2010 (10) TMI 301 - AT - Customs

Advance license - Notification No. 43/2002-Cus., dated 19-4-2002 - Confiscation - Third party export - whether the appellant M/s. NCS Sugars had exported the quantity of white sugar manufactured from the raw sugar imported under the advance licence No. 0910019136 dated 30-6-2004 and specified in the said licence in discharge of the export obligation - Duty demanded cannot be claimed to be time-barred since the appellant had executed a bond undertaking to meet such liability in case of its failure to fulfill the conditions of the Notification No. 43/02-Cus., dated 19-4-02 - there was willful intention on the part of the assessee to contravene the condition of export white sugar to qualify for the entire amount of exemption under Notification No. 43/02 Cus., dated 19-4-02. availed by it at the time of import - The assessee has challenged the fine and penalty as uncalled for on the plea that the exemption availed was due to it and no violation of post import condition for exemption was involved - Appeal is rejected

Summary

Issues Involved:
1. Eligibility of third-party export under the Exim Policy/Foreign Trade Policy.
2. Compliance with the conditions of Notification No. 43/2002-Cus.
3. Validity of the duty demand and confiscation under Section 111(o) of the Customs Act, 1962.
4. Imposition of fine and penalty under Section 112(a) of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Eligibility of Third-Party Export:
The appellant, M/s. NCS Sugars Ltd., argued that the Commissioner wrongly held that the export of 2466.250 MTs of sugar through Emmsons could not be considered a 'third-party export' because the appellant's name was not shown as 'exporter' and Emmsons was not shown as 'third party' in the shipping bill. The appellant contended that under the Exim Policy 2002-2007 and Foreign Trade Policy 2004-09, third-party exports meant exports made by an exporter or manufacturer on behalf of another exporter(s), and the shipping bill should indicate the names of both the manufacturing exporter/manufacturer and third-party exporter(s). The appellant claimed that the unique nature of sugar as an essential commodity regulated by the Sugar Commissioner justified the arrangement, and Emmsons had declared that they did not treat the export as their own.

2. Compliance with Notification No. 43/2002-Cus:
The appellant submitted that they had complied with the conditions of Notification No. 43/2002-Cus by submitting the required documents to the JDGFT to issue the Export Obligation Discharge Certificate. They argued that there was no violation of the notification's conditions, and hence, the duty demand and liability to confiscation under Section 111(o) of the Customs Act were not sustainable.

3. Validity of Duty Demand and Confiscation:
The Tribunal noted that the Commissioner found the appellant had not fulfilled the export obligation for 2466.250 MTs of white sugar exported under Shipping Bill No. 1053189 dated 16-6-2006. The Commissioner observed that the export did not fit the definition of third-party export as per CBEC Circular No. 120/95 and Circular No. 30/2005-Cus because the shipping bill and export documents did not prominently indicate it as a third-party export. The Tribunal upheld the Commissioner's finding that the export obligation fell short by 2466.250 MTs, making the appellant liable to pay the exemption availed on the import of raw sugar relatable to this quantity of white sugar. The Tribunal also noted that the duty demanded was not time-barred due to the bond executed by the appellant.

4. Imposition of Fine and Penalty:
The Tribunal considered the appellant's argument that the failure to fulfill the export obligation was due to the control exercised by the Central Government under the Essential Commodities Act, 1955. However, the Tribunal rejected this plea, stating that the impugned quantity of sugar was exported by Emmsons following the release order issued under the Essential Commodities Act. The Tribunal found that the raw sugar relatable to the sugar exported under Shipping Bill No. 1053189 dated 16-6-06 was liable for confiscation under Section 111(o) of the Customs Act, and the order of confiscation and fine was in accordance with the law. The Tribunal also upheld the penalty imposed under Section 112(a) but reduced the fine to Rs. 28 lakhs and the penalty to Rs. 15 lakhs, considering the value of the raw sugar and the circumstances of the case.

Conclusion:
The appeal filed by M/s. NCS Sugars Ltd. was rejected, but the Tribunal provided relief by reducing the fine and penalty. The Tribunal pronounced the judgment in open Court on 20-10-2010.