereof shall be disposed of in any other manner befo .....

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the Customs Notifications from April 2000 onwards were liberal and favoured the assessee. The earlier stringent conditions were departed from. The rigidity was given up. The Policy continued to be liberal as in the past. Mr. Sridharan then took us through the Customs Notification amended, specifically from April 2000, onwards and points out the salient features thereof, particularly as highlighted in the written submissions. Mr. Sridharan submits that the Policy was amended in April 2005 incorp .....

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ng to the Tribunal, the above amendment introduced in the Policy brings about a drastic change. It reverts the position as prevailing prior to April 2000. Mr. Sridharan submits that when the policy was always liberal than the Customs Notification, then, the legal position as held by CESTAT, namely, an enabling provision cannot be converted into / or read as a bar or prohibition would come to the aid of the appellants. Mr. Sridharan submits that the interpretation by the Tribunal ignores the word .....

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t. Mr. Sridharan submits that the answer in this case is obviously no. The resultant product manufactured from the duty-free materials imported against advance licence as replenishment of duty paid materials used in export resultant product, need not be exported and can be disposed of in the local market. This is what the amendment made in April 205 seeks to achieve. That is why this term option is introduced. Therefore, to clear all doubts, the Policy was amended in April, 2005. Additional opti .....

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. Sridharan submits that such amendment cannot apply to advance licence issued prior to April 2005. 26 Mr. Sridharan submits that customs duty is not payable when the quantity of inputs imported as per licence is as per SION. The quantity of inputs as per licence based SION is more than the quantity of inputs actually consumed due to efficiency in the process. For that purpose, he relies upon para 4.1 of the Policy, para 4.1.3 and un-numbered para 3 of para 4.1.3, para 4.7 of the Handbook of Pro .....

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quantity of input given in SION and as duly mentioned in the advance licence is considered by the Statute as required for manufacture of resultant product. It is not incumbent that the said quantity should be used in the manufacture of the resultant product exported. The entire quantity of the input mentioned in the advance authorization is permitted to be imported duty-free. No substantial duty can be demanded once the quantity to be exported as per the advance authorization is fulfilled. The c .....

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the appellants in utilizing the excess inputs imported as per SION in the manufacture of resultant product and cleared in the domestic market. The Handbook of Procedures cannot restrict the scope of the Policy or Customs Notification. In any event and alternatively, the demand based on para 4.28 (v) cannot be raised for licences issued prior to 13th May, 2005. Mr. Sridharan submits that alternate advance licence whose export obligation has been already fulfilled can be tendered for debiting the .....

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3 advance authorisations without payment of duty, availing benefit of Notification No.93/-04-Cus. The resultant product mentioned in these licences is Nimesulide. 28 The appellants had indicated (a) M/s. Mangalam Drugs and Organics Ltd., Vapi and M/s. Aarti Drugs Ltd, Tarapur as the co-authorisers. 29 According to the department, the appellants did not supply the said raw materials to the co-authorisers for manufacture of the resultant product. In other words, according to the department, the re .....

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horizations are 7ACCA, 7ADCA, Cefaclor, Cefdroxyl, Cephalexin Monohydrate. 31 For manufacture of all these resultant products, pyridine and methylene chloride are required. 32 In respect of these Advance Authorisations, the appellants have completed the export obligation in full. However, the appellants have not fully utilized the authorizations for import of the entire quantity of pyridine and methylene chloride. There is still balance left in these advance authorizations for import of these tw .....

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e mistake occurred and tendered the valid licence for debiting. 35 This is a case of substitution of the advance authorization number as given in para C-4 above in place of the advance authorization numbers mentioned in Annexure-D in the show cause notice. 36 Customs Appraising Manual, Vol.-II, Chapter-5, Part- 1, Para 18 supports the view, as under : 18. Ordinarily requests for transfer of entries are not entertained. However, in bonafide cases of error the customs any grant relief on merits on .....

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rs the goods. Bonafide errors in debits should be corrected in such cases. This will be allowed even when the two licences produced were issued in two different period and were governed by two different policies. 37 This is the view taken by the CESTAT in Gitanjali Gems Ltd. vs. Commissioner of Customs - Final Order No. A/508- 511/08/CSTB/C-II dated 14th August, 2008 (pages 43-53 of Volume II compilation). 38 Mr. Sridharan submits that the demand Annexure-F to the show-cause notice has been rais .....

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edit is admissible to the appellants. Therefore, at best, and without prejudice the sum of ₹ 1,60,74,569/- alone is payable by the appellants for non-fulfillment of shortfall in the fulfillment of export obligations of all the licences / authorizations involved in the present case. Mr. Sridharan then criticizes the confiscation of goods and submits that it is not at all possible in the present case. The goods in question have already been cleared. They are not available for confiscation. N .....

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tional Leather Cloth and relies on the judgment reported in Commissioner of Customs vs. National Leather Cloth 2015 (321) Excise Law Times 135. 39 With regard to penalty, Mr. Sridharan submits as under : 40 Penalty under section 114A is not imposable for non-fulfillment of export obligation of the advance authorization. 41 In such case, there is no short levy or non-levy of customs duty as contemplated in section 28 / section 114A of Customs Act, 1962. Demand in such case is pursuant to the bond .....

