2013 (1) TMI 474 - HC - Customs

Import against advance license - Whether where the imports are license specific, the imports effected under that particular licenses can be used for the manufacture and export of the final products under another licenses - Assessee had imported 9.10 Crore inner cartons for packing - After packing the same with soap had exported 9.88 Crore cartons by utilizing the imported cartons as well as indigenous cartons Held that - As concluded from the facts of the case firstly, the Licensing Authority has found that the conditions attached to the said 20 advance licences have been complied with and accordingly granted export obligation discharge certificate in respect of those 20 licences. Secondly, the total quantity of cartons imported is admittedly less than the quantity permitted under the 20 licences and the quantity exported is more than the quantity imported under the 20 licences. Thirdly having not raised any objection at the time of import, the customs authorities are not justified in raising objection after the fulfilment of the export obligation to the satisfaction of the licensing authorities. Moreover, the customs notifications under which the goods in question have been imported, itself permit the manufacturer-importer after fulfilling the export obligation to use the excess imported material in the manufacture and sale of goods under other licenses In favour of assessee

Summary

Issues:
1. Interpretation of license-specific imports for manufacturing and export.
2. Compliance with license conditions for import and export.
3. Customs authorities' objection post-fulfillment of export obligation.
4. Permissibility of using excess imported material under other licenses.

Interpretation of License-Specific Imports:
The respondent-assessee was allowed to import a specific quantity of inner cartons under 20 advance licenses for packing soap. Despite importing less than the permitted quantity, certain licenses showed more imports than allowed. The Revenue contended that imports under a license should not be used for manufacturing and exporting products under another license. The Tribunal's finding highlighted compliance with license conditions and the discrepancy in imported and exported quantities.

Compliance with License Conditions:
The Tribunal noted that the Licensing Authority confirmed compliance with conditions for the 20 advance licenses and issued export obligation discharge certificates. Additionally, the total imported cartons were less than allowed, while the exported quantity exceeded the imports. The customs authorities' lack of objection during import and the permissibility under customs notifications to use excess imported material for manufacturing and sales under other licenses were crucial factors in the Tribunal's decision.

Customs Authorities' Objection Post-Fulfillment:
The Tribunal emphasized that the customs authorities should not raise objections after the export obligation is fulfilled and approved by the licensing authorities. The lack of objections during the import process and the subsequent fulfillment of export obligations were deemed sufficient reasons to dismiss the appeal. The Tribunal highlighted the importance of timely objections and adherence to customs regulations.

Permissibility of Using Excess Imported Material:
In the given circumstances, the Tribunal found no valid reason to entertain the appeal. The judgment emphasized that after fulfilling export obligations, the manufacturer-importer could utilize excess imported material for manufacturing and selling goods under other licenses. This permissibility under customs notifications and the fulfillment of export obligations to the satisfaction of licensing authorities were crucial in dismissing the appeal without costs. The judgment underscored the importance of adhering to customs regulations and fulfilling obligations as per licensing conditions.