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Issues Involved:
1. Jurisdiction of Customs Authorities 2. Applicability of Amnesty Scheme 3. Validity of Licence Amendments 4. Penalty Imposition on VSP 5. Obligations of Transferee of Advance Licences 6. Invocation of Extended Period of Limitation 7. Jurisdiction of DRI in Issuing Show Cause Notices Summary: 1. Jurisdiction of Customs Authorities: VSP contended that Customs authorities have no jurisdiction and are bound to clear imported raw materials duty-free if they conform to the description in the Advance Licences. DGFT alone is the appropriate authority to act in case of any contravention in the licence. The adjudicating authority upheld this view, stating that the Customs authorities cannot deny exemption once the licence has been amended to include specific items. 2. Applicability of Amnesty Scheme: VSP reversed Modvat credit in terms of the Amnesty Scheme along with interest prior to 31-3-97. The Tribunal held that since VSP reversed Modvat credit, they are entitled to the benefit of the Amnesty Scheme, and hence the benefit of duty-free import under Notification No. 203/92 is available to goods imported by them. This was supported by the Tribunal's decisions in Commissioner of Customs v. Kantilal Manilal Co. Pvt. Ltd. and Kitply Industries Ltd. v. Commissioner of Customs, Kandla. 3. Validity of Licence Amendments: The amendments to the licences to include non-coking coal, lime, and copper bars and rods were upheld. The DGFT's discretion in amending the licences was recognized, and it was held that Customs authorities cannot question the licensing authority's discretion. The Tribunal relied on previous decisions, including Garware Wall Ropes v. Commissioner of Customs, Sheva, and Rama News Prints & Paper Ltd. v. CC, Kandla. 4. Penalty Imposition on VSP: The Tribunal found that penalties could not be imposed on VSP as they were not the importers against transferred licences. The reversal of Modvat credit under the Amnesty Scheme nullified the charge of availing input stage credit. The Tribunal held that the question of interpretation of the notification could not give rise to the imposition of penalties. 5. Obligations of Transferee of Advance Licences: Transferees of advance licences do not have to establish a nexus between the export goods and the input imported duty-free. The Tribunal cited several cases, including Commissioner of Customs v. Salem Stainless Steel and Goodluck Industries v. CC, Calcutta, to support this view. The Tribunal held that the demand against the importers who made imports against the transferred licences is barred by limitation. 6. Invocation of Extended Period of Limitation: The Tribunal held that the proviso to Section 28 of the Customs Act, 1962, cannot be invoked against the transferee of the advance licence who had no knowledge about the availment of Modvat credit by the transferors. The Tribunal's decision in Purulax Electric Pvt. Ltd. v. CC, Mumbai was applied, which states that the proviso to Sec. 28 (1) of the Customs Act is attracted only when mis-statement or suppression is by the importer. 7. Jurisdiction of DRI in Issuing Show Cause Notices: The Tribunal upheld the view that the show cause notices issued by the DRI invoking the extended period of limitation were without jurisdiction. The Commissioner followed the Tribunal's decision in Poona Roller to conclude that only the Commissioner of Customs is the proper officer to issue such notices. Consequently, the show cause notices issued by the DRI were held to fail for want of jurisdiction. Conclusion: The Tribunal upheld the order of the Commissioner, finding no legal infirmity, and rejected the appeals by the Revenue.
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