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TMI Blog2004 (12) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... with the corresponding export obligation of Rs. 66,55,025/-. The petitioner-company executed a bond backed by bank guarantee for the requisite amounts. 4.It was further stated that an exporter like the petitioner-company was also entitled to procure the raw material indigenously and make exports, but only with prior permission of the licensing authority and in such a case, raw material could be sold in the market. The petitioner-company was stated to have complied with the export obligations of a higher value than prescribed and the same was done by 22-7-1989. 5.The dispute relates to a part of the consignment imported by the petitioner-company weighing 3536.52 kg. of the value of Rs. 8,37,281/- contained in 60 bales and cleared at the port of Bombay against the bill of entry dated 24-8-1987. The duty involvement in case of such import is stated to be to the tune of Rs. 5,86,808/-. These goods were to proceed to Phagwara but were, however, sent via Bangalore. It was stated that a few of the bales were given for twisting, weaving, etc. Some complaints are stated to have been made and the DRI Authority in a raid seized 51 bales. Thirty of the bales were with the transporter and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as a manufacturer-exporter should have utilised the imported silk in their factory at Phagwara. However, instead of bringing the imported goods to their factory, they are alleged to have sold the goods to various parties in Bangalore. The Directorate of Revenue Intelligence, Bangalore seized the duty free imported raw silk from the premises of several firms of Bangalore as per details given below :- Name and Address of the firm Quantity seized 1. M/s. Sri Shivananda Silk Koti, 67/38, Maradi Building, Ct. Street, Bangalore. 2 bales 2. M/s. B.T.V. and Sons, No. 12, Anakallapa Lane, Narayanasettypet, Bangalore-2. 4 bales 3. M/s. Vasavi Silk and Sarees, Shop No. 12, Paras Market, No. 12, Appaji Rao Lane, C.T. Street Cross, Bangalore-2. 10 bales 4. M/s. Laxmi Weaving Factory No. 1, 8th Cross, Magadi Road, Bangalore-23. 1 bale 5. M/s. Shantilal Transport Co., 75-B, Usmankhan Road, Bangalore. 30 bales 6. M/s. Pooja Exporters, 5/81, 1st Floor, Cubbonpet, 26th Cross, Bangalore-2. TOTAL 51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the non-industrial category, such as hospitals, research and development units or any other institutions, commercial establishments and individuals, the concerned item shall be utilised for its/his own use, i.e., for the purpose for which the item was sought for import. 11.In order to appreciate the controversy, it may also be stated that the Duty Exemption Scheme was specified in Appendix 19 (Chapter XVI) of the said Policy and states that advance licence, namely, Duty Exemption Entitlement Certificate (DEEC) is issued to registered exporters for import of exempt material specified in Annexure-I to the Appendix and the resultant product has to be exported outside the country. Para 16 of the said Appendix provides as under : Duty Exemption Entitlement Certificate : The licensing authority issuing a licence 16. under this Scheme will also simultaneously issue the connected Duty Exemption Entitlement Certificate in the form given in Appendix XVI-E of the Handbook. These certificates will be issued in two parts - one for imports and the other for exports. Both the parts of the DEECs duty completed in all parts by the Customs will have to be surrendered to the licensing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Laxmi Weaving Factory stated that the goods were obtained for testing prior to purchase and as the quality of denier was sub-standard, they requested the seller to take back the material, but before the seller could take back the material, the same was seized by the DRI. Again, they were found guilty. Sri Vasavi Silks and Sarees stated that 10 bales have been offered for sale and 9 bales had been left, but without receiving any payment by the petitioner-company. It was, thus, pleaded that no sale could be said to have taken place as the purchase was not complete. The finding arrived at was that there was an intention to sell. M/s. B.T. Venkataramaiah and Sons stated that the petitioner-company approached them and offered to sell the yarn at which stage the party demanded documents before negotiating the price. Instead of producing the documents, the petitioner-company dumped the bales at the entrance and promised to produce the documents. The goods were seized before they were taken back by the petitioner. Substance was, however, found in the plea of the transporter M/s. G. Shantilal Transport Co. that they had merely carried the material and not purchased them as the company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f imposition of penalty. In this behalf, learned Counsel relied upon judgment of the Supreme Court in Metal Forgings v. Union of India, 2002 (146) E.L.T. 241 (S.C.). In that case, it was held by the Supreme Court that show cause notice should be specific about the provisions and the facts on which the same is based. 