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Raj Dugar - 1992 (58) ELT 163 (SC), the Hon ble Supreme Court has held that section 111(d) is not applicable as the import was valid at the time of its making and was covered by a valid import licence, the subsequent cancellation of licence is of no relevance nor does it retrospectively render the import illegal. 44 In the case of the present appellants, the imports were valid and covered by the valid advance licence. Subsequent nonfulfillment or short fulfillment of export obligation or cleara .....

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t of export obligation and section 112 is not applicable in such case. 46 Reliance is also placed on the following decisions in support of the submission that penalty is not imposable. (i) Maruti Udyog Ltd. Vs. Commissioner of Customs -2011 (132) ELT 340 (T) (ii) Suncity Synthetics Ltd. Vs. Commissioner of Customs - 2001 (132) ELT 684 (T). (iii) Pattu Exports Pvt. Ltd. Vs. Commissioner of Customs, Chennai- 2007 (213) ELT 454 (T). 47 Failure to fulfill export obligation is only an inability to ac .....

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s, Kandla, 2015 (317) ELT 561. (iii) Arkema Catalyst India Pvt. Ltd. vs. Union of India, 2012 (276) ELT 206. (iv) C. L. Jain Woollen Mills vs. Union of India, 1995 (79) ELT 197. (v) Jaysynth Dyechem Ltd. vs. Commissioner of Customs (Export Promotion), Mumbai, 2001 (136) ELT 1429. (vi) Narendra Udeshi vs. Union of India, 2003 (156) ELT 819. (vii) Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi, 2003 (151) ELT 254. (viii) Commissioner of Customs (Import), Mumbai vs. Finesse Cre .....

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r of Customs, Nhava Sheva, 2001 (132) ELT 684. (xiv) Pattu Exports Pvt. Ltd. vs. Commissioner of Customs, Chennai, 2007 (213) ELT 545. (xv) Jaswal Neco Ltd. vs. Commissioner of Customs, Vishakhapatnam, 2015 (322) ELT 561. (xvi) Sonia Fisheries vs. Union of India, 1997 (90) ELT 22. (xvii) S. B. International Ltd. vs. Assistant Director General of F. T., 1996 (82) ELT 164. (xviii)Commissioner of Customs, New Delhi vs. C. T. Scan Research Centra (P) Ltd., 2003 (155) ELT 3. (xix) Union of India vs. .....

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ligation to pay duty. Therefore, there is no vested right in the appellant and availment of the benefit is conditional upon fulfillment of all the conditions or stipulations for such relaxation. 50 Mr. Jetly, therefore, supports the impugned order in its entirety. He would submit that the appeal raises no substantial question of law and should be dismissed. Mr. Jetly has taken us through the impugned order of the CESTAT and particularly the findings at para 11 page 91 of the paper book. He submi .....

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discussion on these issues and submits that the reasons assigned are cogent, satisfactory and by no means, the impugned order can be termed as perverse. He submits that all the five issues result in an ultimate finding of fact that there is no fulfillment of the export obligation. Rather all lapses are admitted. There is no factual dispute. The only answer provided by the appellant is that the goods are freely importable. That can hardly be said to be an answer for the appellant claims to be sat .....

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tion. It has been issued on the basis of claim filed by the appellant. The authorisation has been granted conditionally. The condition imposed is that the appellant will fulfill and comply with the Foreign Trade Policy (Exim Policy) and fulfillment of export obligation. Mr. Jetly has taken us through each of the drugs and products/goods regarding which the benefit has been availed of. He submits that the goods imported are duty free. They were raw materials and to be utilised in manufacture of t .....

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the desire of the appellant was to cash on and take advantage of the authorisation, then, their act of not fulfilling the terms and conditions of the authorisation would render them liable to all consequences in law. It is, therefore, the submission of Mr. Jetly that the present appeals do not raise any substantial questions of law. Assuming and having admitted them on the substantial questions of law as above, each one of them should be answered against the appellant and in favour of the Revenu .....

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how cause notice and copy of which is to be found at Annexure 'C' to the paper book came to be issued on investigation by the officials of the Directorate of Revenue Intelligence, somewhere in 2007. These officials were of the opinion that there is a violation of Notification Nos. 43/2002-Cus dated 19th April, 2002 and 93/2004-Cus dated 10th September, 2004 in import made under the cover of this authorisation. The statements of various officials of the appellants were recorded. The show .....

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the customs duty to the tune of ₹ 14,53,74,294/-. 54 It is the case of the Revenue that the appellant is a public limited company and it has manufacturing units in the State of Gujrat. It is having godowns at Bhiwandi District Thane in Maharashtra. The company is engaged in the manufacture of various bulk drugs and sells its products both in international as well as local markets. The company avails various export incentive schemes like DEEC, DFRC and DEPB. There was a specific information .....

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facturing plants, godowns etc. has been set out. It is claimed that various incriminating documents, laptop computers and P.Cs were seized from these premises. The documents, which were withdrawn from these premises during the course of searches revealed certain vital facts and as set out in the show cause notice. Thereafter, the duty liability, which was provisionally worked out, is referred. From para 5 onwards, the show cause notice refers to the gist of the statements recorded and then, what .....

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d it is stated that the details of duty free imports made under each licences were verified from the endorsements made by the respective customs port on the copies of the advance licences. As regards the exports made against the export obligation, the same was verified from the copies of the shipping bills and the computer printout obtained from the said company. On verification of the duty free imports made by the company from 1st April, 2003 onwards, it is alleged that it appears that though u .....

