2016 (11) TMI 1322 - AT - Customs

Claim of exemption on import goods against advance licence - Input stage credit - Rule 57A of the Central Excise Rules - entitlement to the exemption availed under notification No.203/92-Cus dated 19/05/1992 - forged licence - Held that - the appellant is a transferee of the licences which were issued to the original manufacturer exporter. The said licenses are genuine and there is no allegation that these licenses were procured by forging the documents or the licenses were forged. The licenses were produced by the appellant before the authorities in 1994 while clearing the goods imported and claimed the exemption as per the licenses. It is a case of the Revenue that the appellant is ineligible to avail the benefit of notification No.203/92 as they could have availed the modvat credit on inputs in respect of the materials exported for procuring the advance licenses. While it is a case of the appellant that there is no evidence shown that the original licence holder who was a manufacturer exporter had availed modvat credit. On perusal of the advance licenses which are annexed when the appeal memorandum we do find strong force in the submissions made by the learned Counsel that these licenses were issued to some other manufacturer exporter who had sold these licenses to the appellants. If it is so then in our view demand of custom duty cannot be made against the appellant holding that they have availed modvat credit on the inputs. We find that there is no evidence in the entire records to indicate that the appellant had availed modvat credit on the inputs in order to deny the benefit of Notification No.203/92 dated 19/05/92 - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Interpretation of duty exemption under Notification No.203/92-Cus for imported goods.
2. Burden of proof on the appellant regarding non-availment of modvat credit.
3. Validity of show-cause notice and evidence requirement.
4. Determination of eligibility for exemption under Notification No.203/92-Cus.
5. Consideration of case laws and their applicability to the current case.

Issue 1: Interpretation of duty exemption under Notification No.203/92-Cus:
The appeal challenged an Order-in-Original passed by the Commissioner of Customs regarding duty exemption under Notification No.203/92-Cus for goods imported by the appellants in 1994. The appellants had acquired transferable value-based Advance Licenses for duty exemption. The dispute arose when a recovery letter demanded duty and penalty, alleging non-compliance with conditions of the exemption notification.

Issue 2: Burden of proof on the appellant regarding non-availment of modvat credit:
The appellant argued that the burden of proof regarding the alleged availing of modvat credit on inputs by the original license holder rested with the Revenue, citing legal precedents. The Tribunal considered the appellant's status as a transferee of licenses issued to the manufacturer exporter and emphasized the lack of evidence showing modvat credit availed by the original holder.

Issue 3: Validity of show-cause notice and evidence requirement:
The Tribunal analyzed the show-cause notice's deficiencies in citing evidence supporting the modvat credit allegation against the appellants. It highlighted the appellant's submission that the licenses were acquired from the manufacturer exporter, making it impractical to prove non-availment of modvat credit by the original holder.

Issue 4: Determination of eligibility for exemption under Notification No.203/92-Cus:
The Tribunal scrutinized the licenses produced by the appellants during import clearance, confirming their authenticity and transferable nature. It noted the absence of evidence indicating modvat credit availed by the original license holder, supporting the appellants' entitlement to the exemption under Notification No.203/92-Cus.

Issue 5: Consideration of case laws and their applicability:
The Tribunal assessed case laws cited by both parties, emphasizing the distinctions in factual circumstances. It relied on legal precedents to conclude that the absence of evidence showing modvat credit availed on inputs by the appellants warranted setting aside the impugned order and allowing the appeal with consequential relief.

In conclusion, the Tribunal found the impugned order unsustainable due to insufficient evidence of modvat credit availed by the appellants, thereby ruling in favor of the appellant and setting aside the order. The judgment highlighted the importance of burden of proof, validity of show-cause notices, and eligibility criteria for duty exemptions under relevant notifications.