2022 (9) TMI 327 - HC - Customs

Grant of Advance Licenses for duty free import of thermal paper - fulfilment of export obligations by procuring duty free materials from the local market by availing facility under sub-rule (2) of Rule 19 of the Central Excise Rules, 2002 or not - Applicability of N/N. 43/2002-Cus., dated 19 April 2022 and 93/2004-Cus., dated 10 September 2004 - HELD THAT - On a perusal of the Order impugned passed by CESTAT, it can be seen that the appeal preferred by the Respondent was allowed only on the ground that it had fulfilled its export obligations as was confirmed vide the letter dated 23 November 2005 issued by the Respondent. However, it is found that the Tribunal has not at all dealt with the view expressed by the Original Authority in extenso as regards the manner, in which the goods imported under the export policy as also the terms and conditions of the exemption Notifications the Advance Licenses were dealt with contrary to their express conditions, which have been reproduced in the preceding paragraphs and its impact on the Order passed by the said Authority as regards confiscation, duty liability, penalty and liability as regards interest in the backdrop of the judicial precedents relied upon by the said authority. The matter remanded to the Tribunal for passing Orders afresh within a period of four months.

Summary

Issues involved:
Violation of Advance Licenses conditions and exemption Notifications by the Respondent.

Detailed Analysis:

Issue 1: Violation of Advance Licenses conditions and exemption Notifications
The Respondent, engaged in manufacturing paper products, applied for Advance Licenses for duty-free import of thermal paper to be used in manufacturing ATM rolls for export. The Advance Licenses had specific conditions prohibiting transfer or sale of imported materials. However, during investigation, it was found that the Respondent imported goods but transferred or sold them without utilizing them for export products, violating export obligations. The Respondent also procured duty-free materials from the local market, violating exemption Notifications. The Original Authority ordered confiscation of goods and imposed penalties. The CESTAT allowed the appeal, stating the export obligations were fulfilled, and excise duty was paid for raw materials. The Appellant argued that the CESTAT overlooked the violations of Advance Licenses and exemption Notifications, leading to misuse of duty-free import facilities. The Court found the CESTAT failed to address these violations and remanded the matter for fresh orders within four months.

This judgment highlights the importance of strict compliance with Advance Licenses conditions and exemption Notifications to prevent misuse of duty-free import facilities and ensure fulfillment of export obligations. The Court emphasized the need for thorough examination of violations by the authorities and proper consideration of all aspects before reaching a decision.