2008 (12) TMI 206 - HC - Customs

DEEC Scheme / advance licence licence was valid at the time of import but expired at the time of clearance - whether the material imported is covered by the licence, and allowed the appeal holding that as per the Notification in question (that) the material imported should be covered by DEEC licence which follows that the licence is for the goods and not specifically for the importer alone held that - The importer s right to bring in the goods duty-free depends on the Advance licence, and when the Licence is not valid on the date when the duty is to be assessed, the right of exemption ceases. - . When the section as well as the judgments of the Supreme Court indicate that the incidence of duty depends on the time of clearance, and if the licence entitling the importer to bring in goods duty free had expired at the time when the goods were cleared, the department is right in objecting to his claim for exemption from duty on the ground that he had a valid Advance Licence under the DEEC scheme at the time of the import.

Issues Involved:
1. Validity of the Advance Licence at the time of clearance.
2. Applicability of Section 15(1)(b) of the Customs Act, 1962.
3. Interpretation of relevant Circulars and Notifications.
4. Tribunal's decision on duty exemption based on the date of shipment versus date of clearance.

Issue-wise Detailed Analysis:

1. Validity of the Advance Licence at the time of clearance:
The primary issue was whether the Advance Licence, which was valid at the time of import but expired before the clearance of goods from the warehouse, could still be used to claim duty exemption. The court held that the validity of the licence at the time of clearance is crucial. The Customs Act and relevant notifications clearly stipulate that a valid licence must be presented at the time of clearance to claim exemption.

2. Applicability of Section 15(1)(b) of the Customs Act, 1962:
Section 15(1)(b) specifies that the rate of duty applicable to warehoused goods is the rate in force on the date the goods are actually removed from the warehouse. The court affirmed that this section applies to determine the rate of duty and that the duty must be assessed based on the date of clearance, not the date of import or shipment.

3. Interpretation of relevant Circulars and Notifications:
The court examined various circulars and notifications, including Circular No. 12/95, Circular No. 51/95, and Circular No. 117/95. These circulars emphasize the necessity of verifying the validity of the licence at the time of clearance. The court highlighted that the Telegraphic Release Advice and other circulars stress the importance of a live and valid licence at the time of clearance, not just at the time of import.

4. Tribunal's decision on duty exemption based on the date of shipment versus date of clearance:
The Tribunal had held that the material imported should be covered by the DEEC licence, interpreting the notification to mean that the licence is for the goods and not specifically for the importer. However, the court found this interpretation erroneous, stating that the crucial question was whether the licence was valid at the time of clearance. The Tribunal's decision was based on a misinterpretation of the relevant legal provisions and Supreme Court precedents.

Conclusion:
The court concluded that the importer was not entitled to claim duty exemption as the Advance Licence had expired at the time of clearance. The Tribunal's order was set aside, and the appeal was allowed. The court emphasized that the incidence of duty depends on the time of clearance and that a valid licence must be presented at that time to claim exemption.

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