2021 (4) TMI 575 - AT - Customs

Advance Authorization scheme - Export of goods under Assorted Utensils Table Kitchen articles made from non-magnetic stainless steel grade 201, of relevant thickness and country of destination being Gambia - It appeared to Revenue that the goods under export are not as per the conditions of the Advance license - HELD THAT - The impugned order relates to the mis-use of Advance license procedure. Further, in view of the redemption certificate(s) issued by the Ministry of Commerce in respect of the two Advance Licences in question, certifying that the appellant have discharged their obligation, the issue no longer survives. Appeal allowed - decided in favor of appellant.

Summary

Issues: Misuse of Advance License Procedure, Mis-declaration of Export Goods

Misuse of Advance License Procedure:
The appellant, a manufacturer exporter, imported raw material under advance license for export purposes. The appellant exported assorted utensils made from non-magnetic stainless steel, claiming to conform to the conditions of the advance license. However, upon examination, it was found that the exported goods exhibited magnetic properties, raising doubts about the material used. A sample was sent to the Revenue laboratory for testing, which confirmed that the goods were not made from the specified non-magnetic stainless steel grade as required by the advance license conditions. The Customs Department observed that the appellant mis-declared the goods to benefit from the duty exemption scheme, rendering the export goods liable for confiscation under Section 113(i) of the Customs Act. The appellant waived the show cause notice and personal hearing, leading to the passing of the original order imposing fines and penalties based on the test report and policy violation. The Commissioner (Appeals) upheld the order of confiscation, noting the mis-declaration of goods in terms of grade and reducing the redemption fine and penalties. The appellant then appealed to the Tribunal, arguing that they re-exported the goods, obtained redemption letters from the Ministry of Commerce, and fulfilled their export obligations, rendering the issue moot. After considering the contentions, the Tribunal set aside the impugned order, as the redemption certificates confirmed the discharge of obligations under the advance licenses, thus allowing the appeal.

Mis-declaration of Export Goods:
The issue of mis-declaration of the export goods arose due to discrepancies in the nature and grade of the stainless steel used in the manufactured utensils. The Customs Department's examination revealed that the goods did not match the specified non-magnetic stainless steel grade as required by the advance license conditions. The test report from the Revenue laboratory further confirmed that the exported goods were not in compliance with the license conditions, leading to the imposition of penalties and fines. However, the appellant's subsequent actions of re-exporting the goods and obtaining redemption letters certifying the fulfillment of export obligations led to the resolution of this issue, as the Ministry of Commerce confirmed the discharge of obligations under the advance licenses. Consequently, the Tribunal set aside the impugned order, recognizing the appellant's compliance with the export requirements and granting them consequential benefits in accordance with the law.

This detailed analysis of the judgment highlights the misuse of the advance license procedure and the mis-declaration of export goods, ultimately culminating in the resolution of the issues through the appellant's fulfillment of export obligations and the issuance of redemption certificates by the Ministry of Commerce.