2017 (10) TMI 472 - AT - Customs

Advance License Scheme - import of Aluminum Coil, Adhesive Film, Protective Film and LDPE/GDPE Granules - fulfillment of export obligation - Held that - Goods imported into India against the Advance Licence are exempted from whole of the duty of Customs leviable thereon, subject to the condition that the importer at the time of clearance of the imported goods, executes a bond with the proper officer of Customs, binding itself to pay, on demand, an amount equal to the duty leviable, but for the exemption contained therein, on the imported materials. It is an admitted fact on record that the export obligation in terms of N/N. 93/2004Cus., dated 10/09/2004 has not been achieved as per the FOB value indicated in the Advance Licence - it is evident that M/s Alstone International and M/s V.L. Estates Pvt. Ltd. were the actual importers of the duty free raw material and also filed Bills of Entry for clearance of such goods from the port of import. Since, the Notification dated 10/09/2004 specifies the condition that the importer has to execute the bond, binding himself to pay the duty on account of imported goods, in the eventuality, the export obligation has not been achieved - proceedings can only be initiated against the importer of the goods, who has executed the bond before the customs authorities. In the present case, the appellant and M/s V.L. Estates Pvt. Ltd. have jointly executed the bond for availing the duty exemption under Advance Licence Scheme. The appellant did not import the subject goods and is only a merchant exporter, proceedings should have been initiated against the co-authorization holder/importers and not against the appellant for confirmation of the adjudged demand - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of duty demand for non-fulfillment of export obligation against the appellant as a merchant exporter instead of co-authorization holders.

Analysis:
The case involved an appeal against an order passed by the Commissioner of Customs (Appeals), New Delhi, confirming a duty demand of &8377; 2,35,00,000/- along with interest and a penalty under Section 112 of the Customs Act, 1962, for non-fulfillment of export obligation regarding imported goods. The appellant had an Advance Licence for importing specified goods, and the export obligation was not met within the stipulated time frame. The appellant argued that duty demand should be confirmed against the co-authorization holders who imported the goods for manufacturing finished products, not against the appellant, who was a merchant exporter. The respondent contended that since the appellant executed a bond with the customs authorities, the duty should be recovered from the appellant. The Tribunal examined the case records and relevant legal provisions.

Upon review, the Tribunal noted that the Advance Licence was issued in favor of the appellant with co-authorization holders. The export obligation specified in the licence was not achieved, leading to proceedings against the importer of the goods, M/s Alstone International. It was established that the co-authorization holders were the actual importers who filed Bills of Entry for clearance. As per the Notification, the importer had to execute a bond for duty payment if the export obligation was not met. Since the appellant and co-authorization holders jointly executed the bond, the Tribunal concluded that proceedings should have been against the importers, not the appellant. The appellant was merely a merchant exporter, not the importer of the goods.

Based on the analysis, the Tribunal held that the confirmed duty demand against the appellant was not sustainable. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The decision was pronounced in the open court on 08.09.2017.