2015 (12) TMI 729 - AT - Customs

Whether once the export obligation is discharged the conditions of customs Notification No. 48/99 are no more relevant - Diversion of goods - marking in the goods differed when enquiry was made with overseas exporter - Held that - There is a condition in the EXIM Policy that the imported goods should be utilized for the purpose of manufacture of goods and the goods so manufactured should be exported to earn foreign exchange. But mere earning of the foreign exchange shall not ipso facto establish a case of compliance to the condition of EXIM Policy when export of the goods manufactured using imported raw material is not established. It may so happen that hawala money may come through questionable exports. Therefore, it is necessity of law that the raw materials which were imported duty free should only result in export of finished goods manufacture out of such raw materials making value addition to the imported goods. This is absent in the present case. Investigation found the goods were diverted to market. There was no pleading of the respondent to defend such allegation before the appellate authority below. Its bonafide was questioned when the stainless steel coil bearing the mark 304 DDQ 0.7000x1250xcoil was discovered by investigation not agreeing with the specification appeared in Invoice No. 2839@USD 1930 PMT/CIF - discrepancy establishes a case of violation of import condition for which the respondent was not entitled to any relief before learned Commissioner (Appeals). Therefore, the adjudication order is restored and the appellate order is set aside - Decided in favour of Revenue.

Summary

Issues:
1. Respondent's failure to respond to the Tribunal's notices.
2. Allegations of violation of customs Notification No. 48/99.
3. Alleged diversion of imported goods for unauthorized purposes.
4. Lack of inextricable link between import and export of finished goods.
5. Discrepancy in goods discovered during investigation.

Analysis:
1. The respondent failed to respond to the Tribunal's notices, leading to no representation or adjournment sought. This lack of response hindered the proceedings and affected the case's outcome adversely.

2. The Revenue appealed against the order of the learned Commissioner (Appeals) regarding the absence of allegations that the goods were not in stock upon the discharge of export obligation. The Commissioner held that once the export obligation is fulfilled, the conditions of customs Notification No. 48/99 become irrelevant.

3. The Revenue contended that the respondent had imported raw materials duty-free for manufacturing and exporting goods to earn foreign exchange. However, an investigation revealed a diversion of materials, as evidenced by discrepancies in goods found in a private warehouse. The mere discharge of export obligations and production of certificates were deemed insufficient to establish compliance with import conditions.

4. The Tribunal emphasized the necessity for an inextricable link between the import of raw materials and the export of finished goods to ensure compliance with the EXIM Policy. The investigation uncovered that the goods were diverted to the market, indicating a violation of import conditions. The respondent's failure to defend these allegations further weakened its case before the appellate authority.

5. The discrepancy in goods discovered during the investigation, where the specifications did not match the actual goods found, was a crucial factor in establishing a violation of import conditions. This discrepancy led to the restoration of the adjudication order, setting aside the appellate order in favor of the Revenue's appeal.