2015 (3) TMI 72 - AT - Customs

Bonafide exporter - export of leather labels - Benefit of Notification No. 20/99-Cus. dated 28.2.1999 - Revenue s grievance is that appellant was not bonafide exporter in view of no exports done by appellant making use of labels imported, in the exportable goods in absence of any export - Held that - Bonafide character of the exporter is essential to avail the duty exemption under Sl. No. 83 of the Notification above. No doubt the appellant was registered with Apparel Export Promotion Council. But the object of the notification to grant duty exemption to the bonafide exporter is to earn foreign exchange for the country. Appellant failed to establish whether it has earned any foreign exchange out of the use of the imported goods exporting goods. In absence of earning of foreign exchange for the country, public interest is defeated. That questions bonafide of appellant. No doubt the notification does not contain any end use condition. Plea of appellant as to absence of end use condition in the notification does not bring a difference to law when object of the notification is to serve public interest. Exemption is granted in public interest to encourage exports so that foreign exchange is earned for this country. Therefore, any act defeating such purpose disentitles to the benefit sought to be granted by the notification. Accordingly, for all the reasons stated above, it is not possible to hold that the imports were made by bonafide exporter. Benefit of the notification is rightly deniable to the appellant who has defeated public interest. - Decided against assessee.

Summary

Issues:
1. Interpretation of Notification No. 20/99-Cus. dated 28.2.1999
2. Bonafide exporter status and eligibility for duty exemption
3. Impact of lack of exports on duty exemption
4. Consideration of public interest in granting duty exemption

Interpretation of Notification:
The appeal was remitted by the High Court for readjudication by the Tribunal. The appellant availed benefit under Notification No. 20/99-Cus. dated 28.2.1999 for imported leather labels. The customs duty forgone by the State was significant. The notification specified goods covered by Chapter 39 and 48 imported by a bonafide exporter as exempt from duty.

Bonafide Exporter Status:
The Revenue contended that the appellant was not a bonafide exporter as no exports were made using the imported labels. This lack of exports defeated the purpose of the notification. The appellant's registration with the Apparel Export Promotion Council was deemed insufficient to establish bonafide exporter status.

Impact of Lack of Exports:
The appellant's failure to export goods using the imported labels raised concerns about the misuse of the duty exemption. Statements from the appellant's officers indicated that a majority of the manufactured jeans were sold in the domestic market, undermining the intended purpose of earning foreign exchange for the country.

Consideration of Public Interest:
The Tribunal emphasized the public interest aspect of the duty exemption notification, aiming to encourage exports for foreign exchange earnings. The absence of foreign exchange earnings due to domestic sales led to the conclusion that the appellant did not act as a bonafide exporter. The Tribunal dismissed the appeal, highlighting the importance of upholding public interest in granting duty exemptions.

This detailed analysis of the judgment provides insights into the interpretation of the notification, the criteria for bonafide exporter status, the impact of lack of exports on duty exemption eligibility, and the significance of public interest considerations in such cases.