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ificates issued by the licencing authority. After setting out the details of these licences obtained during the relevant period and their present status and drawing the summary thereof, it is alleged that in many cases, the company has failed to fulfill their export obligations though duty free imports of inputs had been effected by them as per the licences. Investigation in the case revealed that in addition to non fulfillment of export obligation, in many cases, they had also failed in applyin .....

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ation No. 93/2004-Cus dated 10th September, 2004 as amended from time to time. There is failure to maintain the proper accounts of consumption and utilisation of the imported goods in the proforma given in Appendix 18 of Handbook Volume No. 1. 56 Para 6.2 proceeds on the basis that the various inputs and imported duty free under the above notification were utilised for manufacture of various products, but instead of exporting these final products, as per the conditions of advance licences as als .....

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purchased from local manufacturers. That is how in many of the finished products, they used common raw materials for adjusting the short fall and the modus operandi has been detailed in the show cause notice. In this lengthy show cause notice concerning each product and thereafter referring to the specific terms and conditions of the relevant notifications, the statutory provisions, it is alleged that there is a failure to discharge the duty liability rendering the company and its officers in-ch .....

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eposit customs duty on unutilised imported raw materials, therefore, no action as per the FTP and the Foreign Trade Act is warranted. The endorsement is that the enforcement action against the appellant and M/s. KDL Biotech Limited is dropped by the officer of the Foreign Trade. This is an endorsement and remark, which has been recorded in a letter dated 4/5th June, 2009. Prior to the show cause notice, on 7th February, 2008, the company tried to clarify certain aspects and which emerged during .....

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et. The goods imported under the advance authorisation scheme have been used fulfilling actual user condition and the resultant goods were manufactured and the same were disposed of. The advance licence/authorisation can be obtained even for the replenishment of the goods which were used for the export product, which has been permitted from the day one of the issuance of export import policy/Foreign Trade Policy. The attention of the Revenue was invited to para 4.12 of the Handbook of Procedures .....

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s, either in the paras of FTP or the provisions of notifications issued under Customs Tariff Act, 1975, have been violated. In this detailed letter on various issues and highlighted above by Mr. Jetly, certain clarifications were issued. Then, on that very date, the Assistant Director of Revenue Intelligence was requested to condone the error made by the company by debiting wrong licence against import of Methylene Chloride and Pyridine for export product Nimesulide. The entire correspondence is .....

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are forming part of the paper book and the summary of which is contained in the show cause notice and the reply, what we have to essentially focus our attention to are the two notifications. 60 The notifications are to be found in a compilation, of two volumes placed on our record. Customs Notification No. 43 of 2002 dated 19th April, 2002 is at page 55 of Volume I of this compilation. That reads as under:- Notification No. 48/99-Cus, dated 29-04- 1999 as amended by Notification No. 90/99- Cus. .....

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of export obligation. - In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts articles imported into India, against an Annual Advance Licence from whole of the anti-dumping duty leviable thereon under Section 9A of the Customs Tariff Act, 1975 (51 of 1975), subject to the condition that the exempt articles shall not be disposed of or .....

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ted 11-6-1999] _________________ GENERAL EXEMPTION NO. 89A Exemption to imports against Advance licence issued under Duty Exemption/Remission Schemes from whole of the customs duty, additional duty, safeguard duty and anti-dumping duty. - In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials imported into India, against an Ad .....

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namely:- (i) that the description, value and quantity of materials 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: (ii) that where import takes place after fulfilment of export obligation, the shipping bill number(s) and date(s) and quantity and FOB value of the resultant product exported are endorsed on the said licence: Provided that where import takes place before fulfilment of export obligation .....

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pecified in this notification have not been complied with, together with interest at the rate of fifteen per cent per annum from the date of clearance of the said materials : Provided that bond shall not be necessary in respect of imports made after the discharge of export obligation in full; (iv) that the imports and exports are undertaken through seaports at Mumbai, Kolkata, Cochin, Magdalla, Kakinada, Kandla, Mangalore, Marmagoa, Madras, Nhava Sheva, Paradeep, Pipavav, Sikka, Tuticorin, Visak .....

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ighi (Pune), Vadodra, Dauladtabad, (Wanjarwadi and Maliwada), Walunj (Aurangabad), Anaparthy (Andhra Pradesh), Salem, Malanpur, Singanalur, Jodhpur, Kota, Udaipur, Ahmedabad, Bhiwadi, Madurai, Bhilwara, Pondicherry and Garhi Harsaru or through the Land Customs Station at Ranaghat, Singhabad and Raxaul: Provided that the Commissioner of Customs may by special order and subject to such conditions as may be specified by him, permit import and export from any other Seaport/Airport/Inland Container D .....

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n Advance Intermediate Licence holder shall discharge export obligation by supplying the resultant products to ultimate exporter in terms of sub-para (b) of para 4.1.1 of the said Export and Import Policy; (vi) that the importer produces evidence of discharge of export obligation to the satisfaction of the Assistant commissioner of Customs or Deputy Commissioner of Customs within a period of 30 days of the expiry of period allowed for fulfilment of export obligation, or within such extended peri .....

