2017 (8) TMI 203 - AT - Customs

Benefit of Advance Licence - denial of benefit on the ground that transferor availed CENVAT credit on inputs procured from the domestic market for manufacture of export goods - Held that - Mere availment of credit is not sufficient to invoke the provisions of section 111 of Customs Act, 1962. The goods could not have been held to be liable for confiscation without evidence of post-importation conditions having been breached - appeal allowed - decided in favor of appellant.

Issues:
1. Liability of an advance license holder for recovery of duty foregone on imports by the transferee.
2. Alleged breach of condition in the exemption notification.
3. Confiscation of imported goods.
4. Availment of CENVAT credit by the transferor.
5. Transferability of the license.
6. Failure to consider evidence of non-availment by the adjudicating authority.
7. Invocation of provisions of section 111 of Customs Act, 1962.
8. Imposition of penalty under section 112 of Customs Act, 1962.

Issue 1: The primary issue in this case was whether an advance license holder, upon transferring the license after fulfilling the export obligation, can be held liable for the duty foregone on imports by the transferee due to an alleged breach of condition in the exemption notification. The appellant argued that the breach was based on a presumption of availment of credit and that the law does not require the license holder to prove non-occurrence.

Issue 2: The case involved a challenge against an order by the Commissioner of Customs imposing duty liability, interest, and penalty on the transferor for alleged breach of condition of non-availment of credit. The Tribunal noted that the transferor had completed its export obligation and transferred the license, shifting the contractual obligation to the transferee, making the duty liability on the transferor untenable.

Issue 3: The Revenue appealed against the failure to confiscate the imported goods. However, the Tribunal found that there was no evidence of post-importation conditions being breached, rendering the goods not liable for confiscation. The appeal of Revenue was dismissed on this ground.

Issue 4: The Tribunal highlighted that mere availment of credit is not sufficient to invoke the provisions of section 111 of Customs Act, 1962. The alleged breach of condition regarding availment of credit was not substantiated with evidence, and the goods could not be held liable for confiscation based on pre-importation occurrences by the license holder.

Issue 5: The case involved the transferability of the license to another entity who utilized it for duty-free imports. The Tribunal emphasized that with the transfer of the license, the contractual obligation with Revenue shifted to the transferee, absolving the transferor from liability for duty foregone on imports by the transferee.

Issue 6: The adjudicating authority was criticized for failing to consider the evidence of non-availment of credit furnished by the transferor. The Tribunal found that the alleged breach of condition was based on presumption and lacked fundamental evidence, making the impugned order not sustainable.

Issue 7: The Tribunal clarified that the provisions of section 111 of Customs Act, 1962 pertain to imported goods and the importer. Without evidence of post-importation conditions being breached, the goods could not be held liable for confiscation, leading to the dismissal of the appeal by Revenue.

Issue 8: The imposition of penalty under section 112 of Customs Act, 1962 was deemed unjustified due to the lack of evidence supporting the alleged breach of condition. The impugned order was set aside, and the appeal of the transferor was allowed while the appeal of Revenue was dismissed.

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