21.Learned Counsel further submitted that the reliance placed by the authorities and the respondents on para 24(2) of Appendix 19 of the Import and Export Policy is misconceived since at the relevant stage of time, the said Policy was not in existence. The reliance has been placed on this paragraph by the respondents to submit that only in case of merchant-exporters of goods specified in para 6 of Appendix 13 of the Policy the licensing authority may allow the case on merits without insisting on a joint bond with the supporting manufacturer as the said paragraph refers to exporter other than manufacturer-exporter. It was submitted that this is the Policy for the period 1989-1991. The relevant paragraph is as under : 24. (2)*If the appellant is not a manufacturer/exporter of the resultant products, the export bond/legal agreement shall be executed jointly by the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Pact C of this Certificate would be eligible to exemption from import duty subject to the condition specified in the Notification on the subject. The exempt material will be used in the manufacture of the corresponding resultant product as specified under Part E of this Certificate in the factory/factories of the importer specified in Part A of this Certificate except in respect of ancillaries of the resultant product which may be manufactured in the factory/factories specified in Part B of this Certificate. 25.Part A is the name and address of the factory of the certificate-holder where the resultant product will be manufactured and gives the name of the petitioner-company with the address of Phagwara. Part B is to state the name and address of the factories where the ancillaries to the resultant product will be manufactured. Part B states as above and, thus, there is no separate ancillary mentioned. Part C mentions the goods and the quality, which is 100% mulberry raw silk. 26.Learned Counsel for the respondents, thus, submitted that the petitioner-company violated the terms of the licence on the very first consignment and the advance licence shows that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Appendix 19 of the Policy. DEEC itself stipulated that the same was being issued for import of goods specified in Part C, which were eligible to exemption for import duty subject to conditions of the notification. Thus, subject to compliance of export obligations, the goods specified in Part C could be imported. The said Part specifies the goods as mulberry raw silk. The manufactured product is specified in Part E, which is pure silk saree fabric, dupattas made of 100% mulberry raw silk, suit pieces and are to be manufactured in the factory of the importer specified in Part A. Part A specifies the factory of the petitioner at Phagwara. The exception is stated in respect of ancillaries of the resultant product which can be manufactured in factory/factories specified in Part B of the Certificate. However, Part B of the Certificate only stated as above which implies that it was to be only at Phagwara. Thus, no ancillary place of manufacture was specified in DEEC. 30.I am, thus, of the considered view that in case the petitioner wanted to or had the object of sending the raw material for certain ancillary manufacturing processes, then Part B ought to have specified the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35.The allegation against the petitioners have been clearly and unambiguously mentioned. The notice has been issued under the provisions of Section 4-I of the said Act. However, in the operative paragraph, it has been stated that the petitioner-company should show cause as to why penalty should not be imposed under Section 4-I(1)(a). Specific reference has not been made to Section 4-I(1)(d) since the finding is that no sale has taken place, though certainly the goods were handed over to third-parties. Thus, the general provision was mentioned, though the specific clause has not been mentioned. In my considered view, the petitioner-company was put to notice in view of the allegations that the matter in controversy related to the attempt on the part of the petitioner-company to sell the goods, though specific clause of the provision had not been mentioned. The petitioners undoubtedly parted with the goods. 36.The aforesaid would also not make any difference since even if the provisions of Section 4-I(1)(a) of the said Act are seen, utilisation of the goods cannot be contrary to the advance licence. The processing had to take place at the factory premises of the petitioners at Ph ..... X X X X Extracts X X X X X X X X Extracts X X X X
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