2002 (3) TMI 487 - AT - Customs

Summary

Issues Involved:
1. Eligibility of "stamping foils" imported under a transferable advance licence for the benefit of Notification 203/92-Cus.
2. Requirement of nexus between imported materials and export products.
3. Interpretation of relevant clauses in Notification 203/92 and the DEEC/Advance Licence Scheme.
4. Legal obligations of a transferee of an advance licence.

Issue-wise Detailed Analysis:

1. Eligibility of "stamping foils" imported under a transferable advance licence for the benefit of Notification 203/92-Cus:
The appellants imported "stamping foils" under a transferable advance licence and claimed the benefit of Notification 203/92-Cus, which exempts certain raw materials from customs duty when imported against a value-based advance licence. The Department argued that the imported goods did not have a nexus with the export products (gents shoe uppers) and therefore did not qualify for the exemption. The Deputy Collector of Customs accepted that the goods were correctly described as "stamping foils" but denied the benefit of the notification due to the lack of nexus.

2. Requirement of nexus between imported materials and export products:
The appellants contended that there need not be a nexus between the imported materials and the export products, citing the deletion of para 126 of the ITC Policy and a public notice dated 30-6-93. However, the lower authorities maintained that the DEEC/Advance Licence Scheme required a direct use of inputs in the export product, which was not satisfied in this case. The catalogue for the imported items did not indicate their use in leather goods, further supporting the Department's stance.

3. Interpretation of relevant clauses in Notification 203/92 and the DEEC/Advance Licence Scheme:
The Tribunal examined the relevant clauses of Notification 203/92 and the DEEC/Advance Licence Scheme. The notification exempts raw materials required for the manufacture of export products when imported against a value-based advance licence. The Tribunal noted that the licence permitted the import of stamping foils, but it was essential to establish that the imported foils were capable of use in the leather industry. The absence of a clear nexus between the imported foils and the export product led to the denial of the notification's benefit.

4. Legal obligations of a transferee of an advance licence:
There was a difference of opinion among the Tribunal members regarding the obligations of a transferee of an advance licence. One member argued that the transferee need not establish a nexus between the imported goods and the export products, citing previous Tribunal decisions and the Bombay High Court's approval. However, another member held that the transferee was bound by the conditions attached to the licence, including the requirement to establish a nexus. The majority opinion ultimately upheld the denial of the notification's benefit, agreeing that the appellants failed to substantiate the use of the imported foils in the manufacture of the export product.

Majority Opinion:
The majority of the Tribunal members concluded that the benefit of Notification 203/92-Cus. was not available to the appellants due to the lack of established nexus between the imported stamping foils and the export product (gents shoe uppers). The appeal was rejected, and the impugned order was upheld.