1999 (8) TMI 258 - AT - Customs

Summary

Issues Involved: Alleged mis-utilisation of DEEC scheme under Value Based Advance Licensing System leading to confirmation of Customs duty, interest, penalty, and demand for further interest.

Details of the Judgment:

Issue 1: Alleged Mis-utilisation of DEEC Scheme
The appeal was against Order-in-Original No. 56/98, concerning the misuse of the DEEC scheme under the Value Based Advance Licensing System. The appellants were alleged to have contravened the provisions of Notification No. 203/92-Cus. by not fulfilling the export obligation of the specified final product, IBUPROFEN, within the stipulated period. The order upheld the mis-utilisation, resulting in the confirmation of Customs duty, interest, penalty, and further interest demand.

Issue 2: Appellant's Defense
The appellants argued that they had to partially clear the final product for home consumption due to limited shelf life of imported raw materials and insufficient foreign orders. They highlighted that the Export Trade Control authorities extended the export obligation period until 31-10-1996, which was met before the deadline. They referred to previous Tribunal decisions in their favor, emphasizing that the duty liability and penalty were not sustainable under the DEEC scheme.

Issue 3: Customs Duty Exemption and Export Obligation
The Departmental Representative contended that the extension of the export obligation period did not automatically retain the Customs duty exemption. Emphasis was placed on discouraging misuse of exemption notifications through the imposition of deterrent penalties.

Judgment
After considering the submissions and records, the Tribunal noted that the allegations were related to the sale of the final product in the domestic market and failure to adhere to the export obligation period, not the diversion of raw materials. Referring to previous Tribunal decisions, including Final Order No. 73/98, which had been accepted by the Commissioner of Customs, Chennai, the Tribunal concluded that duty and penalty were not leviable when the export obligation was fulfilled within the extended period. Therefore, the Order-in-Original was set aside, and the appeal was allowed with consequential relief, in line with established legal principles.