2014 (12) TMI 811 - AT - Customs

Advance Authorisation - import raw sugar under actual user condition - ton-to-ton or grain-to-grain basis - Export of sugar without release order from appropriate authority - According to Revenue such failure resulted in violation of law - plea of appellant was that it was an actual user of imported goods and the export being done on grain-to-grain basis, there was no violation of law - Held that - When the advance authorisation was issued that was subject to the condition as has been quoted herein before. There was no indication therein that the authorisation was subject to the condition of grain-to-grain basis. But the Appellant misconceived such proposition while it was allowed to operate under actual user scheme and under ton-to-ton basis only. The JDGFT in terms of a Policy Circular No. 1 (RE-2010)/2009-14, dated 7-9-2010 addressed to all regional authorities informed that export of sugar on ton-to-ton basis should not be allowed without release order from Directorate of Sugar against authorisation issued from 17-2-2009 to 30th September, 2009 for import of sugar. The appellant misconceived the intent of this circular to submit that it has operated under grain-to-grain basis and not under ton to ton basis. Further the appellant misconceived that its advance authorisation being issued in 2005, there is no embargo on the appellant to export sugar without release order. No licence was given to it to operate under grain-to-grain basis as is clear from the letter of DGFT. Appellant also misconceived that signing of the bond, etc. exonerated it from operating under ton-to-ton basis. There was further misconception by it that the bond executed by the appellant required recovery of the duty element in terms of Notification No. 93/2004-Cus., dated 10-9-2004 in case of non-fulfilment of export obligation. It was also pleaded that the appellant operated under actual user scheme. All such pleas are irrelevant and appellant was not an innocent but deliberately violated condition of advance authorisation. It may be stated that when the appellant was categorically found to have violated the export norm as has been stated by the Directorate of Sugar in its letter dated 23rd June, 2011, the inescapable conclusion that may be drawn is that 2,496 MT of sugar exported by the appellant was without release order and in contravention of the law. - Penalty u/s 114 and 114 AA imposed on assessee - However, penalty upon General Manager is reduced - Decided against the assessee.

Summary

Issues Involved:
1. Whether the export of 2496 MTs of sugar during July & August 2010 was contrary to any legal prohibition.
2. Whether the adjustment of export without proper release order by the Directorate of Sugar at a later date can be accepted as release of prohibition on the date of export.

Issue-wise Detailed Analysis:

Issue 1: Export of 2496 MTs of Sugar Contrary to Legal Prohibition

The appellant was issued an Advance Authorisation on 14-3-2005 to import raw sugar under actual user condition and imported raw sugar during 2005-2006. The Revenue alleged that the export of 2496 MT of sugar to the UAE during July-August 2010 was without a release order from the appropriate authority, violating the law. The appellant argued that the export was regularized by the Directorate of Sugar, adjusting the quantity against future release orders, and thus no violation occurred. They claimed that the export was done on a "grain-to-grain" basis, fulfilling the actual user condition as per the Foreign Trade Policy (2004-2009), which did not require a release order from the Sugar Directorate.

The Revenue contended that the exported sugar was not manufactured from the imported raw sugar and was not on a "Ton-to-Ton" basis, making it liable for confiscation and penalty. The adjudicating authority found that the appellant's export was made from indigenously manufactured sugar without a release order, violating the conditions of the export policy. The appellant's reliance on the "grain-to-grain" scheme was misplaced as the authorization was under the "Ton-to-Ton" basis, requiring a release order. The Directorate of Sugar's letter dated 23-6-2011 confirmed that the appellant's export without a release order was not permissible.

Issue 2: Adjustment of Export Without Proper Release Order

The appellant argued that the Directorate of Sugar allowed the past exports to be regularized by issuing subsequent release orders, and thus no penalty should be imposed. The Directorate's letter dated 23-6-2011 allowed the adjustment of 2496 MT against future release orders but did not absolve the appellant of the initial violation. The adjudicating authority concluded that the appellant's export without a release order was a deliberate violation of the law, and the subsequent regularization did not negate the need for a release order at the time of export.

Judgment Summary:

The Tribunal upheld the adjudicating authority's decision, confirming that the appellant violated the export norms by exporting sugar without a release order. The penalties imposed were revised as follows:

1. The penalty on the appellant company was reduced to an aggregate of Rs. 20,00,000/- under Sections 114(i) and 114AA of the Customs Act, 1962.
2. The penalty on Shri Mukesh Sharma, General Manager, was reduced to an aggregate of Rs. 1,00,000/- under Sections 114(i) and 114AA of the Customs Act, 1962.

The appeals were partly allowed to the extent of the reduced penalties.