1993 (4) TMI 157 - AT - Customs

Summary

Issues Involved:

1. Non-fulfillment of export obligation under the DEEC Scheme.
2. Consideration of third-party exports towards fulfillment of export obligation.
3. Legality of the Tribunal's stay order and subsequent dismissal of the appeal.
4. Adequate opportunity for the appellants to get the DEEC Book endorsed.

Issue-wise Detailed Analysis:

1. Non-fulfillment of export obligation under the DEEC Scheme:
The appellants were required to fulfill an export obligation for Idochlorohydroxyquinoline after duty-free clearance of raw materials (Iodine and Hydroxyquinoline) under the DEEC Scheme. The Assistant Collector found that the appellants failed to meet this obligation within six months and confirmed a duty demand of Rs. 2,00,943.08 plus interest. The appellants contended that the export order was canceled, preventing full export, and argued for duty determination based on actual raw material usage and partial exports by M/s. Dey's Chemicals.

2. Consideration of third-party exports towards fulfillment of export obligation:
The appellants argued that exports made by M/s. Dey's Medical should count towards their export obligation, as M/s. Dey's Medical had signed the relevant bond and converted the raw materials into tablets for export. However, the Assistant Collector and the Collector (Appeals) rejected this argument, stating that Notification Nos. 117/78 and 44/87 did not allow for third-party exports to fulfill the importer's obligation. The Tribunal initially upheld this view, noting that the appellants had not exported the goods themselves and that no favorable modification of the DEEC had been received.

3. Legality of the Tribunal's stay order and subsequent dismissal of the appeal:
The Tribunal rejected the appellants' stay petition, emphasizing that the export obligation had not been met by the appellants themselves. The appellants then filed a writ application in the Calcutta High Court, which set aside the Tribunal's orders. The High Court observed that the Tribunal had overlooked the Licensing Authority's willingness to amend the DEEC book and noted that the Tribunal dismissed the appeal prematurely before the deadline for duty payment. The High Court directed the Tribunal to hear the appeal without requiring a pre-deposit.

4. Adequate opportunity for the appellants to get the DEEC Book endorsed:
Upon remand, the appellants presented evidence that the Licensing Authority had endorsed the DEEC book to show M/s. Dey's Medical Store as the manufacturing site. They also referred to a letter from the Joint Chief Controller of Imports and Exports indicating willingness to endorse third-party exports. The Tribunal found that the lower authorities had not considered this correspondence and had not given the appellants adequate opportunity to get the DEEC book endorsed. The Tribunal concluded that this amounted to non-application of mind and remanded the matter for de novo adjudication, directing the adjudicating authority to allow the appellants to get the DEEC book endorsed and to pass an order within four months after hearing the appellants.

Conclusion:
The appeal was allowed by way of remand, with instructions for the adjudicating authority to reconsider the case, taking into account the full facts and correspondence, and to provide the appellants an opportunity to get the relevant DEEC book endorsed by the licensing authority.