2007 (3) TMI 533 - AT - Customs

EXIM Policy - Import of goods under advance license - Beta Napthol and Aniline Oil - duty free - violation of conditions of Notification - export of goods covered by shipping bills - HELD THAT - We find that the shipping bills giving the description of the product exported and the details of the advance licence against which the export was sought to be made and details of raw material used in the export consignments were filed by the appellants and the shipping bills were passed by the Customs authorities. The shipping bills related of the goods to the description specified as export obligation. The fact that there is a long gap between the date of import of the raw materials duty free and the date of export and the further fact that the value mentioned in the invoice is higher than the job charges paid by the appellants is not sufficient to hold that the conditions of the relevant notifications have been violated, particularly when identical pattern has been adopted in respect of other exports which have been logged by JNPT Customs as well as by Bombay Port Customs themselves. In the above circumstances, the Tribunal s orders in the case of Dolphin Drugs Pvt. Ltd. 1999 (8) TMI 258 - CEGAT, MADRAS holding that as long as the export obligation was fulfilled within the time allowed to the licensee or within the period extended by the DGFT authorities, there is no violation of condition of Notification and the Tribunal s order in the case of Galaxy Surfactants Ltd. v. Commissioner of Customs 2006 (7) TMI 371 - CESTAT, MUMBAI holding that it is immaterial whether material imported duty free was first used for domestic clearances of final products in the manufacture of which the import material was used, and exports were made later on, or vice versa are squarely applicable to the facts of this case. Thus, we accept the appellant s contention that they were entitled to logging of exports under the two advance licences in question, set aside the impugned order and allow the appeal.

Summary

Issues:
1. Logging of exports under Advance Licences.
2. Violation of conditions of Notification No. 204/92 and Public Notice No. 217/95.
3. Fulfillment of export obligation and sale/diversion of duty-free imports.
4. Interpretation of conditions of relevant notifications.
5. Applicability of previous Tribunal orders to the case.

Logging of exports under Advance Licences:
The case involved two Quantity Based Advance Licences issued to exporters of various chemicals and dyes. The dispute arose regarding the logging of exports under these licences. The Deputy Commissioner initially rejected the logging, citing violations of Notification No. 204/92 and Public Notice No. 217/95. After remand, a fresh order was passed rejecting the logging once again. The lower appellate authority upheld this decision, leading to the current appeal.

Violation of conditions of Notification No. 204/92 and Public Notice No. 217/95:
The appellants argued that they fulfilled export obligations and did not sell/divert the duty-free imports. Even if the duty-free material was sold in the domestic market after fulfilling export obligations, they contended it did not contravene the notification's conditions. The case hinged on whether the conditions regarding duty-free imports were violated by the appellants.

Fulfillment of export obligation and sale/diversion of duty-free imports:
The appellants maintained that they fulfilled export obligations and did not sell/divert the imported duty-free materials. They argued that any sale after fulfilling export obligations would not breach the notification's conditions. The core issue was whether the appellants complied with the export obligations and the restrictions on duty-free imports.

Interpretation of conditions of relevant notifications:
The Tribunal analyzed the shipping bills, the raw materials used in exports, and the timing of import and export. It was noted that the value mentioned in invoices exceeded job charges paid by the appellants. The Tribunal found that the conditions of the notifications were not violated, especially considering the extension of the export obligation period with a compensation fee paid by the appellants.

Applicability of previous Tribunal orders to the case:
The Tribunal referred to previous judgments like Dolphin Drugs Pvt. Ltd. and Galaxy Surfactants Ltd. to support the appellants' contentions. These cases emphasized that fulfilling export obligations within the allowed time or with extensions did not breach the notification's conditions. The Tribunal also cited Kitply Industries Ltd. case, stating that after fulfilling export obligations, exempt material could be disposed of in the open market. Relying on these precedents, the Tribunal accepted the appellants' arguments, set aside the impugned order, and allowed the appeal.