2001 (1) TMI 392 - AT - Central Excise

Summary

Issues:
- Duty demand against the appellant under the impugned order-in-Original
- Whether the appellant violated the DEEC scheme by selling off imported goods
- Appellant's defense regarding transfer of goods to supporting manufacturer
- Liability of the appellant under the DEEC scheme
- Applicability of penalty provision on the supporting manufacturer
- Interpretation of relevant legal judgments and schemes

Analysis:

The appeal in this case challenges a duty demand of Rs. 18,92,881.82 imposed on the appellant by the Commissioner of Customs-I, New Customs House, Mumbai. The appellant, a merchant exporter, imported materials under the DEEC scheme and cleared them without paying customs duty. However, subsequent investigations revealed that some of the imported goods were sold off, leading to the duty demand.

The appellant raised two main contentions in defense. Firstly, they argued that the sale was conducted by their supporting manufacturer, not by them, and that they had taken precautions against such sales. Secondly, they contended that any liability should fall on the supporting manufacturer, citing a Supreme Court decision. However, the Revenue authority argued that the importer remains liable for duty in case of DEEC scheme violations, as established by a judgment of the Orissa High Court.

The Tribunal examined the legal position and held that the duty-free clearance of imported goods was conditional on not selling them, a condition the appellant had agreed to and taken precautions for. The liability could not be transferred to the supporting manufacturer. The Tribunal rejected the appellant's offer to recover Modvat credit and emphasized that the Amnesty scheme allowing this had lapsed. The Tribunal also dismissed the argument that penalty provisions should apply to the supporting manufacturer, stating that the Sales Tax Act judgment cited by the appellant was not relevant to the DEEC scheme.

Ultimately, the Tribunal confirmed the duty demand, ruling it legally valid and rejecting the appeal. The judgment reinforced the settled legal position that duty can be demanded for goods imported duty-free under the DEEC scheme if the exemption conditions are violated, citing relevant legal precedents and highlighting the appellant's awareness of their obligations under the scheme.