2009 (7) TMI 1015 - AT - Customs

Summary

Issues:
1. Interpretation of advance licence terms for importing raw materials.
2. Alleged violation of advance licence terms by using different raw materials.
3. Transferability of advance licences to other entities.
4. Liability of importer for breach of advance licence terms.
5. Compliance with standard input-output norms for raw materials.
6. Relevance of DGFT decision in regularization of breach of advance licence.
7. Dispute regarding use of BOPP films instead of polyester films in manufacturing cartons.
8. Application of customs notification requiring goods exported to match goods imported.

Analysis:
1. The appellant received advance licences for importing polyester films based on their application for manufacturing printed cartons. The appellant used BOPP films in the cartons instead of polyester films, leading to a dispute over the compliance with the advance licence terms.

2. Customs authorities alleged a breach of advance licence terms by using different raw materials than specified. However, the DGFT decision regularizing the breach on 9-4-03 was considered significant, as it exonerated the appellant from any violation. The transfer of licences to other entities further complicated the issue.

3. The transferability of advance licences to M/s. R.T. Packaging Ltd. and M/s. Super Cassettes Inds. Ltd. raised questions about the liability of the original importer for any breach of licence terms, especially when the goods exported did not match the goods imported as required by customs notification.

4. The argument regarding the technical differences between BOPP films and polyester films, along with the existence of standard input-output norms for printing, highlighted the importance of complying with specific requirements of advance licences for raw materials.

5. Ultimately, the DGFT decision played a crucial role in resolving the dispute, as it regularized the breach and exonerated the appellant. The court found that the allegations in the show cause notice became academic after the regularization, leading to the success of the appeals filed by the appellant.

Conclusion:
The judgment focused on the interpretation of advance licence terms, compliance with raw material requirements, transferability of licences, and the impact of the DGFT decision on regularization of breaches. The court ruled in favor of the appellant based on the exoneration provided by the DGFT decision, emphasizing the importance of adhering to specific licence terms and technical norms in international trade transactions.