2015 (2) TMI 513 - AT - Customs

Benefit of Notification No. 203/92-Cus dated 19/05/2002 - violation of the condition V(A) of Notification No. 203/92-Cus - Held that - In the show cause notice, the allegations made and the Commissioner confirmed in adjudication holding that the transferor-exporter has availed MODVAT credit and therefore, the appellant is not entitled for the exemption Notification No. 203/92-Cus. It is observed that neither in the show cause notice nor in the impugned order, the allegation of availment of MODVAT credit by the transferee of the licence was supported by any evidence from which any inference can be drawn that the exporter has availed MODVAT credit. Though the adjudicating authority has recorded that there is a declaration of non-availment of MODVAT credit by the exporter on the shipping bill/AR4s. However, it could not be established by the adjudicating authority by adducing any evidence that the declaration is incorrect or false. In such a situation, it cannot be concluded that the exporter has availed input stage MODVAT credit in terms of Rule 57A of the Central Excise Rules, 1944 and there is any violation of condition (V)(A) of Notification No. 203/92-Cus. Demand of customs duty was confirmed on the appellant, who is the transferee of the advance licence. However, as regard the condition of non-availment of MODVAT credit provided under Condition No. V(A) of Notification No. 203/92-Cus., the obligation is on the exporter and not on the transferee of the licence. Therefore, the entire basis of the show cause notice and the consequent confirmation of demand is incorrect. - Commissioner has wrongly denied the exemption Notification No. 203/92-Cus to the appellant and confirmed the customs duty demand by denying the benefit of exemption Notification No. 203/92. - Decided in favour of assessee.

Summary

Issues Involved:
Appeals against Orders-in-Original confirming duty demand and penalties under Notification No. 203/92-Cus based on alleged violation by the transferor of MODVAT credit condition.

Analysis:

1. Facts and Allegations:
The case involved appeals against Orders-in-Original confirming duty demand and penalties based on an allegation that the transferor of an advance license availed MODVAT credit, leading to the denial of exemption under Notification No. 203/92-Cus.

2. Appellant's Submission:
The appellant argued that as a bona fide transferee of the license, they should not be held accountable for any violation committed by the transferor. The appellant contended that the transferor had declared non-availment of MODVAT credit in shipping documents, and no evidence was presented to prove otherwise.

3. Revenue's Position:
The Revenue, represented by the Additional Commissioner, supported the findings of the impugned orders confirming duty demand and penalties.

4. Court's Analysis:
The Court examined the submissions and records, noting that the allegation of the transferor availing MODVAT credit was not substantiated with evidence. The Court emphasized that the obligation of non-availment of MODVAT credit rested with the exporter, not the transferee.

5. Legal Precedent:
The Court referred to a previous decision by the Larger Bench in Hico Enterprises vs. Commissioner of Customs, where it was held that the transferee cannot be held responsible for compliance with the Notification's conditions. This decision was upheld by the Supreme Court in a subsequent case.

6. Decision and Ruling:
Based on the settled legal position and the facts of the case, the Court concluded that the Commissioner erred in denying the exemption under Notification No. 203/92-Cus to the appellant. The Court allowed the appeals, providing consequential relief as per the law.

This detailed analysis highlights the key arguments, legal principles, and the Court's reasoning leading to the decision to allow the appeals and provide relief to the appellant.