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TMI Blog2006 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... uminium Ingots through Mumbai Navsheva and Kandla respectively duty free against the said licences cleared under Customs Notification No. 260/92 dated 27-8-2002 and 128/94 dated 10-6-94. Instead of using the imported material, the appellants had diverted and sold them in the local market for huge profits in violation of the DEEC Scheme and Customs Notification governing duty free imports. The DRI conducted elaborate investigation and consequently Show Cause Notices were issued to the appellants. The CBEC appointed the Commissioner of Customs (Adjudication), Customs Mumbai as common Adjudication Officer for all the three Show Cause Notices. The Adjudicating Authority passed the impugned dated 18-12-2001. The gist of the order is as follows :- (a) Denial of exemption under Notifications in respect of the imports made. (b) Confirmation of demand of Customs duty of Rs. 6,07,67,478/- under proviso to sub-section (1) of Section 28 of the Customs Act, 1962 in respect of clearances through Mumbai Port. (c) Equal penalty under Section 114A in respect of the above amount in (b). (d) Demand of Customs duty of 50,83,301/- under proviso to sub-section (l) to Section 28 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the manufacture of any other goods." (iii) It is submitted that export obligation had been completed and export proceedings realized. It is the understanding of the appellant that the restrictions has been only for disposing off the material prior to completion of the export obligation and receipt of export proceedings. (iv) In view of the fact that the import had been done in this case after the export obligation was completed clause (viii) of the Notification 204/92 itself would require that the order passed by the Original Authority is liable to be set aside. (v) The Apex Court (Full Bench) in the case of East India Commercial Co. Ltd., Calcutta v. CC, Calcutta, reported in 1983 (13) E.L.T. 1342 (S.C.) held that breach of condition of the licence is not a breach of the relevant Order. Section 167(8) of Sea Customs Act, 1878 (corresponding to Sections 111(2) and 111(e) of Customs Act, 1962). The infringement of a condition in the import licence not to sell the imported goods to third parties, is not an infringement of the order which itself does not impose such a condition, and therefore, the said infringement does not attract Section 167(8) of the Sea Customs Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty can be demanded. (c) Dolphins Drugs (P) Ltd. v. CC, Mumbai - 2000 (115) E.L.T. 552 (T) = 1999 (35) RLT 80 (CEGAT) wherein it is held that the benefit of the Notification should not be denied on the ground that part of production of final products containing imported raw materials is cleared for home consumption when export obligation is fulfilled during extended period. (d) Kitply Industries Ltd. v. CC, New Kandla - 2001 (135) E.L.T. 786 (Tri.-Kolkata), wherein it has held that import is permissible when export obligations had already been discharged by appellant prior to imports against advance licence and exact correlation is not to be made between export already made and imports of materials made subsequent to such export. (e) Vorin Laboratories Ltd. v. CC, Chennai - 2004 (168) E.L.T. 107 (T) = 2004 (92) ECC 443 (Tri.) (f) P.J. Pipes and Vessels Ltd. v. CC, Mumbai - 2002 (139) E.L.T. 177 (Tri.-Mumbai) - It is held that when the goods are cleared without payment of duty or under concessional rate of duty in terms of Notification issued under Section 25 of the Customs Act, provisions of Section 28 are not applicable, there being no short levy or non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the sale, which is admitted and proved, is in total violation of the very DEEC Scheme and the Customs Notification. (v) On verification of the claim of the appellant that the deemed exports were made by utilizing domestic inputs much before the actual import of the impugned goods, it is seen that they had claimed Modvat credit on the domestic inputs utilized in export product. They paid the Excise duty on the export product and refund of terminal duty was availed. Thus, there is no resultant incidence or suffering of any duty by them even with respect to the goods manufactured by utilizing the domestic inputs. Hence, there is no basis or locus standi for obtaining Special Imprest Licences as it amounts to availing the exemption twice on the same activity. The exports were made during the period from 13-10-1993 to 5-8-1995. The imports took place during the period 20-6-1996 to 27-12-1995. The diversion of the imported goods and the exports by utilizing domestic inputs were made during the same period. Out of total 42 exports made by utilizing the domestic inputs against Licence dated 20-10-1993, only 18 exports were made prior to imports. And the remaining 24 expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Rubber Industries Ltd. v. CC, Meerut-I - 2004 (172) E.L.T. 201 (Tri.-Del.) (i) Bihariji Enterprises v. CC, New Delhi - 2001 (136) E.L.T. 912 (Tri.-Del.) 6.We have gone through the records of the case carefully. The following factual position is not under dispute :- 6.1The appellants obtained two Special Imprest Licences from the DGFT with certain conditions. They also executed LUT with the JDGFT. The imports were through the Ports of Mumbai, JNPT and Kandla. The goods were cleared free of duty. 6.2The claim of the appellants is that they fulfilled the export obligations even prior to the import of the impugned goods. Revenue has clearly shown that the claim of the appellants regarding fulfilment of export obligation prior to imports is totally false. It is seen that there was actually only one export consignment prior to the obtaining of the two Special Imprest Licences. The learned JDR in the submissions, has given the factual details of the number of exports made prior to imports and that after the said imports. The DRI investigations revealed that the goods were sold without being brought to the declared manufacturing premises. There is clear admission of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be loaned, transferred, sold or disposed of in any other manner. 7................................................ Provided................... Provided that where final goods in respect of which the said materials have been imported have already been manufactured and supplied as required under this notification, the importer may use the said materials for the manufacture of any other goods." From the above provisions, it is clear that even in cases where the final goods have already been manufactured and supplied, the importer may use the said materials for the manufacture of any other goods. In other words, it is abundantly clear that the appellant is not allowed to sell the imported goods. We are reproducing the relevant provisions of Notification No. 260/92 dated 27-8-1992 : "5.the said imported materials are utilized for the manufacture of goods which are supplied to agencies specified in the Schedule and that no portion thereof shall be loaned, transferred, sold or disposed of in any other manner. Provided that where obligations under the Licence have been fully discharged, sale proceeds realised and bond executed in terms of condition (3) has been redeemed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Notice have clearly brought out the facts that the appellants have sold the goods cleared free of duty in blatant violation of the conditions of the Notification. Hence, the goods are liable for confiscation under Section 111(o) of the Customs Act. 6.8A point was made that Section 114A for penalty cannot be invoked in view of the fact that the violations relate to a period prior to the enactment of Section 114A. The learned Advocate relied on the decision of the Apex Court in the case of Elgi Equipments, cited supra. The learned Original Authority has justified the invocation of Section 114A in view of the following explanation to Section 114A inserted in 2000. "Explanation: For the removal of doubts, it is hereby declared that - (i) the provisions of this section shall also apply to cases in which the order determining the duty or interest under sub-section (2) of Section 28 relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President." In view of the above explanation, invocation of Section 114A in the present case is correct. As regards the applicability of the decision in Elgi case, it is seen that in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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