2000 (6) TMI 66 - AT - Customs

Summary

Issues Involved: Import requirements under the Import-Export Policy 1992-1997, classification of Heptene and Nonene as Naphtha, applicability of Notification benefits, waiver of policy conditions by licensing authorities, and the scope of show cause notice versus adjudication order.

Detailed Analysis:

1. Import Requirements under the Import-Export Policy 1992-1997:
The appellants were issued a show cause notice alleging that several consignments of Heptene and Nonene were imported without satisfying the requirements under the Import-Export Policy 1992-1997. The show cause notice claimed that the appellants imported these goods as Naphtha and claimed benefits under Notifications No. 12/97, 11/97, and 41/96. The notice further alleged that the goods, classified under Chapter Sub-heading 2710.00 of the Customs Tariff Act, 1975, as Naphtha, should comply with the licensing conditions under the Exim Policy.

2. Classification of Heptene and Nonene as Naphtha:
The bills of entry described the imported goods as Heptene and Nonene, classifiable as "Naphtha." The importability of Naphtha under the policies was permitted without a license, subject to the condition that the importer sells the return stream of Naphtha to crude oil refineries or uses it for captive consumption. The show cause notice alleged that the importers failed to fulfill these conditions, making the goods liable for confiscation under Section 111(d) of the Customs Act, 1962.

3. Applicability of Notification Benefits:
The importers had approached the licensing authorities, explaining their position that crude oil refineries were not inclined to purchase their return stream. The licensing authority waived the condition of selling the return stream to crude oil refineries and permitted its use as industrial feedstock/fuel for captive consumption. This waiver was granted through letters dated 17-12-1997 and 6-8-1998, covering both policy periods (1992-97 and 1997-2001).

4. Waiver of Policy Conditions by Licensing Authorities:
Both policies included provisions allowing the licensing authorities to relax or waive any policy provisions if strict application would create genuine hardship. The waivers granted by the DGFT were applicable to all seven imports, as the assessments were provisional, and the importers had executed ITC bonds. The clarifications issued by the licensing authorities were binding on the Customs authorities, as supported by several judgments cited by Shri Hidayatullah.

5. Scope of Show Cause Notice versus Adjudication Order:
The show cause notices presumed that Heptene and Nonene qualified as "Naphtha" for assessment under the Customs Tariff. The Commissioner, however, distinguished between Naphtha and Heptene/Nonene, leading to the order of confiscation. This approach was beyond the scope of the show cause notice, violating natural justice principles. The Tribunal held that the Commissioner's order could not survive as it expanded the scope of the dispute beyond the show cause notice.

Conclusion:
The Tribunal concluded that the imports were within the parameters of the policy as relaxed by the licensing authorities. The appeal succeeded, and the order of confiscation was set aside with consequential relief. The Tribunal emphasized that Customs authorities could not ignore clarifications issued by the licensing authority, ensuring consistency and preventing inconvenience to importers. The appeal was allowed, and the order pronounced by the Tribunal was agreed upon by both members.