2006 (1) TMI 406 - AT - Customs

Demand - Original holder of advance licence - Misdeclaration - Samples - Test reports - Penalty - Imposition of

Summary

Issues:
1. Duty demand on original holder of advance license
2. Mis-declaration of composition of export consignments
3. Imposition of penalty on the partner of the exporter

Analysis:

Issue 1: Duty demand on original holder of advance license
The Tribunal examined whether duty demand can be raised on the original holder of an advance license even if they are not the importer. The Commissioner considered the appellants as Deemed importers to justify the duty demand. However, the Tribunal referenced the case of Dharam Exports v. CC, Nhava Sheva, where the concept of "Deemed Importer" was rejected. It was noted that the decision in Jupiter Exports case has become final as it was not challenged in appeal. Following this precedent, the duty demand against the appellants was set aside.

Issue 2: Mis-declaration of composition of export consignments
The duty demand was based on the allegation that the exporters deliberately mis-declared the composition of export consignments to obtain higher entitlements in advance licenses. However, the Tribunal found this charge unsustainable. Test reports used to support the mis-declaration finding were not authenticated by SASMIRA and were not relied upon in the show cause notice. The Tribunal also noted discrepancies in the weight declarations on the Shipping Bills. As the licenses' cancellation was set aside and the issue was remanded, the goods were deemed not liable to confiscation or duty.

Issue 3: Imposition of penalty on the partner of the exporter
The penalty imposed on the partner of the exporter was challenged. The Tribunal ruled that since the goods were not prohibited for export, they were not liable to confiscation under Section 113 of the Customs Act. Referring to the Supreme Court judgment in Shilpi Exports case, the penalty under Section 114 was deemed unsustainable. The Tribunal distinguished the case from Om Prakash Bhatia, as it involved exports under a different scheme. Consequently, the appeals were allowed, overturning the penalties imposed.

This judgment clarifies the legal principles regarding duty demands on original holders of advance licenses, mis-declaration of export consignments, and the imposition of penalties. The decision underscores the importance of proper evidence and procedural adherence in customs cases to ensure fair treatment of exporters and their partners.