2017 (3) TMI 537 - AT - Customs

Import against advance license - violation of conditions by availing MODVAT credit - suppression of facts - Held that - the allegation and finding that appellant suppressed this vital fact at the time of import is without any basis. Further, from the records it was found that no effort has been taken to ascertain if the manufacturer of the export goods had, indeed, availed such credit. There is no statement of manufacturer or evidence of statutory register maintained by the manufacturing unit that has been placed on record. It would appear that the notice has been issued on surmises and assumptions that such credit had been availed on the inputs - appeal allowed - decided against appellant.

Summary

Issues:
1. Appeal against order-in-appeal dated 21st November 2006 of Commissioner of Customs (Appeals), Mumbai - I.
2. Allegation of liability to customs duty and penalty for failing to provide evidence of non-availment of MODVAT credit.
3. Submission of appeal against the direction to produce evidence of non-availment of input stage credit.
4. Procurement and utilization of advance license for import of goods without payment of duty.
5. Lack of evidence regarding the appellant's awareness of availment of credit by the manufacturer or exporter.
6. Allegation of suppression of vital facts by the appellant during import.
7. Interpretation of recovery provisions against transferee of advance license as per Commissioner of Customs (Imports), Bombay v. Hico Enterprises [2008 (228) ELT 161 (SC)].

Analysis:
1. The appellant, M/s. Jindal Drugs Limited, appealed against an order-in-appeal dated 21st November 2006 of Commissioner of Customs (Appeals), Mumbai - I, challenging the imposition of customs duty and penalty for failing to provide evidence of non-availment of MODVAT credit. The original authority directed a re-consideration of the matter and requested the appellant to produce necessary certificates and registers to support their claim of non-availment of credit.

2. The appellant contested the direction to produce evidence of non-availment of input stage credit, arguing that no evidence had been presented to prove such availment. They also mentioned the conversion of the license into a 'quantity based license,' permitting input stage credit availment. The appellant claimed that any demand at this stage was time-barred.

3. The records revealed that the appellant procured the advance license after the export obligation was fulfilled by the original holder and utilized it for duty-free import of goods. As the appellant was neither the manufacturer nor the exporter, the knowledge of export obligation fulfillment conditions was not within their purview. The allegation of suppression of facts during import was deemed baseless.

4. The judgment referred to the case of Commissioner of Customs (Imports), Bombay v. Hico Enterprises [2008 (228) ELT 161 (SC)] to interpret the recovery provisions against the transferee of an advance license. The Tribunal's decision emphasized that the transferee cannot be compelled to prove export obligation fulfillment by the original license holder and that the responsibility lies with the original licensee.

5. The Tribunal dismissed the appeal, stating that the show cause notice did not attribute any role to the appellant regarding the alleged infraction by the original license holder. Therefore, the judgment was upheld, and the impugned order was set aside, allowing the appeal in favor of the appellant.