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TMI Blog2017 (9) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... for exemption notification under the advance licence scheme on the ground that as per the notification 1) The goods and licence shall not be transferred or sold; 2) The exempt material are utilised for the manufacture of final goods and no portion of such material shall be loaned, transferred, sold or disposed of in any other manner; Provided that where the final goods in respect of which the said material has been imported have already been manufactured and supplied as required under the notification, the importer may use the said material for the manufacture of any other goods. In the present case the allegation of the department is that the appellant have not imported the goods whereas the said goods was imported by Maharashtra Steel Rolling Mills (MSRM), Mumbai and the appellant have purchased the same on high sea sale basis. The goods were further given to MSRM for job work and after manufacturing the said goods were sold to MSRM. In this fact department contended that right from import of goods to sale of finished goods it is MSRM who owns the goods, therefore the clearance of goods by the appellant under advance licence has been transferred to MSRM. Accordingly the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has categorically held that he is not examining the issue was to whether the imported bills have been sold or transferred. In fact, according to the appellants, this issue has been given up by the Commissioner in the impugned orders. A.6)Therefore it is submitted that condition (vii) of Notification No.51/00-Cus is not violated by any of the appellants. A.7)Reliance in this regard, is placed on the Final Order Nos. A/11059 to 11518/2015 dated 15.10.2015 in the case of M/s Silver Line Plastpack Pvt. Ltd. & Others vs. CCE, Bhavnagar. In decision dealt with Condition (3) of Notification No. 32/05-Cus, which is identical to Condition (vii) of Notification No. 51/00-Cus involved in the present case. In paras 6 and 7, the CESTAT in the Final Order dated 15.10.2015 held that giving the imported goods to a job worker for conversion into excisable goods is not sale or transferof the imported goods. In that case too, the importer-assessee gave the imported goods to job worker for conversion into excisable goods, which excisable goods were subsequently sold to the job worker itself by the assessee in that case. A.8)Condition (viii) is applicable to merchant exporter and not to manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on; and (b) exempt materials are utilized in the factory of the supporting manufacturer for discharge of export obligation by the said merchant exporter." B.3)The Policy and Handbook relevant to the present case is that as prevailing during 1997-2002 and the same are available at Page Nos. 9 29 of Vol. IV. It is necessary to refer to Para 7.17 & 7.18 of Handbook of Procedures [at page 22 of Vol. IV] therein, which is reproduced below for ready reference: "Facility of supporting manufacturer 7.17The license holder has the option to have the material processed through any other manufacturer including a jobber. However, the license holder shall be solely responsible for the imported items and fulfillment of export obligation. Facility of Co-Licensee 7.18If the applicant desires to have the name of any manufacturer or jobber added to the licence, he may apply for such endorsement. Such endorsement shall be mandatory where prior import before export is a condition for Advance Licence for physical exports and the licence holder desires to have the material processed through any other manufacturer or jobber. Upon such endorsement made by the licensing authority, the license hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Notice No. dated 15.2.08 issued by the DGFT in the context of the Target Plus Scheme also provides that this facility of supporting manufacturer is available to manufacturer-exporter too. The relevant customs notification governing the import of goods against this scheme is at page no. 83 86 of Vol. IV. This public notice was referred to in the Final Order dated 15.10.15 passed by CESTAT, Ahmedabad in Silver Line Plastpack Pvt. Ltd. B.11)The issue raised by the customs department has already been decided in favour of the Appellants by the Tribunal in its decision in the case of Tetra Pak (I) Ltd. Vs. Commissioner Of Customs, Nhava Sheva - 2005 (190) E.L.T. 257 (Tri) at page no. 43 48 of Vol. IV. B.12)The Tribunal has ultimately held that there was no breach of the actual user condition by the importer. The Hon'ble Tribunal therein held as follows, all of which are squarely applicable to the case at hand: a)Giving the imported duty free material to the supporting-manufacturer whose name appearing in the license does not amount to sale or transfer (para 2(f) of the order at pages 272 and 273) ; b)It is not mandatory to get the name of the supporting-manufacturer endorsed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out prejudice to the above, it is submitted that there is no violation of condition no. (vii) of Notification No. 51/00-Cus since there is no "sale or transfer" in the present case on account of the submissions below. C.3)The department has construed the MOU between the Appellants and MSRM as an instrument under which the Appellants have transferred/sold the goods to MSRM. C.4)It is submitted that the MOU does not show that the imported billets have been sold by the Appellants to MSRM. It is expressly averred that there is no sale of the billets by the Appellants