2019 (4) TMI 2074 - AT - Customs

Utilization of Advance License Scheme - it is allege that duty free imported raw materials as per the Bills of Entry were transferred/sold without using the same in the manufacture of export products against fulfilment of the export obligations - contravention of the conditions laid down under Notification Nos. 43/2002-Cus., dated 19.04.2002 and 93/2004-Cus., dated 10.09.2004 - subrule (2) of Rule 19 of the Central Excise Rules, 2002 - HELD THAT - The Notification Nos. 43/2002 dated 19.04.2002 and 93/2004 dated 10.09.2004, as amended have provided the conditions vide para (v) that the export obligation as specified in the said licence (both in value and quantity terms) is discharged within the period specified in the said licence or within such extended period as may be granted by the licensing Authority by exporting resultant products, manufactured in India which are specified in the said licence and in respect of which facility under rule 18 or rule 19 of the Central Excise Rules, 2002 has not been availed. - In this case, it is an admitted fact on record that in respect of the license no. 310272122 dated 01.06.2004, the appellant had already achieved the requisite export obligation as per the confirmation provided by the licensing authority in the letter dated 23.11.2005. The appellant had also paid the central excise duty along with interest in respect of the raw material procured by it without payment of central excise duty. Hence, requirements of the above referred notifications have been duly complied with by the appellant. The factual aspects of non-achievement of the export obligation and payment of central excise duty by the appellant have not been specifically disputed by the department - the appellant cannot be saddled with the adjudged demands confirmed against it in the impugned order. There are no merits in the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Compliance with conditions of Advance License for duty-free import.
2. Confiscation of imported goods under Section 111(o) of the Customs Act, 1962.
3. Duty demand, interest, and penalty imposed on the appellant.
4. Dispute regarding fulfillment of export obligations and payment of central excise duty.

Comprehensive Analysis:

Issue 1: Compliance with conditions of Advance License for duty-free import
The appellant, engaged in manufacturing paper products, applied for an Advance License to import raw materials for export of mini ATM rolls. The department objected to the utilization of the duty-free imported raw materials, alleging that they were transferred/sold without being used in the manufacture of export products. The appellant argued that it had fulfilled the export obligations and paid central excise duty along with interest, as evidenced by documents submitted. The Tribunal noted that the appellant had indeed complied with the conditions of the Advance License, as confirmed by the licensing authority. The department did not dispute the factual aspects of export obligation fulfillment and duty payment. Therefore, the Tribunal held that the appellant had met the requirements of the relevant notifications and could not be held liable for the demands confirmed in the impugned order.

Issue 2: Confiscation of imported goods under Section 111(o) of the Customs Act, 1962
The impugned order had confiscated the imported goods under Section 111(o) of the Customs Act, 1962, providing an option for redemption on payment of a fine. However, since the Tribunal found that the appellant had complied with the statutory provisions and the demands were not sustainable, the confiscation of goods was deemed unjustified. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

Issue 3: Duty demand, interest, and penalty imposed on the appellant
The impugned order had confirmed a duty demand, interest, and penalty on the appellant. However, since the Tribunal found that the appellant had fulfilled the export obligations and paid the central excise duty along with interest, as required, it held that the demands confirmed against the appellant could not be sustained. Therefore, the imposition of duty demand, interest, and penalty on the appellant was deemed unwarranted, and the impugned order was set aside accordingly.

Issue 4: Dispute regarding fulfillment of export obligations and payment of central excise duty
The dispute revolved around the fulfillment of export obligations and the payment of central excise duty by the appellant. The appellant provided evidence to show compliance with the requirements, which the Tribunal found to be satisfactory. The department did not specifically dispute the factual aspects of the appellant's compliance. Consequently, the Tribunal concluded that the appellant had indeed fulfilled the export obligations and paid the central excise duty, thereby warranting the setting aside of the impugned order and allowing the appeal in favor of the appellant.