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er binding themselves jointly and severally to comply with the conditions specified in this notification; and (b) exempt materials are utilised in the factory of such supporting manufacturer for discharge of export obligation and the same shall not be transferred or sold or used for any other purpose by the said Merchant Exporter. 2. Where the materials are found defective or unfit for use, the said materials may be re-exported back to the foreign supplier within three years from the date of pay .....

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rity means the Director General of Foreign Trade appointed under Section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorised by him to grant a licence under the said Act. (iii) Materials means - (a) raw materials, components, intermediates, consumables, catalysts, computer software and parts which are required for manufacture of resultant product; (b) mandatory spares within a value limit of 10 per cent of the value of the licence which are require .....

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7, which reads thus:- GENERAL EXEMPTION NO. 89H Exemption to imports under Advance Licence. - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials imported into India against an Advance Licence issued in terms of paragraph 4.1.3 of the Foreign Trade Policy (hereinafter referred to as the said licence) from the whole of the d .....

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e time of clearance for debit; (ii) that where import takes place after fulfilment of export obligation, the shipping numbers(s) and date(s) and quantity and FOB value of the resultant product are endorsed on the said licence: Provided that where import takes place before fulfilment of export obligation, the quantity or FOB value of the resultant product to be exported are endorsed on the said licence; (iii) that the importer at the time of clearance of the imported materials executes a bond wit .....

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f the said materials: Provided that bond shall not be necessary in respect of imports made and the discharge of export obligation in full; (iv) that the imports and exports are undertaken through seaports at Mumbai, Kolkata, Cochin, Magdalla, Kakinada, Kandla, Mangalore, Marmagoa, Chennai, Nhava Sheva, Paradeep, Pipavav, Sikka, Tuticorin, Visakhapatnam, Dahej, Mundhra, Nagapattinam and Okha, Jamnagar and Muldawarka or through any of the airports as Ahmedabad, Bangalore, Bhubaneswar, Mumbai, Kolk .....

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Singanalur, Jodhpur, Kota, Udaipur, Ahmedabad, Bhiwadi, Madurai, Bhilwara, Pondicherry and Garhi Harsaru, Bhatinda, Dappar (Dera Bassi), Chheharata (Amritsar), Karur, Miraj, Rew..., Bhusawal, Jamshedpur, Surajpur and Dadri or through the Land Customs Station at Ranaghat, Singhabad and Raxaul, Jogbani, Nautanva (Sonauli), Petrapole and Mah..pur Provided that the Commissioner of Customs may, by a Public Notice and subject to such conditions as may be specified by him, permit import and export from .....

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ise Rules, 2002 has not been availed: Provided that an Advance Intermediate Licence holder shall discharge export obligation by supplying the resultant products to ultimate exporter in terms of Paragraph 4.1.3 (b) of the foreign Trade Policy; (vi) that the importer produces evidence of discharge of export obligation to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within a period of 30 days of the expiry of period allowed for ful .....

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hall be executed jointly by the merchant exporter and the supporting manufacturer binding themselves jointly and severally to comply with the conditions specified in this notification; and (b) exempt materials are utilised in the factory of such supporting manufacturer for discharge of export obligation and the same shall not be transferred or sold or used for any other purpose by the said merchant exporter. 2. Where the materials are found defective or unfit for use, the said materials may be r .....

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nt of India in the Ministry of Commerce and Industry, No. 1/2004 dated the 31st August, 2004; (ii) Licensing Authority means the Director General of Foreign Trade appointed under Section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorised by him to grant a licence under the said Act. (iii) Materials means - (a) raw materials, components, intermediates, consumables, catalysts, and parts which are required for manufacture of resultant product; (b) ma .....

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xemption No. 89 from anti-dumping duty to import against annual advance licence when utilised in discharging export obligation vide Notification No. 75 of 1999- Cus dated 11th June, 1999 and there is a General Exemption No. 89A to imports against advance licence issued under Duty Exemption/Remission Schemes from whole of the customs duty, additional duty, safeguard duty and anti-dumping duty. In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962, the Centr .....

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dments thereto. 63 We find that firstly, there is an obligation to produce, before the proper officer of Customs, at the time of clearance or debit, the licence and secondly, the proof that the description, value and quantity of materials imported are covered by this licence. Another condition is that whether import takes place after fulfillment of export obligation, then, Condition No. (ii) of this notification has to be complied with and the proviso to this condition would indicate that whethe .....

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n respect of imports made after discharging all export obligations in full. Then, the exemption is on the condition that the imports and exports are undertaken through seaports specified in clause (iv) and proviso to this clause provides that the Commissioner of Customs may, by special order and subject to such conditions, as may be specified by him, permit import and export from any other seaport/airport/inland container depot through any land customs station. Condition (v) says that the export .....

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diate licence holder shall discharge export obligation by supplying the resultant products to ultimate exporter in terms of sub-para (b) of para 4.1.1 of the said Exim Policy. Condition No. (vi) obliges production of evidence so as to prove discharge of export obligation to the satisfaction of the authority mentioned therein, within the period of 30 days of the expiry of the period allowed for fulfillment of export obligation or within such extended period as the authority may allow. Condition N .....

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f Procedures relevant for standard input and output norms is also compiled and para 4.1.3 of the Foreign Trade Policy deals with the advance licence. The advance licence can be issued to manufacturer exporter or merchant exporter tied to supporting manufacturer for physical exports, including exports to SEZ and/or for intermediate supplies and/or to the main contractor for supply of goods to the categories mentioned in para 4.1.3 (iii) of the FTP dealing with advance licence. This advance licenc .....

