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TMI Blog1999 (7) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... rt policy at the relevant time, in Chapter XVI deemed supplies of goods meant to IBRD aided project under international competitive bidding to be exports for the purposes of benefits under the import replenishment scheme. Such deemed exports were entitled for grant of import replenishment licence and other such benefits. Such goods were also entitled to exemption from customs duty by Notification 210/82 as subsequently amended. 2. Towards fulfilment of the contract M/s. Virgo Steels supplied between August and November, 1988 2483,540 metric tonne of high strength deformed steel bars. In November, 1988 the ACC reviewed its project. As a result of the review, ACC decided to suspend further work on the expansion project. Mr. Gosher of Virgo Steel who was also present at the meeting was also informed that no further material shall be despatched to Shahabad after the meeting. 3. Virgo Steel asked the ACC for issue of a certificate that the material supplied to ACC was in pursuance of the deemed exports. This certificate was asked for so that it could be demonstrated to the Customs authorities that the steel has been supplied in pursuance of an IBRD aided project, or for replenishmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant s Director was asked to stop further supply and it was only in March, 1989 that the ACC formally terminated the contract. When the supply was made, Virgo Steel did not know that the project for modernisation would subsequently be abandoned. ACC had incurred its liabilities in pursuance of the contract and satisfied the conditions required for complying with the conditions of the notification. Therefore, the import of the prime steel billets by ACC was in pursuance of an obligation already incurred by it and the right already accrued to it in pursuance of the supply made to an existing IBRD aided project. If the ACC had imported these goods from abroad directly and cleared them under concessional rate of duty, it would have been bound to pay back the differential duty to the Department. He cites the exemption of 100% export orient unit supply to which considered to be deemed exports. If such units do not utilise the goods for the specified purpose, liability to pay duty falls on that 100% export orient unit and not upon the supplier to it. The bona fides of Virgo Steel are emphasised by pointing out that supplies were made at prices lower than the prevailing domest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided project. The import policy refers at paragraph 190B to supplies made to IBRD/IDA/ ADB aided project in India where such supplies are made under the procedure of international competitive bidding. Notification 210/82 also exempts raw materials and components required for the manufacture of goods to be supplied to International Development Association or International Bank for Reconstruction and Development or bilateral or multi-lateral aided projects. Neither the policy nor the notification has defined or explained the scope of the term IBRD aided project. It is therefore reasonable to apply the common meaning of the term and to say that an IBRD aided project is a project which has received aid from the International Bank for Reconstruction and Development. We specifically asked the Advocate for the ACC whether any such aid has been received by ACC for this project. After verifying the matter, the Advocate for the appellant has produced letter of 24th December, 1992 from the Industrial Development Bank of India (IDBI for short) to ACC and ACC s letter, dated 22nd December, 1992 to IDBI. It is relevant to reproduce the letter, dated 22nd December, 1992 of ACC to IDBI and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection with its hearing slated for December 26,1992. It will be clear from reading this letter, that no financial assistance was provided by IBRD for the project. There was thus no aid or assistance provided to ACC by the IBRD. The project therefore had not acquired the status of an IBRD aided project. It could be at the most said to be a project for which IBRD aid has been promised or a project in which IBRD s aid would be provided in future. This falls short of it being an IBRD aided project. 13. The next question to be considered is whether, in the absence of written notice, demand for duty could be confirmed. No written notice was issued to Virgo Steel, and the amount has been recovered in terms of the letter of its proprietor, dated 30-3-1991. In that letter Virgo Steel has waived issue of written show cause notice and agreed to pay the duty. 14. Section 28 of the Customs Act, 1962, at the relevant time, provided in sub-section (1) that the proper officer, may within the time specified serve notice on the person chargeable with the duty which has not been levied or which has been so short-levied or whom the refund has erroneously been made, requiring him to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that letters dated 27 and 28 December, 1984 informing the importer that there is a short levy on account of the fact that the goods were assessed free instead of exempting from duty and a further letter, dated 27-2-1985 in which reference is made to the earlier two demands did not constitute show cause notice under Section 28(1) of the Act. The earlier letter, dated 27/28-12-1984 to the assessee indicated that there has been wrong assessment and asked for duty to be paid. The letter, dated 22-7-1985 sought to invoke the extended period by saying that there was a suppression referring to the two earlier notices. On these facts the Supreme Court held that the letter, dated 22-7-1985 would hardly be described as show cause notice under Section 28 (1) of the Act. 17. It is evident from this judgment that a notice has to contain details of the ground on which a short levy is proposed, and where the extended period is invoked indicate the reasons for the extended period. The letter waiving issue of written notice of Virgo Steel does not even indicate that it was made aware of the fact that the extended period was invoked. The Collector s view that this appellant has acknowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial supplied by Virgo Steel, ACC has contravened the import policy. Chapter XVl of the policy, which deal with such deemed exports, does not contain any such condition. Apart from this fact, the Collector seems to have lost sight of the point that what was supplied to ACC was not imported material, but material locally manufactured and cleared on payment of duty. It is the material for replenishment towards manufacture of raw material for such which was imported by Virgo Steel. That material never reached ACC. 22. It is true that ACC did not inform the Customs authority or the licensing authority for the failure on the fact that it would abort the project. ACC may have thought that since it informed Virgo Steel, it would be sufficient, and it need not inform the licensing authority or the Customs authority. 23. Certainly, it would have been preferable if the ACC had informed the Customs department and the licensing authority; ethically that would have been the correct thing to do. It was on the basis of ACC s letter that supplies were being made by Virgo Steel to its project that resulted in Virgo Steel obtaining a licence. Without this letter, such a licence would almost cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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