2005 (12) TMI 435 - AT - Customs

Summary

Issues: Violation of customs regulations - Transfer of duty-free raw materials - Regularization by DGFT - Confiscation of goods - Recovery of duty - Penal action

In this case, the main issue revolved around the alleged violation of customs regulations due to the transfer of duty-free raw materials between two companies. The officers discovered that duty-free raw materials were illegally transferred from one company to its sister concern, violating specific notifications and conditions regarding the exchange of imported raw materials. The investigation revealed discrepancies in the loan arrangement and the use of duty-free imported materials, leading to a show cause notice being issued in November 1991 proposing confiscation of the goods, recovery of duty, and penal action under relevant sections of the Customs Act.

The case was adjudicated by the Commissioner of Customs, who considered the ex post facto regularization of the transaction by the Directorate General of Foreign Trade (DGFT). The DGFT had granted permission for the regularization of the loan transaction between the companies, and it was found that all relevant facts were disclosed to the DGFT before the regularization. The Commissioner, based on the regularization and the actions taken by the respondents, concluded that there were no grounds to sustain the charges. Consequently, the proceedings initiated against the respondents were dropped.

Upon review, the Appellate Tribunal upheld the decision of the Commissioner, noting that the regularization by the DGFT, as the concerned authority, was valid and based on full disclosure of facts. The Tribunal found no valid reason to interfere with the impugned order and therefore rejected the appeals brought forth in the case. The judgment emphasized the importance of compliance with customs regulations and the significance of regulatory authorities' decisions in such matters, ultimately affirming the decision to drop the charges against the respondents based on the regularization granted by the DGFT.