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und in Exim Policy and Handbook of Procedures. Chapter 7 deals with Duty Exemption/Remission Scheme and what it speaks of is issuance of advance licence under the Duty Exemption Scheme for allowing import of inputs which are physically incorporated in the export product and that also speaks of issuance of such licence for its physical exports, intermediate supplies and deemed exports. For physical exports, advance licence can also be issued on the basis of annual requirement in respect of export .....

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eemed exports are exempted from payment of the basic customs duty, surcharge etc. The licences are issued and to the categories of persons mentioned in para 7.3(i) and (ii). They shall and/or materials imported thereunder shall not be transferable even after completion of export obligation. However, in exceptional cases, the materials may be allowed to be transferred on merits by ALC. 66 Chapter 7 of a prior Exemption Policy 1997-2002 speaks of transferability. It permits transferability after c .....

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available in case of material imported against advance licence with actual user condition, as appearing at page 32 of the paper book and the condition imposed for exemption vide clause (vii), namely, exempted materials shall not be disposed of or utilised in any manner except for utilisation in discharge of export obligation or for replenishment of such materials and the materials so replenished shall not be sold or transferred to any other person. 68 The argument and essentially canvassed befo .....

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be utilised for discharge of export obligation and no part thereof shall be disposed of in any other manner before the export obligation is discharged. The condition now is that the advance licence and the materials shall not be transferred or sold. There is no condition that the resultant product manufactured from the materials imported against advance licence cannot be disposed of before export obligation under the said licence has been discharged. Thus, there is no violation of any of the con .....

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mported. Thus, the regime after 1st April, 2000 is practicable and workable. The tribunal, however, has relied upon para 4.1.5 of the FTP, which para came in by amendment in April, 2005. The tribunal relied upon this to hold that the pre-April, 2000 position is brought back. In that also, according to the appellant, the tribunal failed to note that para 4.1.5 speaks of an option, which the licencee has, of disposing of the product manufactured out of duty free inputs, once export obligation is c .....

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t to the said unit, no Pencillin-G or goods manufactured from the said Pencillin-G were found in the manufacturing unit. This implied that the goods manufactured out of the said Pencillin-G have been sold in the domestic market. This fact has also not been disputed by the appellant. They also do not dispute that export obligation was yet to be fulfilled. The argument of the appellant was noted and mainly that the Customs notifications relating to advance licence do not require that the duty free .....

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e, the tribunal arrived at a conclusion that the argument of the appellant has no substance, if the understanding of the Revenue is clarified. Thereafter, the tribunal, in para 13 understood the fact that the Pencillin-G imported was required for the manufacture of export products and would, therefore, be physically incorporated in the export product. The tribunal concluded that the appellant has sold the product so manufactured in domestic market before export obligation was complete and this i .....

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n, the tribunal found that the condition that imported inputs alone should be used for manufacture of products to be exported or the inputs should not be used for domestic market prior to completion of export obligation is not the condition in the notification. Therefore, necessarily the export obligation should be completed using the imported inputs alone is not sustainable. In that regard, the tribunal relied upon the condition sheet attached to the authorisation and particularly that the expo .....

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tion sheet attached to the licence/authorisation that exempted material is required to be utilised in accordance with the Export Import Policy and relevant customs notifications would mean that the exemption available is to materials imported in to India against an advance licence issued in terms of subparas (a) and (b) of para 4.1.1 of the Export Import Policy. Hence, all the conditions of the export import policy/FTP are applicable for grant of exemption. We do not think that this conclusion o .....

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iled submissions of both sides and found that admittedly, the raw material imported was far in excess of the required quantity of the appellant. This fact was not brought to the notice of the licencing authorities. Therefore, they could have issued the licences as per the requirement. Even after duty free importation, the appellant has neither made additional exports nor paid the customs duty. The details were suppressed and came to light during the investigation. The reasoning in para 25 procee .....

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and by accepting the arguments of the Revenue's representative. 72 We also do not find any substance in the contention of Mr. Sridharan for all that he was seeking to urge is that the entire quantity of inputs mentioned in the advance authorisation is permitted to be duty free. No Customs duty can be demanded once the quantity to be exported as per advance authorisation is fulfilled. Mr. Sridharan then tries to urge that materials have been defined in the notification itself, as raw material .....

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again, revolve around para 4.8 of the Handbook of Procedures. It is submitted that it is applicable only in case of default. There is no default of the appellants in utilising the excess inputs imported as per SION in the manufacture of resultant product and clearing it in domestic market. 74 The tribunal considered this aspect of the matter and from paras 21 onwards, noted the contentions of the assessee. In para 23, the tribunal noted the argument of the special counsel appearing for the Reve .....

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imported material nor has it effected any additional exports. The detailed arguments of the special counsel appearing for the Revenue, on this point, are noted in paras 23 and 24. Thereafter, in para 25, the tribunal found that it is undisputed that the rawmaterial imported was far in excess of that required by the assessee. This fact was not brought to the notice of the licencing authorities, so that they could have issued the licences as per the actual requirement. Even after the duty free im .....

