2005 (6) TMI 359 - AT - Customs

Issues Involved:
1. Confirmation of duty demand and imposition of penalties on M/s. ISI Bars Limited and its Director.
2. Dropping of proceedings for recovery of balance duty amount and penal action against other companies and their officers.
3. Alleged contravention of conditions under Customs Notification Nos. 203/92 and 204/92.
4. Misdeclaration of exported products.
5. Disposal of imported inputs in contravention of Notification and EXIM Policy.
6. Transfer of licences.

Issue-Wise Detailed Analysis:

1. Confirmation of Duty Demand and Imposition of Penalties:
The Commissioner confirmed a duty demand of Rs. 10,47,651/- against M/s. ISI Bars Limited for 27 Metric Tones of Calcium Silicide under Section 28 of the Customs Act, 1962, and imposed a penalty of Rs. 5 lakhs on the company and Rs. 25,000/- on its Director. The Tribunal upheld the duty demand, noting that the company sold resultant products made from imported inputs without obtaining permission from the Development Commissioner, as required by para 127 of the EXIM Policy. The penalty on M/s. ISI Bars Limited was reduced to Rs. 2,50,000/-, but the penalty on the Director was upheld.

2. Dropping of Proceedings for Recovery of Balance Duty Amount and Penal Action:
The Commissioner dropped the proceedings for recovery of the balance duty amount against M/s. ISI Bars Limited and the entire duty demand against M/s. India Steel International and M/s. India Steel International Pvt. Ltd., as well as the proposal for penal action against these companies and their officers. The Tribunal upheld this decision, stating that the Revenue had not established its case regarding the disposal of imported inputs as such in contravention of Notification No. 203/92 and the EXIM Policy.

3. Alleged Contravention of Conditions under Customs Notification Nos. 203/92 and 204/92:
The Revenue argued that the Licence Holders had availed Modvat credit for inputs used in the manufacture of export products, which was against the conditions of Notification No. 203/92. The Commissioner found that for the year 1993-94, the Licence Holders had reversed the credit in excess of what was required. For the year 1994-95, he left it open to the competent authority to quantify and recover the correct amounts by reversal. The Tribunal found no substance in the Revenue's appeal on this issue, noting that the Assistant Commissioner had not quantified any shortfall in the credit.

4. Misdeclaration of Exported Products:
The Commissioner relied on a clarification dated 3-12-1993 from the Directorate General of Foreign Trade to hold that Stainless Steel Bright Bars exported by the Licence Holders were covered under Sr. No. 717 of the EXIM Policy. The Tribunal found no challenge to this finding in the Revenue's appeal and upheld the Commissioner's decision that there was no misdeclaration.

5. Disposal of Imported Inputs in Contravention of Notification and EXIM Policy:
The Commissioner found that the Licence Holders had not sold the imported inputs as such but had converted them into resultant products, which were then sold. The only exception was 27 metric tones of Calcium Silicide, which was used by M/s. Madhya Pradesh Iron & Steel Company and sold in the domestic market. The Tribunal upheld the Commissioner's decision on this issue, noting that the Revenue had not established its case beyond averring the contravention.

6. Transfer of Licences:
The Commissioner accepted the Licence Holders' contention that they had not received any payment towards the sale of licences except for those transferred by DGFT and found no evidence of transfer of licences to any other person. Based on this finding, he dropped the demand for the balance and penal proceedings against all noticees except M/s. ISI Bars Limited and its Joint Managing Director. The Tribunal upheld this decision, noting that the Commissioner's findings on this issue were not specifically contravened in the Revenue's appeals.

Conclusion:
The Tribunal dismissed the appeals of the Revenue, upheld the duty demand and penalty on M/s. ISI Bars Limited (with a reduced penalty), and rejected the appeal of the Director. The decisions to drop the proceedings for recovery of the balance duty amount and penal action against other companies and their officers were also upheld.

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