2007 (3) TMI 608 - AT - Customs

Summary

Issues Involved:
1. Violation of Notification No. 43/97-Cus. conditions.
2. Alleged sale of duty-free imported coal.
3. Time-barred show cause notice.
4. Penalties imposed on appellants.

Summary:

1. Violation of Notification No. 43/97-Cus. Conditions:
The adjudicating authority held that giving duty-free coal by UCL to NCCL violates condition No. (vii) of Notification No. 43/02-Cus. and condition (10) of Notification No. 93/04-Cus. The tribunal examined whether the transfer of imported coal duty-free by UCL to NCCL could be considered a violation of condition No. (vii) of Notification No. 43/97-Cus., which states, "that the said licence and the materials shall not be transferred or sold." The tribunal found that the condition was intended to prevent the diversion of duty-free goods to the local market. Since UCL met the export obligations and redeemed the licenses, the tribunal held that there was no violation of the notification by UCL.

2. Alleged Sale of Duty-Free Imported Coal:
The adjudicating authority concluded that even if the cement manufactured by NCCL was exported by UCL, the condition (ii) of notifications was violated as there was a sale of imported duty-free coal by UCL to NCCL. The tribunal, however, found that the transaction between UCL and NCCL was not a sale or purchase transaction as envisaged in the notification. The tribunal referred to the case of Tetra Pak India Ltd. [2005 (190) E.L.T. 257], which supported the interpretation that the transfer for conversion into intermediate products and their return to the license holder for further use/export does not constitute a sale or transfer in violation of the notification.

3. Time-Barred Show Cause Notice:
The appellant argued that the show cause notice issued on 18-6-2005 was time-barred as the imports of duty-free coal were made in 2002-03. The tribunal did not explicitly address this issue in the judgment, focusing instead on the substantive compliance with the notification conditions.

4. Penalties Imposed on Appellants:
The adjudicating authority imposed penalties on all the appellants for the alleged violations. The tribunal, however, held that there was no violation of the clause (vii) of Notification No. 43/97-Cus. and remanded the matter to the original adjudicating authority to verify the claims of the appellants regarding the utilization of duty-free imported coal and the fulfillment of export obligations. The tribunal instructed the adjudicating authority to afford a reasonable opportunity for a personal hearing and to allow the appellants to present all evidence in their support.

Conclusion:
The appeal was allowed, and the matter was remanded to the original adjudicating authority for verification of the appellants' claims regarding the utilization of duty-free imported coal and fulfillment of export obligations. The tribunal held that there was no violation of the condition No. (vii) of Notification No. 43/97-Cus. as amended.