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FTP/Handbook of Procedures, therefore, this is an integral part of the scheme and we cannot segregate or separate it from each other. 75 The further argument on behalf of the assessee that the provision tries to restrict the FTP is also rejected and we do not find any substance in the argument of Mr. Sridharan. The tribunal has rightly understood the issue to mean that import of duty free raw-materials is permitted for production of such goods which are to be exported. These are materials, whic .....

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raw-materials, namely Pyridine and Methylene Chloride were not utilised to manufacture the export goods. The export product was manufactured from some other items/raw-materials, which were procured domestically. The imported duty free raw-materials Pyridine and Methylene chloride were used in the manufacture of other goods. These goods were, then, cleared in domestic area. The argument of the assessee was that this export product can be manufactured by using alternate inputs. These alternate inp .....

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of licences/advance authorisations. Reliance was placed upon an order passed by the tribunal in the case of Ajay Kalsi vs. Commissioner of Customs, reported in 2005 (185) ELT 209. 77 Mr. Sridharan's arguments are summarised in paras C.1 to C.11 of the written submissions. 78 The Revenue's arguments and which have been reiterated before us are that there is an admission that the imported duty free raw-materials were not used in the manufacture of export product Nimesulide. It was also arg .....

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nted out in the Revenue's contention as noted in para 28 of the tribunal's order. Special emphasis was that the two rawmaterials can be imported easily. Their import is free and without any licence. Advance licences/authorisations have been issued only for the purpose of exemption from customs duty and there is, therefore, an obligation to use the imported goods as per the conditions of the notifications for the manufacture of main product and clearance thereof. Earlier, the advance auth .....

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y were not utilised in execution of the export order. Had the investigation not been carried out, the assessee would have escaped with the violation. The tribunal also noted that the advance licences/authorisations were issued as per the declaration of the assessee and the method adopted and noted as above continued for five years. It is now that a request is made for debiting other licences as per Customs Appraising Manual. It is in these circumstances that the tribunal rightly agreed with the .....

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8) ELT 626. Even with regard to the demand of duty of ₹ 4,01,80,481/-, as per Annexures F-1 to F-12, F-13 to F-22, F-41 and F-43 and also demand of ₹ 1,69,63,689/- covered by Annexures F-23 to F-40, the tribunal assigned the same reasons. The excess raw-materials imported duty free having not been utilised as above, the tribunal found that the export obligation discharge certificate is yet to be obtained. The investigation started in 2007 and seven years are over. The items of export .....

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re the DGFT. To our mind, the calculations as made in para D.3 of the written submissions by the assessee cannot be accepted. We also do not find that such a plea was raised before the tribunal. If the customs duty payable is ₹ 3,97,65,602/-, according to the assessee, then, we do not find any warrant for now urging that since the request before the DGFT noted above is pending, there is an element or component of non cenvatable customs duty of ₹ 1,60,74,569/- and that alone is payabl .....

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idharan then submits that the impugned order also upholds the confiscation of goods, imposition of fine and penalties. That is clearly impermissible for confiscation of goods not available with Customs is not permissible in law. There cannot be, therefore, redemption fine as well. 82 The tribunal has considered this aspect from paras 36 to 38. It has also noted the contention that section 111(d) of the Customs Act, 1962 is applicable only when the goods are otherwise prohibited or restricted for .....

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d. vs. Commissioner of Central Excise and Customs, reported in 2009(235) ELT 623 and that of this court in the case of Commissioner of Customs (I) Mumbai vs. Finesse Creation Inc, reported in 2009 (248) ELT 122 is noted. 84 Equally, the Revenue relied upon two judgments, one in the case of Sheshank Sea Foods (supra) and Weston Components Ltd. vs. Commissioner of Customs, reported in 2000 (115) ELT 278, Where, the Hon'ble Supreme Court held that redemption fine is imposable even after release .....

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para 39 and held that the assessee in this case has not imported goods under free importability. They have imported the goods under advance licences/authorisations which have their own benefits and obligations, restrictions and prohibitions. Thus, the benefit comes with the obligation, restriction and prohibition and all of them are interlinked. The assessee cannot be permitted to avail the benefit and when it comes to obligation, restriction and prohibition, to rely on the free importability o .....

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tedly, the goods were released on an application made by the assessee and on execution of a bond. Therefore, if subsequently it is found that the import was not valid or that there was irregularity which would entitle the customs authority to confiscate the goods, then, mere fact that the goods were released on the bond being executed would not take away the power of customs authority to levy redemption fine. 88 In the present case, the confiscation has been ordered under sections 111(d) and 111 .....

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, they can be confiscated. The Revenue argued before us that confiscation even by resorting to this clause of section 111 is permitted, however, what we have found from para 38 of the tribunals order, which notes the Revenue's argument that its special counsel did not at all refer to section 111(d) nor relied upon it. In the facts and circumstances, only clause (o) of section 111 of the Customs Act, 1962 was relied upon. 90 Yet, the tribunal holds that both clauses are applicable. We do not .....

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able. In Weston Components Ltd. (supra), there was a seizure and provisional release against the bond undertaking to produce the goods. That is how the redemption fine could have been imposed. 91 Mr. Shridharan would urge that in the present case, redemption fine was imposed even though there was no seizure and the goods were already cleared. 92 In the case of Sheshank Sea Foods (supra), the facts were that one M/s. Kamath Packaging Limited filed a writ petition in the High Court of Karnataka. T .....

