2006 (4) TMI 128 - SC - Customs

Whether the benefit of Notification Nos. 159/90-Cus. and 204/92-Cus. be denied for the reasons that it has not been shown that the condition in the notification that the imported goods were identical in terms of quality and technical characteristics with those used in the export product? Held that - Set aside the order of the Tribunal with consequential reliefs and hold that the appellant-assessee is entitled to the benefit of the Exemption Notification Nos. 159/90-Cus. and 204/92-Cus. In favour of assessee.

Issues Involved:
1. Entitlement to Exemption Notification Nos. 159/90-Cus. and 204/92-Cus.
2. Judicial Propriety and Precedent
3. Provisional Assessment and Clearance of Goods
4. Cancellation of Advance Licences and DEEC Certificates

Detailed Analysis:

1. Entitlement to Exemption Notification Nos. 159/90-Cus. and 204/92-Cus.
The appellant, a manufacturer and exporter of Aromatic Chemicals and Natural Essential Oils, imported various chemicals under advance licences. The Customs Authorities initially refused clearance, leading to provisional assessments and legal challenges. The appellant contended entitlement to exemption under Notification Nos. 159/90-Cus. and 204/92-Cus. The Tribunal initially rejected this claim, but the Supreme Court, referencing the Tribunal's decision in Jayant R. Patel v. Commissioner of Customs, Hyderabad, held that the appellant is entitled to the benefit of these notifications. The Court emphasized that once the licensing authority is satisfied, the customs authorities should not re-evaluate the eligibility for duty-free import.

2. Judicial Propriety and Precedent
The Tribunal's decision to not follow the Madras Bench's ruling in Jayant R. Patel was scrutinized. The Supreme Court emphasized the importance of judicial propriety, stating that if a Bench of co-ordinate jurisdiction disagrees with another, it should refer the matter to a Larger Bench rather than taking a contra view. This practice ensures consistency and avoids confusion. The Court cited its previous ruling in Jayaswals Neco Ltd. v. Commissioner of Central Excise, Nagpur, reinforcing that such matters should be referred to a Larger Bench to maintain judicial propriety.

3. Provisional Assessment and Clearance of Goods
The appellant faced provisional assessments requiring the submission of a P.D. Bond and Bank Guarantee for the duty amount. Despite compliance, the Customs Authorities continued to refuse clearance, leading to multiple writ petitions. The High Court allowed clearance of consignments under specific conditions, but the underlying issue of duty exemption remained unresolved until the Supreme Court's intervention.

4. Cancellation of Advance Licences and DEEC Certificates
The Customs Authorities issued a show cause notice alleging that the exported products did not match the imported goods, leading to the cancellation of advance licences and DEEC certificates. The Collector's order denied the benefit of the exemption notifications, citing non-compliance with conditions regarding the identity and characteristics of the imported goods. However, the Supreme Court found that the appellant had completed export obligations and was entitled to the exemptions, overturning the Tribunal's decision.

Conclusion:
The Supreme Court accepted the appeal, set aside the Tribunal's order, and granted the appellant the benefit of Exemption Notification Nos. 159/90-Cus. and 204/92-Cus. The Court underscored the necessity of judicial propriety and consistency in decision-making, directing that matters of disagreement within co-ordinate benches should be referred to a Larger Bench. The appellant was entitled to consequential reliefs, and the parties were to bear their own costs.

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