2014 (5) TMI 943 - AT - Customs

Import of goods against advance license - goods manufactured out of such import exported as well as sold in DTA - Denial of benefit of Notification 93/2004 and 94/2004 - Held that - in this case the respondent has first exported the goods. Against the said export, the respondent obtained advance license for import the raw material duty-free - The Board s Circular No. 4/93, dated 4-9-1993 clarified that word required does not mean that goods imported must be physically incorporated in the export product as export product could be manufactured from inputs procured outside the DEEC scheme. Iit is in the condition precedent of the Notification that the respondent are required to import raw material first and same is to be used in manufacture of the resultant product. Therefore the respondents have fulfilled the condition of the Notification 93/2004 and 94/2004 as they have already discharged the export obligation and EODC has been issued by D.G.F.T. In these circumstances, we hold that the respondents are entitled for benefit of the above said notification - Decided against Revenue.

Summary

Issues:
Appeal against the impugned order granting benefit of Notification No. 93/2004-Cus. to the respondents.

Analysis:
The case involved the import of zinc dross by the respondents under different Advance Licences, with a significant portion of the resultant products made from these imports being sold in the domestic market instead of being exported as required. The Revenue contended that the raw material imported duty-free against advance authorization was not solely used in the manufacture of the resultant product, violating the conditions of the relevant Notifications. The adjudicating authority dropped the proceedings, leading to the Revenue's appeal.

The Revenue argued that the respondents violated the conditions of Notification No. 93/2004 by selling the raw material in the domestic market, which was meant for manufacturing the resultant product to be exported. On the other hand, the respondent's advocate contended that the respondents procured indigenous raw material, manufactured finished goods (zinc dross), and exported them. They obtained an advance license to import raw material duty-free after fulfilling the export obligation, which exempted them from the requirement to re-export the resultant product.

The Tribunal analyzed whether the Customs Notifications mandated that the resultant product must be manufactured solely from duty-free imported raw material or if different treatment was allowed if export obligations were met. It was noted that the respondents first exported the goods, obtained an advance license for duty-free raw material import, and fulfilled the export obligation, as required by the Notifications. The Tribunal referred to relevant Circulars and case law to support the interpretation that the importer had the option to either use the imported raw material in the export product or keep it in the factory and fulfill the export obligation using other inputs. As the respondents met the conditions and obtained the necessary clearances, they were deemed entitled to the benefits of the Notifications.

In conclusion, the Tribunal dismissed the Revenue's appeals, upholding the impugned order that granted the respondents the benefit of Notification No. 93/2004-Cus. The Tribunal found no infirmity in the decision, as the respondents had fulfilled the export obligations and were entitled to the notification's benefits.

Judgment:
The appeals filed by the Revenue were dismissed, and the impugned order granting the benefit of Notification No. 93/2004-Cus. to the respondents was upheld.