2001 (10) TMI 232 - AT - Customs

Summary

Issues:
1. Duty demand and penalty imposed on imported fabrics under DEEC Scheme.
2. Discrepancy in description of fabrics in DEEC license and shipping documents.
3. Fulfillment of export obligation under DEEC Scheme.
4. Entitlement of exporters to receive raw materials duty-free under DEEC Scheme.
5. Correlation between imported goods and exported goods.
6. Delay in disputing the description of goods and its impact on duty exemption.

Analysis:
1. The appeal challenged an order imposing duty demand and penalty on fabrics imported under the Duty Exemption Entitlement Certificate (DEEC) Scheme due to a discrepancy in the type of fabrics imported and specified in the DEEC license. The appellants argued that they fulfilled their substantive obligation by processing and exporting the fabrics as garments, meeting the DEEC Scheme requirements.

2. The appellants contended that once the export obligation is met, no duty demand should be raised, citing precedents like Dolphin Drugs (P) Ltd. v. CC, Mumbai and other tribunal decisions. The Customs Authorities argued that the discrepancy justified the duty demand. However, the Tribunal emphasized the importance of fulfilling export obligations under the DEEC Scheme to avoid export goods bearing the burden of customs duty on raw materials.

3. The Tribunal noted that the imported fabrics were used for export production, and the correlation between imported and exported goods was established. The delay in disputing the goods' description should not deny duty exemption for export goods. The Tribunal relied on previous decisions to support the appellants' position that the benefit of the DEEC Scheme should not be denied when export obligations are fulfilled.

4. Considering the facts and circumstances, the Tribunal found the duty demand and penalty unjustified. The impugned order was set aside, and the appeal was allowed with consequential relief to the appellants. The Tribunal emphasized the need to align customs duty exemptions with the fulfillment of export obligations under the DEEC Scheme to prevent unintended consequences for exporters.