1992 (7) TMI 169 - AT - Customs

Summary

Issues Involved:
1. Grant of exemption under Notification No. 44/87-Cus., dated 19-2-1987.
2. Compliance with conditions of the Duty Exemption Entitlement Certificate (DEEC) Scheme.
3. Interpretation of the term "resultant product" in the context of the notification.
4. Applicability of Section 74 of the Customs Act regarding duty drawback.
5. Scope for liberal interpretation of the notification.

Issue-wise Detailed Analysis:

1. Grant of Exemption under Notification No. 44/87-Cus., dated 19-2-1987:
The appellants sought exemption under Notification No. 44/87-Cus., dated 19-2-1987 for components of a lime kiln exported to Bhutan. The Asstt. Collector of Customs rejected the claim on the grounds that the goods were exported without any manufacturing process in India. The Collector (Appeals) upheld this decision, stating that the goods must be used for manufacturing resultant products in India to qualify for the exemption. The Tribunal agreed, emphasizing that the basic stipulation of the notification was not fulfilled as the goods were exported in the same condition as imported.

2. Compliance with Conditions of the Duty Exemption Entitlement Certificate (DEEC) Scheme:
The appellants imported components against an Advance Licence and DEEC Book. They argued that the components were specified in Part 'C' of the DEEC Book and were eligible for exemption. However, the Tribunal noted that the DEEC Certificate specified the manufacturing location as "M/s. Vulcan Engineers (P) Ltd., MIDC Area, Ahmednagar," indicating that the resultant products were to be manufactured in India. Since the appellants did not manufacture the resultant products in India, they did not comply with the DEEC Scheme's terms.

3. Interpretation of the Term "Resultant Product":
The appellants contended that the term "resultant product" should include components exported for assembly abroad. The Tribunal rejected this argument, clarifying that the notification and DEEC Scheme required the resultant products to be manufactured in India. The Tribunal stated that the notification's terms could not be construed to allow exemption for goods exported without any manufacturing process in India.

4. Applicability of Section 74 of the Customs Act Regarding Duty Drawback:
The Tribunal noted that the issue at hand was not about duty drawback under Section 74 of the Customs Act but the applicability of the exemption notification. The Tribunal did not address the duty drawback argument further, as it was irrelevant to the main issue of exemption under Notification No. 44/87-Cus.

5. Scope for Liberal Interpretation of the Notification:
The appellants argued for a liberal interpretation of the notification, citing various legal precedents. The Tribunal acknowledged that liberal interpretation is applicable in cases where procedural breaches occur, but not when the fundamental terms of the notification are not met. Since the appellants did not comply with the notification's core requirements, the Tribunal concluded that a liberal interpretation was not warranted.

Conclusion:
The Tribunal upheld the lower authorities' decisions, denying the exemption under Notification No. 44/87-Cus., dated 19-2-1987, as the appellants failed to manufacture the resultant products in India as required by the DEEC Scheme and the notification. The appeal was dismissed.