TMI Blog2001 (11) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 15-2-1993 (7) P/CS/21067763, dated 3-11-1993 (8) P/L/2316330, dated 16-2-1993 (9) P/L/1523133, dated 28-9-1993 (10) P/L/1524110, dated 29-10-1993 The licence at Sr. No. 5 above was a quantity based advance licence while the remaining 9 advance licences were value based advance licences. These 10 licences were sold by VSP to M/s. Rupali Agencies Pvt. Ltd. (hereinafter called RAPL) vide contract dated 20-11-1993. VSP and RAPL moved certain amendment applications before DGFT so as to enlarge the scope of duty free benefits and the licences were amended by addition of non-coking coal and copper wire bars/rods in the licences. In view of the flexibility provision these licences were ultimately used mainly for import of the two items added by way of amendment. Statements of various persons as well as the evidence in the form of internal noting exchanged between various departments of VSP appears to establish that VSP knowingly and wilfully furnished wrong declaration to Customs and DGFT by stating that no Modvat credit on inputs was availed by them and further investigations revealed that copper wire bars were not the requisite raw materials for manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pper wire Bars 2,07,33,772 11. S/10-66/95 Gr. IV - do - Copper wire Rods 1,22,71,530 12. S/10-43/95 Gr. IV - do - - do - 28,55,729 13. VIII/10-20/Commr/95 CC(P), Ahmedabad Low Ash Met. Coke 1,16,67,184 + Cess 14. VIII/10-15/Commr/95 - do - Low Ash Met. coke pig iron 82,25,590 +Cess 95,18,729 15. S/10-319/95-Adj. (Appg. VII) S-20-11/95 Appg. VII CC, Kandla Copper wire bars 20,06,25,851 16. S/99-49/95 Ap. CC, Goa Low Ash Met coke 58,67,746 17. S/23/81/94-Ap. (Pt. II) CC, Vizag Lime stone, coking coal, copper plate special Refractories, Rolls for rolling mills etc. 7,19,15,944 48,85,698 33,97,73,903 18. VIII/10/19/95 CC, Trichy Steam coal 1,03,89,094 81,89,546 19. S.59/DEEC/Misc/527/95 Gr. 7 S/8/460/95 CC, Madras - do - 1,01,78,760 1,84,42,379 79,71,644 20. VIII/10-21/Commr./95 CC, Ahmedabad - do - 3,08,76,292 2,85,09,143 2,92,31,482 1,85,40,349 53,45,484 21. VIII/10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct in respect of goods covered by these 6 notices. In respect of balance 2 show cause notices issued by the Commissioner of Customs, Ahmedabad, he held that the same were not sustainable since the assessments in these cases were provisional and in coming to this conclusion, he relied upon the judgment of the Hon'ble Mumbai High Court in the case of M/s. Godrej Boyce Ltd. [1989 (43) E.L.T. 225]. He held that 3 show cause notices issued by the Asstt. Commissioner of Customs invoking the extended period of limitation under the proviso to Sec. 28(1) of the Customs Act were without jurisdiction. In respect of 4 show cause notices issued by the Commissioner of Customs, JCH invoking the extended period of limitation on which Asstt. Commissioner of Customs had already issued demand show cause notices, the adjudicating authority held that subsequent issue of show cause notice by the Commissioner improving upon the show cause notice and invoking the proviso to Sec. 28(1) of the Customs Act were not permissible. In respect of one show cause notice issued by the Commissioner of Customs, Vizag, he held that since the date of assessments was not given in the show cause notice and the extende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 116) E.L.T. 285 (Tri.)] and Kitply Industries Ltd. v. Commissioner of Customs, Kandla [2001 (130) E.L.T. 236 (Tri.)]. In respect of licences at Sr. Nos. (9) and (10) set out in Paragraph 2 of this order, the export product was pig iron, the raw material for which was iron ore, which was not covered under the Modvat scheme. Hence, the question of availing Modvat credit on the exports of pig iron does not arise and this fact has also been confirmed by the department in the certificate at Page 361 of the Paper Book. In respect of QBAL, we find that VSP had utilised the licence value partially and the licence for the balance value was transferred. However, VSP had reversed Modvat credit in respect of the export of final product under QBAL in question along with interest. The principle laid down by the Apex Court in the case of Chandrapur Magnet [1996 (81) E.L.T. 3 (S.C.)] will apply to reversal of Modvat credit against exports made under QBAL. The ratio laid down by the Supreme Court in this case was followed by the Larger Bench of the Tribunal in the case of Franco Italian Co. Ltd. v. CCE [2000 (120) E.L.T. 792 (T) = 2000 (40) RLT 295] and in view of the above, the decision of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 235 (Bom.)]. 10. In the case of Rama News Prints Paper Ltd. v. CC, Kandla [2000 (122) E.L.T. 473 (Tri.)], the Tribunal held that the licensing authority has the jurisdiction and power to relax the conditions of the Policy and amend the licence and it is not open to Customs authorities to question the licensing authority's discretion exercised in issuing or amending a licence by contending that it is not in accordance with the Policy. The Tribunal held that since the amended licence was valid to cover the goods already imported, confiscation of the goods imported and the penalty imposed are not sustainable. 11. In the case of Sanwah Micro System Pvt. Ltd. v. CC, Madras [2000 (118) E.L.T. 294] the Larger Bench of the Tribunal has set aside confiscation and penalties since imports were permissible under the licence. Reliance placed by the ld. D.R. on the decision of the Hon'ble Delhi High Court in the case of Exports Apparel Group Ltd. v. UOI [1997 (91) E.L.T. 307 (Del.)] does not advance the case of the Revenue according to this judgment, the Customs department is entitled to examine whether the goods have been imported in terms of the licence, and no where in this judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the wordings in the notification have to be construed keeping in view the object and purpose of the exemption and the exemption must be given its natural meaning to include materials that are required in order to manufacture the resultant product and that the exemption cannot be confined to materials which are actually used in the manufacture of the resultant product but would also include materials which though not used in the manufacture of the resultant product are required to manufacture the resultant product. In that case, the benefit of notification was extended to crystar beams required for fitting inside of the kilns for the purpose of manufacture of porcelain insulators for lightening arrestors. Applying the ratio of the above decision, we have no hesitation in holding that non-cocking coal and copper bars and rods are raw materials required for the purpose of manufacture of export products. 12. As regards the penalty imposed on M/s. VSP, we find that Sec. 112A of the Customs Act has been invoked in the show cause notice for alleged mis-representation by VSP before the DGFT and the alleged collusion with M/s. Roopali Agencies in obtaining amendments that were not pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as the licences were duly endorsed as transferable, no case has been made out against the transferee licensees by the department. 14. We further hold that the proviso to Section 28 of the Customs Act, 1962 cannot be invoked against the transferee of the advance licence who had no knowledge about the availment of Modvat credit of duty paid on inputs used in the export products by the transferors and it is pertinent to note that even the show cause notice does not allege suppression of facts or wilful mis-statement on the part of the transferee. In these circumstances, the decision of the Tribunal in the case of Purulax Electric Pvt. Ltd. v. CC, Mumbai [2001 (138) E.L.T. 786 (T) = 2001 (46) RLT 97] in which it has been held that the proviso to Sec. 28 (1) of the Customs Act is attracted only when mis-statement or suppression is by the importer, that is, the person chargeable to duty, is applicable to all fours. Therefore, we hold that the demand against the importers who have made imports against the transferred licences are barred by limitation. 15. One other ground on which the show cause notices were discharged was that the show cause notices issued invoking the extended pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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