2009 (4) TMI 522 - HC - Customs

Export obligation - Confiscation - goods were imported on prior export basis declaring that they were used in the manufacture and export of SMX under the DEEC Scheme - export obligation had been met with - licence had subsequently been transferred to others as per the EXIM policy by the authorities of DGFT - bar regarding disposal of exempted materials is that such materials must not be disposed of or utilised in any manner till the export obligation under the licence had been discharged in full . This bar will not apply to these goods since the export obligations had been met with - quantity of imported sodium metal does not correlate with the quantity of inputs with the manufacture of SMX - Held that - officers cannot sit in judgment on the quantity and need of an item when the same is imported within the value limits of the licence and there was no evidence that the items as imported were in excess of the value/quantity limits if any on the licences, further, the sodium metal does not meet the sensitive items criteria, order of confiscation set aside and redemption fine and duty, civil miscellaneous appeal is dismissed

Summary

Issues:
1. Interpretation of Section 111(o) of the Customs Act, 1962 regarding confiscation of goods.
2. Authority of the Commissioner of Customs in determining the quantity and necessity of imported items.
3. Relevance of conditions stipulated in Notifications post-export obligation discharge.
4. Jurisdiction of the Tribunal in contradiction to statements, evidences, and estoppel law.

Analysis:
1. The case involved the interpretation of Section 111(o) of the Customs Act, 1962, regarding the confiscation of goods. The Tribunal held that goods were not liable for confiscation under this section as duty had been paid as demanded on the imported goods, and no further action was required. Consequently, fines and penalties under Sections 111(o) and 112(a) were set aside. The High Court upheld this decision, emphasizing that once the export obligation was discharged, the conditions stipulated in the Notifications became irrelevant.

2. The issue of the Commissioner of Customs determining the quantity and necessity of an item imported within the value limits of the license was raised. The Tribunal ruled that unless the imported items exceeded the value/quantity limits specified in the license, and were sensitive items, the Commissioner could not interfere. The High Court agreed, stating that there was no strict correlation required between the quantity of imported items and their utilization in manufacturing sensitive goods. As long as the value limits were adhered to, the Tribunal's decision was upheld.

3. Regarding the relevance of conditions stipulated in Notifications post-export obligation discharge, the High Court noted that once the export obligations were fulfilled, the restrictions on disposal or utilization of exempted materials did not apply. The Court also highlighted that the proof of execution of a bond or declaration was not violated in this case. Therefore, the Tribunal's decision to set aside the order of confiscation and redemption fine post-export obligation fulfillment was deemed valid.

4. Lastly, the jurisdiction of the Tribunal in passing orders contradictory to statements, evidences, and principles of estoppel was discussed. The High Court found that the Tribunal's decision was based on factual considerations, and there was no evidence of excess import beyond the license limits or violation of sensitive items criteria. As such, the Tribunal's decision to dismiss the civil miscellaneous appeal was upheld, emphasizing that the issues raised were factual and did not warrant interference.