to MSRM. There is no admission to this effect either by the Appellants or by MSRM. C.5)Sale or transfer has to be construed to mean that the importer is parting with the ownership of the goods imported under the advance license. Sale refers to parting with ownership on a consideration. Transfer means, parting with ownership without a consideration. The said expressions will not apply to a case where the imported goods are used for further production in the factory of the job worker. C.6)This is the view taken by the Tribunal in Tetrapak (supra).The Tribunal in Tetra Pak supra held that supply of the inputs (even on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment (R&D) institution, university or other educational institution or hospital ; or (iii)any service industry. D.2)The definition of actual user (Industrial) in para 9.5 is in two parts. The first part refers to person utilizing the imported goods for manufacturing in his own industrial unit. The second part refers to a person utilizing the imported goods for manufacturing for his own use in another unit. The another unit need not be the license-holders own unit. Thus, manufacture of goods can also be in another industrial unit. D.3)The inclusive portion of the definition of actual user (industrial) states that the utilization of the imported goods in a jobbing unit also satisfies the actual user condition. Therefore, prima facie, sending of the imported materials by the Appellants to MSRM did not violate the actual user condition. D.4)Further, the contention of the department that even for job work, it is necessary that some activity must be undertaken in the factory of the license holder, is incorrect. D.5)It is submitted that in those cases decided by the Tribunal as aforesaid, the notifications provided that the imported material shall not be used for any purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yndicate 1999 (114) ELT 850 (Tri)&Mahindra & Mahindra Ltd. 2000 (125) ELT 477 (Tri) E.5)It is submitted that in the present case the duty cannot be demanded under the provisions of Section 28 of the Act for the reason that the said provision is applicable only in the cases where the duty is short paid at the point of assessment . It is the case of the department that the duty is due from the Noticees on account of violation of end-use conditions of exemption Notifications. Hence, Section 28 cannot be applied. Imported goods are not liable for confiscation. Imposition of fine and penalty not sustainable F.1)It is submitted that for post-importation conditions, Section 111(o) cannot be invoked. This is the ratio of decision of the Tribunal in Maruti Udyog Ltd. 2001 (132) ELT 340. F.2)The entire demand is because of the omission on the appellants part to include all the units in the DEEC book. Under these circumstances, it is submitted that there is no evasion of duty as alleged. In the facts and circumstances of the case, the question of levying interest and imposition penalty does not arise. In any case since extended period of limitation is not invocable, the question of imposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of arguments, the department high-lighted that MSRM and the appellants did not make payments to each other, but made mere book adjustments. In this regard, reference may be made to the commentary on Income Tax Act, 1961 by Kanga and Palkhivala, 1990 Edition, pages 210 and 211. It was specifically mentioned therein as Adjustment of cross-claims, a settlement in account, an exchange effected by a book entry, or a set-off, would be equivalent to actual receipt of a sum of money although no money may pass. 3. Shri M.K. Sarangi, Ld. Jt. Commissioner (AR) appearing on behalf of the revenue made the following submissions:- a. MSRM- Mumbai purchased billets from STC on high sea sale basis and instead of clearing the same on duty payment, cleared without duty payment showing on high sea sale to itself through advance licence issued in name of appellant i.e. Prakash Ispat Udyog b. The importer has transferred the goods without knowledge or intimation to licensing authority or customs. As the importer is a manufacturer exporter it is not entitled to transfer/sale the duty free goods in view of condition no. vii of notification. c. The contention of appellant that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant is not allowed to sell the imported goods. l. In case of Sushant Minerals Ltd. 2015 (32) ELT 260, goods imported under EPCG, was rented to KJS Ahluwalia, and it was only a job worker or service provider operating mines of KJS. While confirming duty demand action under Section 111(o)/112 was also confirmed. m. The observation of Hon'ble High Court in their own case 2013 (287) ELT 33 was only prima facie observation and it was rendered prior to Hon'ble Supreme Court decision in case of Pennar Inds. Ltd. Hence, view of apex court, which is similar will prevail. 4. We have carefully considered the submission made by both sides. We find that as per the record the material was initially imported by MSRM who subsequently sold on high sea sale basis to appellant M/s. Prakash Ispat Udyog and Sanvijay Rolling & Engg. Ltd. The appellants cleared the said imported goods on the basis of advance licence under notification 51/2000-Cus and 43/2002-Cus. The goods were directly sent from the port to MSRM for job work under a job work agreement and after processing, the goods were sold to MSRM only. Though on record it appears that the goods were cleared under advance l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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