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Morepen Laboratories Ltd Versus C.C., Kandla

2017 (11) TMI 953 - CESTAT AHMEDABAD

Violation of actual user condition - clandestine diversion of imported goods - N/N. 43/2002-Cus dated 19.4.2002 and N/N. 50/2000-Cus dated 27.4.2000 - it was alleged that the said imported goods were not brought to the factory nor was used in the manufacture of finished goods - Held that: - Para 4.30 of the Handbook of Procedure stipulates that the advance licence holder shall maintain and preserve true and proper account of same and utilization of the duty free importd/domestically procured goo .....

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ized in the manufacture finished goods - there is no reason to interfere with the reasoning and conclusion recorded by the ld. Commissioner in confirming duty, interest and confiscation of the goods in absence of contrary evidence in this regard - appeal dismissed - decided against Revenue. - Custom Appeal No. 118 of 2011 -SM - Final Order No. A/13447/2017 - Dated:- 15-11-2017 - Dr. D. M. Misra, Member ( Judicial ) Shri Anand Nainawati, Advocate for the appellant Shri A. Mishra, A.R. for the Res .....

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Methylene Chloride valued at ₹ 17,52,690/- involving duty amount of ₹ 9,88,878/- against Advance Licence having actual user condition as per Notification No.43/2002-Cus dated 19.4.2002 and Notification No.50/2000-Cus dated 27.4.2000.Alleging that the said imported goods were not brought to the factory nor was used in the manufacture of finished goods, show cause notice was issued to them for recovery of the said duty of ₹ 9,88,878/- with interest and penalty; also proposing con .....

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reducing redemption fine to ₹ 4.0 lakhs and penalty to ₹ 1.50 lakhs. Hence, the present Appeal. 3. Ld. Advocate for the Appellant submits that the alleged diversion of the imported goods is not sustainable in the absence of cogent and corroborative evidence, accordingly, the demand of customs duty under Section 28 of the Customs Act is not sustainable. It is his contention that since the Appellant discharged the export obligation, therefore, in the absence of proof of clandestine di .....

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also not applicable. He has further submitted that direction of confiscation of the imported goods is also not sustainable as the goods were not available for confiscation. In support , he has referred to the judgment in the case of Commissioner vs. Shiv Kripa Ispat Pvt. Ltd. - 2015 (318) ELT A 259 (Bom.). 4. Ld. A.R. for the Revenue on the other hand argued that the Appellant is a manufacturer of excisable goods and holder of advance licence for import of duty free inputs with actual user cond .....

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eceipt and utilization of the imported goods in their factory. The arguments of the Appellant that they have fulfilled the export obligation, hence, the demand of duty on the imported goods is also unsustainable in law, be accepted, inasmuch as, the duty free imported goods cannot be transferred nor sold and has to be utilized in the manufacture of finished goods which alone can be sold in the local market. The condition of the Customs Notification and the Foreign Trade Policy read with Para 4.3 .....

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transferability of advance licence/material imported thereunder; Notification 43/2002-Cus which also says that the said licence and material are not to be transferred and sold. Concluding from the said provisions, the ld. Commissioner (Appeals) observed that these conditions are laid down to prohibit the importer from importing duty free goods diverted the same to local market and attempt to misuse advance licence scheme. Further, he has recorded that Para 4.30 of the Handbook of Procedure stipu .....

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ceived in the factory and utilized in the manufacture of exported goods but records were not traceable. Further, analyzing the evidence of Shri Satbir Singh, Senior Executive and S.K. Malpani AGM, the ld.Commissioner(Appeals) concluded that the Appellant had not maintained any record. To establish the fulfillment of the condition of Exim Policy under Notification No.43/2002-Cus. To establish that the goods were utilized in the manufacture finished goods. The conclusion of the ld. Commissioner (A .....

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export products or that they maintained records prescribed for this purpose under the Exim Policy provisions.They failed miserably to prove their bona fide. In the facts and circumstances to this case, it has to be concluded that the duty free exemption scheme available to goods imported under Advance Licence Scheme was abused by Appellant and the customs duty exemption was illegitimately claimed on the raw materials imported and accordingly, the demand of customs duties ₹ 9,88,878/- and i .....

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his post import condition has been violated, the provisions of Section 111(o) are clearly attracted and accordingly, the imported goods are liable to confiscation under Section 111(o) of the Act and the appellant, by committing breach of conditions of notification , rendered themselves liable to penalty liable for penalty under Section 112 of the Act. Further the ld. Commissioner (Appeals) referred to arguments of the Appellant and analyzing the principle laid down in Western Components Ltd. 200 .....

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er in respect of such goods under Section 28 read with Section 111 (o) of the Act was dropped by the Commissioner and his decision has been accepted by the Board. Based on these facts, it was held that where the action proposed under Section 111 of the Custom Act stands dropped, there is no question of invoking Section 112 of the Act inasmuch as the penal liability of a person under Section 112 depends on the confiscability of the goods imported by him. A penalty under Section 112 of the Customs .....

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