2011 (1) TMI 1013 - AT - Customs

Import of raw material under the Advance Licences transferred to them by the original licensee as permitted by the licensing authority (DGFT) - Demand of duty, interest and penalty - Held that -Provision of the policy was to the effect that an advance licence could be freely transferred after export obligation had been fulfilled, export proceeds realized and the Bank Guarantee/LUT redeemed. It was further provided that the facility of transferability would not be available in cases where the modvat/proforma-credit facility under Rule 191B of the Central Excise Rules of 1944 had been availed of - This aspect was not considered by the ld. Commissioner - Commissioner, however, did not also considered the plea of limitation raised by the party - order set aside and allow the appeal by way of remand with a request to the jurisdictional Commissioner of Customs to re-adjudicate the case - appeal allowed by way of remand

Summary

Issues:
- Demand of duty under Notification No.203/92 Cus
- Allegation of violation of Condition (V) (a) of the Notification
- Allegation of deliberate suppression of MODVAT credit
- Invocation of Sections 112 and 114 of the Customs Act for penalties
- Burden of proof on department regarding input-stage credit
- Plea of limitation for time-barred demand

Analysis:

The appeal before the Appellate Tribunal CESTAT, Mumbai involved a dispute regarding the demand of duty, interest, and penalty imposed by the Commissioner on the appellant. The Commissioner's order was based on a show-cause notice alleging the violation of Condition (V) (a) of Notification No.203/92 Cus, which led to the denial of duty exemption on raw material imported under Advance Licences during 1993-94. The notice also accused the appellant of deliberately suppressing MODVAT credit availed by the exporter, invoking Customs Act provisions for duty recovery and penalties.

The appellant contended that there was no evidence of input-stage credit availed by the exporter, and the burden to prove such credit rested with the department. The appellant argued that the endorsement of transferability on Advance Licences implied verification by the licensing authority that no Modvat credit had been availed. Citing the Supreme Court's decision in Commissioner of Customs vs. Auto Ignition Ltd, the appellant claimed the demand was time-barred as the show-cause notice was issued beyond 5 years from import clearance.

The Tribunal acknowledged the appellant's submissions, noting that the burden to prove the violation of Condition (V) (a) of the Notification rested with the department. The Tribunal highlighted the need for the department to establish input-stage credit availed by the exporter, as emphasized in the Auto Ignition Ltd case. Due to the Commissioner not considering the limitation plea raised by the appellant, the Tribunal remanded the case for de novo adjudication, emphasizing the need for a fair opportunity for the appellant to be heard.

In conclusion, the Tribunal set aside the Commissioner's order, allowing the appeal by way of remand for the jurisdictional Commissioner of Customs to re-adjudicate the case in accordance with the law, ensuring a fair hearing for the appellant.