2015 (11) TMI 1328 - AT - Customs

Denial of exemption claim - goods imported under DEEC Licence as transferee of the said licenses - Modvat Credit - Held that - In the show cause notice there is allegation that manufacturer/exporter i.e. original licence holder has availed modvat credit and made wrong declaration in the export documents to the effect that no modvat credit was availed and as such violated the condition V(a) of Notification No. 203/92-Cus. However, it is undisputed facts that show cause notice has no base or infact no single document has been relied upon in the show cause notice that the manufacturer exporter made a wrong declaration on the export documents that no modvat credit was availed on the input used in the export goods, the entire proceedings is vitiated by the Revenue as it failed to prove that the declaration is incorrect. Allegation of charge is possible only by adducing tangible documentary evidences such as modvat invoices, modvat account in respect of input of manufacturer exporter. No such exercise was carried out in order to issue effective show cause notice. In view of this fact the show cause notice and the allegation made there under without support of any evidence cannot stand. - transferee s import under legitimate transferred licence cannot be disputed on the ground that obligation casted on exporter manufacturer regarding non availment of Modvat credit was not satisfied. - Appeal of revenue is not maintainable - Decided against Revenue.

Summary

Issues:
1. Interpretation of Notification No. 203/92-Cus regarding exemption on imported goods under DEEC licenses.
2. Allegation of non-compliance with conditions of exemption by the importer.
3. Validity of show cause notice and evidence presented to support the allegations.
4. Legal position on the importer's liability for non-compliance with conditions originally imposed on the exporter.

Analysis:
1. The appeal revolved around the interpretation of Notification No. 203/92-Cus concerning the exemption granted on imported goods under DEEC licenses. The respondent, engaged in manufacturing excisable goods, imported inputs under duty-free licenses transferred to them by the DGFT authorities.

2. The Revenue contended that the importer did not comply with the conditions of the exemption, specifically regarding the non-availment of input stage modvat credit by the original license holder. The Revenue argued that the exemption was not admissible unless this condition was met, leading to the initiation of proceedings against the importer.

3. The validity of the show cause notice and the evidence presented to support the allegations were questioned by the respondent. It was highlighted that the show cause notice lacked tangible documentary evidence to prove the alleged non-compliance with conditions. The absence of supporting documents rendered the proceedings initiated by the Revenue baseless and unsubstantiated.

4. The Tribunal, after considering the arguments presented, emphasized that the importer's liability for non-compliance with conditions originally imposed on the exporter was not established due to the lack of concrete evidence. Referring to legal precedents, including the judgment in Collector of Customs v. Hico Products Ltd., the Tribunal concluded that the importer's legitimate import under transferred licenses cannot be disputed solely based on the exporter's obligations. As a result, the appeal of the Revenue was dismissed, and the cross objection was disposed of accordingly. The Tribunal highlighted the importance of providing substantial evidence to support allegations in such cases to ensure a fair and justified legal process.