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t had been imported by the appellant Sheshank Sea Foods Pvt. Ltd. under advance licences granted to them under the duty exemption scheme. The argument of the Customs was that the raw-materials had been imported without payment of duty by availing of benefit of Exemption Notification No. 116 of 1988 dated 30th April, 1988. The terms and conditions thereof have been violated by the appellants. The search and seizure operation in this behalf was, therefore, within their powers. 93 The Hon'ble S .....

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pellants' advance licences which incorporated the terms of the said Exemption Notification. Only the licensing authority had the jurisdiction to investigate the alleged violations. The Duty Exemption Scheme under which the licences had been issued was a code by itself and excluded any investigation by the Customs authorities. The bond that had been furnished by the appellants pursuant to the licences also provided for action by the licensing authority. 5. Our attention was drawn by learned C .....

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the prescribed export obligation within thepermitted time, the licensing authority shall initiate action against the licence-holder on the lines indicated in Chapter XIX of the hand Book of Procedures, 1988-91. this shall, however, be without prejudice to any other action that may be initiated by the Customs authorities for recovery of Customs duty or other duties and interest thereon under Section 142 of the customs Act, 1962. Learned Counsel drew attention to the Hand Book of Procedures, April .....

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ed Counsel's submission, these provisions of the Import & Export Policy and the Hand Book of Procedures showed that it was only the licensing authority which could investigate alleged cases of domestic sale of exempt material and the jurisdiction of the Customs authorities to do so was ousted. 6. Learned Counsel placed reliance upon a communication to all Collectors of Centrral Excise issued by the Central Board of Excise & Customs on 13th May, 1969, on the subject of whether, in the .....

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vened, it cannot be said that any condition of exemption is contravened. 7. For the reasons stated above, the Ministry of Law have advised that it may not be possible to take action under Section 111(o) with respect to the conditions of the licence relating to the use of goods after they are cleared from the Customs Charge. 8. Section 111(o) is the sheet-anchor of the respondents' case. It reads thus: 111. confiscation of improperly imported goods, etc. - The following goods brought from a p .....

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liable to confiscation. The case of the respondents is that the goods imported by the appellants, which availed of the said exemption subject to the condition that they would not be sold, loaned, transferred or disposed of in any other manner, had been disposed of by the appellants. The Customs authorities, therefore, clearly had the power to take action under the provisions of Section 111(o). 10. We do not find in the provisions of the Import and Export Policy or the Hand Book of Procedure issu .....

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1969 refers to the breach of the condition of a license and suggests that it may not be possible to take action under Section 111(o) in respect thereof. It is true that the terms of the said Exemption Notification were made part of the appellants' licences and, in that sense, a breach of the terms of the said Exemption Notification is also a breach of the terms of the license, entitling the licensing authority to investigate. But the breach is not only of the terms of the license; it is also .....

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emption is subject to a condition. If that condition is not observed, the Hon'ble Supreme Court held that the goods are liable to confiscation. The power of the customs authorities is held to be absolute. In these circumstances, we do not find that the appellants can escape from the judgment in the case of Sheshank Sea Foods Pvt. Ltd. (supra). 95 We do not think that the judgment in the case of National Leather Cloth (supra) can assist the appellants any further. We, therefore, set aside the .....

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levy of duty in certain cases.- Where the duty has not been levied or has not been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty of interest, as the case may be, as determined under sub-section (8) of section 28 shall, also be liable to pay a penalty equal to the duty or interest so determined .....

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enalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty or interest as reduced or increased, as the case may be, shall be take .....

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munication of the order by which such increase in the duty or interest takes effect : Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. Explanation.- For the removal of doubts, it is hereby declared that- (i) the provisions of this section shall also apply to cases in which the order determining the duty or interest under sub-section (2) of section 28 relates to notices issued prior to the date on which the Finan .....

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d on the main appellant, namely, the company. The violation and breach of law is highlighted once again in that regard. In para 39 of the tribunal's order, this fact has been dealt with. It is evident that without adverting to section 114A and interpreting it, imposition of penalty has been upheld. Section 114A deals with the penalty for short levy or non levy of duty in certain cases. Where the duty has not been levied or has been short levied or the interest has not been charged or paid or .....

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on deals with a situation where the duty has not been paid or has been short levied etc. for any reason other than the reason of collusion or any wilful misstatement or suppression of facts, whereas sub-section (8) deals with a situation where the proper officer after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determines the amount of duty or interest due from such person not being in excess of the amount spe .....

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ment of interest or its part payment or erroneous refund, by reason of collusion or any wilful misstatement or suppression of facts by the importer or exporter or agent or employee of the importer or exporter would arise within the meaning of sub-section (4) of section 28. 99 The impugned order does not indicate as to what is the act and deliberately committed attributable to the Assessee. It is only stated that the assessee suppressed the actual consumption of raw-materials and undeclared consu .....

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alse. It is also held that export obligation in large number of licences is yet to be completely fulfilled even though the period is over long back. That is why the penalty has been imposed under section 114A of the Customs Act, 1962. That is upheld. 100 We are of the view that the tribunal has mixed up these issues. Once the penalty under section 114A is for short levy or non levy of duty in certain cases and a determination thereof is contemplated by section 28, then, unless and until the trib .....

