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TMI Blog2010 (10) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 20-10-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ. REPRESENTED BY : Shri G. Shivadas, Advocate, for the Appellant. Shri M. Vivekanandan, SDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. - M/s. NCS Sugars Ltd., the appellant herein had obtained advance license No. 0910019136, dated 30-6-2004 for duty free import of 50,000/- MTs of raw sugar with actual user condition and with obligation to export 47,620 MTs of white sugar. The initial period of 18 months prescribed for fulfillment of export obligation from the date of issue of license was extended to 24 months by the DGFT vide Public Notice No. 2 (RE-05)/2004-09, dated 20-4-2005. The assessee imported a quantity of 21,300 MTs of raw sugar against the advance license availing exemption from customs duty under Notification No. 43/2002-Cus., dated 19-4-2002. The appellants converted the imported raw sugar into white sugar and cleared it on payment of applicable excise duty into the DTA. Pursuant to investigations conducted by the DRI in or around August 2006, the authorities came to a tentative conclusion that the assessee was not entitled to exemption under Notification No. 43/2002-Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had been directed to off-take certain quantities of sugar from designated sugar factories for the purpose of export and utilize the said quantities of sugar to discharge export obligation. The sugar produced by the assessee would have been similarly allocated by the Directorate of Sugar for use in some other manner. As per release order dated 2-3-2006, the appellants were permitted to procure 19,000 MTs of sugar from different sugar factories noted therein. As per the release order, the appellants purchased sugar from M/s. Halasidanath SSK Ltd., (HSSK) under contract dated 25-2-2006 between the appellant and the said M/s. Halasidanath SSK Ltd. The release order allowed the appellants to purchase 19000 MTs of sugar for export in fulfillment of export obligation against the subject advance license; the contract between the appellants and the said sugar factory also contained a clear agreement that the sugar purchased was meant for export purposes. The contract entered into by the appellant with Emmsons would show that the entire quantity of sugar purchased from HSSK was meant for export and in compliance with the directions contained in the release order of the Directorate of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself to whom he wanted to sell. It was all regulated by the Sugar Commissioner. In the instant case even though the export order was in the name of Emmsons, the Sugar Commissioner had ordered release of sugar by the appellants in satisfaction of that export order. The Sugar Commissioner had also clearly stated in the release order that this was counted towards discharge of the export obligation of the appellants. Further Emmsons had also given a declaration that they had not treated it as their exports. In the circumstances, appellants should be construed as a third party exporter and the impugned exports reckoned towards discharge of export obligation. 2.2 They relied on the CBEC Circular No. 120/95-Cus., dated 23-11-1995, in support of the claim that third party exports could be counted towards discharge of export obligation. The said circular reads as follows :- After introduction of Para 41(11) and Para 59(A) in the EXIM Policy (92-97) with effect from 30th March, 1994, under which exports by Advance Licence holders through third party were allowed, doubts were expressed by some of the Commissioners of Customs, whether and how the export through a third party by an Adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Circular No. 30/2005-Cus., dated 12-7-2005. The relevant paragraph relied on by the assessee is reproduced below :- 10.1 Third Party Exports : In terms of para 2.34 read with para 9.62 of the Foreign Trade Policy, 2004-09, Third Party Exports have been defined to mean exports made by an exporter or manufacturer on behalf of another exporter(s). In such case, export document such as shipping bills etc. shall indicate the name of both the manufacturing exporter/manufacturer and third party exporters(s). The DRC, GR declaration, export order and the invoice should be in the name of the third party exporter. The definition of Third Party Exports in Circular No. 120/95-Cus., dated 23-11-1995 accordingly stands amended to fall in line with the definition of third party exports given under the Foreign Trade Policy. The other conditions of the Circular will remain unchanged. It is also argued that there was no violation of conditions of Notification No. 43/2002-Cus. The appellants had submitted the required documents to the JDGFT to issue Export Obligation Discharge Certificate. As the assessee had complied with the conditions of the Notification, duty demand was not sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the- time being in force at the time of making the exports. Analyzing the same, he inferred that third party export was export by a person, who had an export order and GR form in his name. Third party exports are made where an exporter did not have an export order/GR form in his name. In the instant case, Emmsons had an export order and GR form in its name and would become a third party, had the shipping bill been filed by M/s. NCS Sugars. Whereas in the instant case Emmsons itself could have exported the goods without M/s. NCS Sugars appearing in the shipping bill as third party; the subject export did not fit in the definition of third party export in terms of CBEC Circular No. 120/95 read with Circular No. 30/2005-Cus. M/s. NCS Sugars did not possess an export order/GR form in its name. In the case of third party exports, the circuit of exports would be completed only when three parties, namely foreign buyer, seller (exporter) and export order holder (third party) were present. In the absence of any of these three, there was no third party export. The contract between M/s. NCS Sugars and Emmsons had shown M/s. NCS Sugars as the third party and the latter as exporter. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order rightly held that the export obligation fell short by 2466.250 MTs and the appellant was liable to pay the exemption availed on import of the raw sugar relatable to this quantity of white sugar. Duty demanded cannot be claimed to be time-barred since the appellant had executed a bond undertaking to meet such liability in case of its failure to fulfill the conditions of the Notification No. 43/02-Cus., dated 19-4-02. We also note that the decisions of the Tribunal in Pennar Industries Ltd. and Jay Engg. Works Ltd. dealt with cases where the appellants therein were found to have fulfilled the conditions of the relevant notification and had fulfilled export obligation as per policy clarified by CBEC. These decisions are distinguishable. 4.3 The assessee has argued that the failure to fulfill the export obligation occurred for the reason that sugar being a controlled commodity under the Essential Commodities Act, 1955, releases of all sugar by them were regulated by the orders issued by the Central Government under the above Act and Sugar (Control) Order 1966. We find that the impugned quantity of sugar was exported by Emmsons following the release order issued under ..... 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