2018 (1) TMI 224 - AT - Customs

Nn-fulfilment of export obligation - cancellation of advance license - allegation of the department is that the appellant has obligation to export the Metformin HCL BP about 50,000 kgs but the appellant has exported only 45,000 kgs - Held that - the registration was obtained after the export of the goods. So at the time of export the genuineness was not examined - it is clear that various condition of the Rules for import of goods at concessional rate of duty have not been fulfilled. In the remand order passed by the Tribunal, the Commissioner was directed to verify whether the appellant is eligible for the benefit of Notification which he has done but it appears that substantial compliance was not made out by the appellant as observed in his order. Hon ble Supreme Court in the case of CCE v. Hari Chand Shri Gopal 2005 (10) TMI 89 - SUPREME COURT OF INDIA wherein the Hon ble Supreme Court observed that one cannot ignore above said Rules while claiming exemption under such notification. Compliance has not been made out by the appellant - appeal dismissed.

Summary

Issues:
1. Failure to fulfill export obligation under advance license.
2. Cancellation of advance license by DGFT.
3. Request for conversion from one scheme to another.
4. Tribunal's remand order and subsequent fresh order by adjudicating authority.
5. Compliance with conditions of Notification No. 32/1997.
6. Justification of impugned order by the Authorised Representative.
7. Verification of eligibility for benefit of Notification.
8. Compliance with Rules for import of goods at concessional rate of duty.
9. Applicability of Supreme Court decision in CCE v. Hari Chand Shri Gopal.

Analysis:

1. The appellant imported "Metformin HCL Mother Liquor Product" against an advance license for manufacturing "Metformin HCL BP". The dispute arose as the appellant allegedly failed to export the required quantity of 50,000 kgs, exporting only 45,000 kgs, leading to non-fulfillment of the export obligation.

2. The DGFT canceled the advance license, citing non-compliance with license conditions, including a requirement to supply within six months. Despite a subsequent No Objection Certificate issued by DGFT, the appellant's request for conversion to another scheme was rejected.

3. Following a Tribunal remand, the adjudicating authority levied excise duty and penalty, leading to the present appeal by the appellant against the denial of the advance license benefit.

4. The appellant argued compliance with conditions, presenting a detailed table to support their case. However, the Authorised Representative contended that the Rules for import of goods at a concessional rate of duty were not met, such as obtaining registration before import and maintaining separate records for imported goods.

5. The Tribunal noted the requirement for compliance with conditions before exporting goods for manufacturing excisable goods. It observed that registration was obtained after export, indicating non-examination of genuineness during export.

6. The Tribunal referred to the Supreme Court decision in CCE v. Hari Chand Shri Gopal, emphasizing the importance of adhering to Rules while claiming exemption under notifications. It concluded that the appellant did not demonstrate compliance, resulting in the dismissal of the appeal.

7. In summary, the judgment upheld the dismissal of the appeal, highlighting the appellant's failure to meet the necessary conditions for the advance license and the Rules governing the import of goods at a concessional rate of duty. The decision underscored the significance of strict compliance with legal requirements in availing benefits and exemptions under relevant notifications and regulations.