2009 (4) TMI 592 - AT - Customs

Summary

Issues:
1. Requirement of pre-deposit amounts including duty, interest, penalty, and redemption fine.
2. Discrepancy in the imported item description compared to the DFRC Licence.
3. Interpretation of the DGFT clarification regarding the use of palm oil in the manufacture of biscuits.
4. Transferability of licences and the absence of actual user condition.

Analysis:
The judgment by the Appellate Tribunal CESTAT, BANGALORE involved several key issues. Firstly, the Tribunal addressed the requirement of pre-deposit amounts, including duty, interest under Section 28AB of the Customs Act, penalty under Section 112(a), and redemption fine. The applicants were directed to pre-deposit significant sums, totaling to Rs. 1,04,42,556 for duty, Rs. 15,00,000 for penalty, and Rs. 10,00,000 for redemption fine.

Secondly, the Tribunal delved into the discrepancy between the item imported, which was 'Crude Palm Oil (Edible Grade),' and the description mentioned in the DFRC Licence. The Revenue contended that the imported item did not align with the DFRC Licence description, leading to proceedings against the applicants.

Thirdly, the Tribunal analyzed the interpretation of a clarification issued by the DGFT regarding the use of palm oil in the manufacture of biscuits. The learned Advocate highlighted the DGFT clarification, the amendment in the Committee meeting minutes, and the decision of the Commissioner (Appeals) granting benefits for a similar item, Crude Palm Oil. The Departmental representative argued that crude palm oil could not be directly used in biscuit manufacturing under the DFRC Licence.

Lastly, the Tribunal considered the transferability of licences and the absence of an actual user condition. After careful consideration, the Tribunal found that palm oil was considered an input for biscuit manufacturing and vegetable fat as per the DGFT clarification. Consequently, the Tribunal leaned towards waiving the pre-deposit of the entire dues demanded in the impugned order due to the strong case presented by the applicants and the absence of an actual user condition in transferable licences. The appeal was scheduled for further hearing on 21st July 2009.