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Issues Involved:
1. Contravention of Notification 159/90 and 203/92. 2. Utilization of Modvat credit. 3. Limitation under Section 28 of the Act. 4. Confiscation and penalty. Summary: 1. Contravention of Notification 159/90 and 203/92: The appellant imported 2400 MTs of potassium chloride duty-free under Notification 159/90 or 203/92, intended for manufacturing potassium carbonate and potassium hydroxide for export. However, the appellant used the imported material for domestic consumption and fulfilled export obligations using other materials. The Commissioner confirmed the contravention of Notification 159/90 but not 203/92, leading to duty demand, confiscation, and penalty. 2. Utilization of Modvat Credit: The appellant took Modvat credit on duty-paid inputs used for export production, which was reversed under the amnesty scheme. The Commissioner did not accept the appellant's contention regarding the non-violation of Notification 203/92 conditions related to Modvat credit. 3. Limitation under Section 28 of the Act: The appellant argued that the notice invoking the extended period u/s 28 was barred by limitation, as the department learned of the material utilization through an audit. The Commissioner found the notice timely and upheld the duty demand. 4. Confiscation and Penalty: The Commissioner ordered the confiscation of the duty-free imported raw material, allowing redemption on payment of a fine, and imposed a penalty on the company but not on its officials. Tribunal's Analysis: - Notification 159/90: The Tribunal emphasized the significance of the phrase "goods corresponding to the resultant products" and concluded that as long as the exported goods matched the specified value, quantity, and characteristics, the export obligation was fulfilled, irrespective of the raw material used. - Notification 203/92: The Tribunal noted that the conditions were more stringent, requiring the exempt materials to be used for export obligations without any disposal before fulfilling the export obligation. - Dolphin Drugs Case: The Tribunal referenced its decision in Dolphin Drugs Pvt. Ltd. v. CC, where similar issues were addressed, supporting the appellant's case. - Practical Considerations: The Tribunal acknowledged practical difficulties in identifying specific raw materials used in continuous manufacturing processes and bulk storage, advocating for a uniform interpretation of the notification. Conclusion: The Tribunal allowed the appeal, set aside the impugned order, and ruled that there was no contravention of Notification 159/90 by the appellant.
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