2004 (11) TMI 233 - AT - Customs

Admissibility of exported goods towards export obligation - Denial of duty exemption benefits - Advance licences - 'Actual User (Industrial)' - duty - interest - Penalty - HELD THAT - We find that admittedly, in terms of the licences, the appellants had imported 638.368 MTs of Stainless Steel and exported 500.716 MTs of utensils and thus fulfilled the export obligation which fact is not in dispute. Such discharge of export obligation has been certified by the licensing authority itself. It was at the DRIs instance that the JDGFT initiated proceedings for cancelling the licences and penalising the appellants. The said proceedings culminated in a quasi-judicial order, dated 10-12-2003 passed by the JDGFT, Chennai wherein the said authority categorically held that export obligation has been discharged in terms of the licence. It is clear from the definition of Actual user. (Industrial) that the importer is free to manufacture the final product in his own industrial unit or in any other unit including a jobbing unit. In the face of the above definition, the Revenue's contention that at least some activity or any manufacturing process must he carried out in his factory premises in order to categorise him as manufacturer-exporter , cannot be countenanced. In the present case also there is no material before us to take a different view. Following the above view expressed by us in the final order Navjyothi International 2004 (9) TMI 178 - CESTAT, CHENNAI and M/s. Bharat Steel Corporation 2004 (11) TMI 234 - CESTAT, CHENNAI , we hold that the charge of breach of conditions of the Customs Notifications does not survive against the appellants in the wake of the JDGFT's order dated 10-12-2003 which by now is final and binding on the Customs authorities. Thus, we hold that the impugned order is not legal and proper and we set aside the same and allow the appeal with consequential relief if any, as per law.

Summary

Issues Involved:
1. Admissibility of exported goods towards export obligation.
2. Denial of duty exemption benefits.
3. Demand for duty and interest.
4. Confiscation of goods and imposition of fine and penalty.
5. Allegations of misuse of Advance licences and diversion of imported raw materials.

Summary of Judgment:

1. Admissibility of Exported Goods Towards Export Obligation:
The Commissioner of Customs (Exports), Chennai, held that 500.716 MTs of SS utensils valued at Rs. 5,43,75,495/- were inadmissible towards the export obligation as the exported goods were locally procured. However, the appellants argued that they fulfilled the export obligation by exporting 500.716 MT of utensils and obtained necessary shipping bills and Test Reports, which were certified by the JDGFT. The Tribunal noted that the JDGFT had confirmed the discharge of export obligation and issued an Export Obligation Discharge Certificate.

2. Denial of Duty Exemption Benefits:
The Commissioner denied the benefit of duty exemption under Notification Nos. 30/97, 51/2000-Cus., and 48/99 for the import of 638.368 MTs of SS Coils/sheets. The appellants contended that they utilized the imported raw material for manufacturing export products through job workers, which was permissible under the EXIM Policy. The Tribunal found that the JDGFT's order had certified the fulfilment of export obligations, thus negating the denial of duty exemption benefits.

3. Demand for Duty and Interest:
The Commissioner demanded duty of Rs. 2,57,82,659/- on the imported SS coils/sheets under proviso to Section 28(1) of the Customs Act, 1962, along with interest u/s 28AB. The Tribunal observed that the JDGFT's order, which was not challenged by the Revenue, had confirmed the fulfilment of export obligations, rendering the demand for duty and interest baseless.

4. Confiscation of Goods and Imposition of Fine and Penalty:
The Commissioner ordered the confiscation of duty-free imported goods u/s 111(o) of the Customs Act and imposed a fine of Rs. 40,00,000/- u/s 125, along with a penalty of Rs. 2,57,82,659/- u/s 114A. The Tribunal held that the JDGFT's order, which had attained finality, negated the allegations of non-fulfilment of conditions of the licence/Notifications, thus invalidating the confiscation, fine, and penalty.

5. Allegations of Misuse of Advance Licences and Diversion of Imported Raw Materials:
The DRI alleged that the appellants misused Advance licences by diverting duty-free imported raw materials and exporting locally procured goods. The Tribunal noted that the JDGFT had rejected these allegations and confirmed the discharge of export obligations. The Tribunal also found no evidence of the appellants selling imported raw materials in the domestic market or purchasing SS utensils from the market.

Conclusion:
The Tribunal set aside the impugned order, holding that the charge of breach of conditions of the Customs Notifications did not survive against the appellants in light of the JDGFT's order, which was final and binding. The appeal was allowed with consequential relief as per law.