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the tribunal's order to uphold the imposition of penalty. The imposition of penalty should have been upheld by clearly outlining as to whether that follows the determination of the quantum of duty payable for reasons attributable to the appellant company within the meaning of sub-section (4) of section 28 of the Customs Act, 1962. Thereafter, it should have been held that the determination under sub-section (8) of section 28, therefore, was in tune and consistent with the finding of non lev .....

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ed duty free for the manufacture of goods sold in the domestic market before fulfillment of export obligation is the foundation for imposition of such penalty or any suppression about actual consumption of raw-materials or importing excess raw-materials free of customs duty and diverting it for production of goods which in turn are sold in domestic market or non utilisation or physical incorporation of the imported raw-materials in the production of goods exported is the reason for imposing pena .....

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d cannot be upheld. We do not lay down any general principle, but confine our findings to the facts and circumstances of the present case. In the facts and circumstances of the case, clarity was required and consistent with the deliberate or intentional act attributable to the assessee, the penalty should have been imposed. That having not been done, we set aside the penalty imposed under section 114A of the Customs Act, 1962. We also set aside the same for we have not agreed with the tribunal w .....

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not find this argument to be sound for it is not some business forecast which had gone haywire or is upset, but is a clear act attributable within the meaning of clause (a) of section 112 of the Customs Act, 1962. That in the present case has been amply clarified. There was a confiscation of goods and which confiscation is traceable to clause (o) of section 111 of the Customs Act, 1962. That attracts the penalty under clause (a) of section 112 of the Customs Act, 1962. In the present case, we ha .....

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Logistic. The penalty as imposed under the order-in- original dated 31st January, 2011 has been considerably reduced and brought down from ₹ 4 crores each to ₹ 50 lacs each in the case of Suresh Mandhana and Anwar Patel. It has been maintained in the case of Mehul Parikh and Mr. Yogesh Parikh. That is because of their position and status in the company and their direct knowledge of the state of affairs in relation to fulfillment of the export obligation and for that purpose, procure .....

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. Reported in 2015 (317) ELT 561. That was a case where the tribunal came to the conclusion that VVF applied for and was granted advance licence for import of duty free raw-materials for consumption thereof for manufacturing of final products for export purpose. On an intelligence gathered, the Revenue was of an impression that the company has imported Palm Fatty Acid Oil, which attracts duty and is not covered under the licences granted to the appellant. The finding was also arrived at that thi .....

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the learned senior counsel appearing for the assessee relied upon paras 11.1 and 11.2 of this order. 106 The finding in para 11 is consistent with the view taken by the CESTAT in this case and upheld by us. The argument based on para 11.1 is that a merchant exporter, who gets his goods manufactured from a supporting manufacturer is barred from using the duty free material for purposes other than discharge of the export obligation while for a manufacturer exporter there is no such stipulation. T .....

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para 11.3, yet, once we have rendered our independent opinion and by analysing all the relevant documents, including the notification, then, this disagreement or divergence in the tribunal's views need not detain us. 107 Then, Mr. Sridharan relied upon the view taken in the case of Arkema Catalyst India Pvt. Ltd. vs. Union of India, reported in 2012 (276) ELT 206. That was a case where the petitioner before the High Court imported raw-materials, which were to be used in the manufacture of g .....

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icy, the petitioner, in respect of the balance amount of inputs, is not entitled to exemption. The Union of India (Customs) demanded duty on such inputs on the ground that the manufactured goods contain less quantity of inputs. It is in regard to such a controversy that the findings in paras 4 to 7 have been rendered. Therefore, it was not open for the Customs/Union of India to go behind the licence and seek to recover anything on the basis noted above. We do not think that this judgment is a pr .....

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onclusion that the appellant before it, namely, Jaswal Neco Ltd. did not divert the goods meant for export to the domestic tariff area. The court was satisfied that the market considerations made it difficult, if not impossible, for the appellant to fulfill its export obligations. Therefore, the penalty imposed was set aside. That was in peculiar facts. The facts are that the appellant before the Hon'ble Supreme Court of India had furnished a bond containing an undertaking to pay duty on imp .....

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rtially allowed by the tribunal. The concession noted in para 8 of the' order of the Hon'ble Supreme Court of India reveals that there was never any dispute raised about failure to fulfill the export obligation. Therefore, the exemption could not have been claimed. Thus, the liability to pay duty was conceded. The concession was that basic customs duty and special customs duty as well as special additional duty was payable. The argument was that anti-dumping duty was not payable, no inte .....

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duty would arise, it rejected the first argument of the appellant's advocate, but directed that the anti-dumping duty has to be calculated at the rate specified in Notification No. 81 of 1998. Then, the argument on the point of liability to pay interest was considered and in para 20, it was held that no interest is payable on any of the customs duties that are due from the appellant. It is in these peculiar circumstances that the Hon'ble Supreme Court came to the conclusion that no penal .....

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- Sr.No. Questions Answers (i) Whether the appellate tribunal is correct in holding that in terms of para 4.1.3 and para 4.1.5 of the Foreign Trade Policy 2004-09, the appellants could not have cleared the resultant products manufactured out of duty free inputs in domestic market before fulfillment of the export obligation? Yes (ii) Whether the appellate tribunal is correct in holding that the appellants have violated the sub-para (v) of para 4.28 of the Handbook of Procedures? Yes (iii) Whether .....

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