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TMI Blog2016 (3) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... clared premises and have not used the SS coils/sheets imported under DEEC Advance Licences and cleared without duty under customs exemption Notification 30/97 as amended by 51/2000, 48/99 as amended for manufacture of finished goods exported. Therefore, the benefit should not be granted and the demand of customs duty and interest and confiscation, and penalty upheld. - Decided against the appellant - Appeal No. C/MISC/40214/2015 (By dept), C/MISC/40299/2015 & C/181/2004 - Final Order No.40316/2016 - Dated:- 25-2-2016 - SHRI R. PERIASAMI, TECHNICAL MEMBER AND SHRI P.K. CHOUDHARY, JUDICIAL MEMBER For the Petitioner : Shri S. Dayaleeswaran, Advocate For the Respondent : Ms. Indira Sisupal, AC (AR) ORDER PER R. PERIASAMI There are two MISC applications, one filed by Revenue for change of cause title and the other application is filed by assessee for taking on record the additional grounds of the appeal memorandum. 2. Revenue seeks to change the cause title in so far as the respondent's name to be changed from Commissioner of Customs, Seaport-Export, Custom House, Chennai-600 001 to Commissioner of Customs, Chennai IV Commissionerate, Custom House, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notifications should not be denied on the entire import. After following the principles of natural justice, the Commissioner of Customs (Exports), Chennai in the impugned order No.1851/2004 dt. 31.3.2004 ordered as under :- (a) 1 hold that the export of 500.716 MTs of SS utensils valued at ₹ 5,43,75,495/- is inadmissible towards the export obligation under the said licences in as much as the exported goods were locally procured; (b) 1 deny the benefit of duty exemption claimed, under Customs Notification No. 30/97 dated 01.04.97; 51/2000-Cus.,dated 27.4.2000 and 48/99 dated 29.04,1999 as amended, for the import of 638.368 MTs of SS Coils/sheets totally valued at ₹ 3,84,32,021/- made under the said licences; (e) I demand the duty of ₹ 2,57,82,659/- on 638.368 MTs or SS coils/Sheets imported under the said licences, under proviso to Section 28(1) of the Customs Act, 1962 read with terms of the bond executed by them and as per the conditions of the Customs Notification No. 30/97 dated 01.04.1997, 51/2000 dated 27.04.2000 and 48/99 dated 29.04.99 as amended; (d) I demand interest at appropriate rate under Section 28AB of the Customs Act, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Superintendent of Central Excise, Chennai (Ref.Page 19 to 21). He also drew our attention to the application filed before the DGFT authorities for obtaining the licence (Page 22) and the licence issued by the DGFT (Page 33). He submits that as per the licence, they have fulfilled the export obligation and licensing authority have issued EODC (available at page 70, 71). He also referred to DEEC book Part I for import and Part-II for export. He also referred to SCN dt. 26.3.2003 (at page 79) wherein at para-8, the DRI made a reference to the Department of Industries and Commerce, Chennai and submitted a report on the registration issued to manufacturing premises and submits that no reply has been produced by the department so far. He also relied cross examination (at page 124) of the investigating officer and submits that no seizure was made. He submits that based on the DRI investigation and the report submitted to DGFT, DGFT also issued SCN dt. 14.2.2003 which is annexed at page 96 of Vol-I of the paper book. The JDGFT in his order dt. 10.12.2003 considered the investigation and the allegations of the DRI and dropped the proceedings in so far as fulfilment of export obligation e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (13) ELT 1546 (SC) (6) CC Chennai Vs Ashok Enterprises-2014 (302) ELT 191 (Mad.) (7) CC (Sea) Chennai Vs CESTAT Chennai-2009 (240) ELT 166 (Mad.) (8) CC Vs CESTAT Chennai/Gaur Impex - 2009 (240) ELT 166 (Mad.) affirmed by Hon'ble Supreme Court in Gaur Impex Vs Com. - 2010 (249) ELT A28 (SC) (9) South India Exports Vs JDFT 2004 (177) ELT 57 (Mad.) (10) Pooja Exporters Vs Asst.Director, DRI 1989 (41) ELT 21 (Kar.) (11) 1992 (61) ELT 548 (Kar.) Kamath Packaging Ltd. Vs UOI (12) CC (Exports) Vs Pattu Exports Pvt. Ltd. Hon'ble Madras High Court order dt. 28.11.2014 (13) CC Hyderabad Vs Pennar Industries Ltd.-2015 (322) ELT 402 (SC) (14) CC (Exports) Chennai Vs KRM International Ltd. Others - 2014-TIOL-1249-HC-MAD-CUS She submits that this is a clear case of violation of condition of the notification where the appellants imported S.S. coils/sheets with actual user conditions and it is proved that goods imported are not used in the manufacture of export goods thereby violated the condition of the notification. The adjudicating authority has rightly confirmed the demand and imposed penalty. 10. We have carefully consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Import Policy 1997-2002 and the concerned customs notifications No.50/51/2000 dt. 27/04/2000 as amended from time to time. ... ... 5. The licence holder shall maintain a true and proper account of consumption and utilization of imported goods in the proforma given in Appendix-21 of the Handbook of Procedure 1997-2002. ... ... 7. For sensitive items customs to carryout necessary checks. The DEEC Book No.A 053819 dt.19.7.2001 Part-I (Import) issued to the appellants for the above Advance Licence (Page. 37) bears the condition which reads as under :- Materials imported against Licence No.0410016181 dated 19.7.2001 issued by JDGFT, Mds-14 to the above licence and covered by the list of materials specified in list (a) Part 'C' of this certificate would be eligible for exemption from duty of Customs specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) subject to the conditions specified in the Notification of the Government of India, Ministry of Finance, Department of Revenue No.51/2000/Customs, dated 27.4.2000. The Part 'A' of the above DEEC contains Names and addresses of factories where the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltant products from the imported S.S. coils/sheets. Further, the appellants failed to maintain any records of account of consumption and utilisation of imported raw material. Further, it is evident that the S.S. coils/sheets imported by the appellant under these Advance Licences are sensitive items and the investigation by the DRI proved that the appellants failed to produce any evidence against the charges. 13. The Customs Notifications 30/97, 48/99 as amended by Notfn 50/51/2000-Cus. dt. 27.4.2000 issued under Section 25 of Customs Act, exempts the whole of Customs duty, Additional Customs duty and Anti-dumping duty subject to the conditions. Condition No.(ii) of the said notification mandates that the appellant shall execute Bond with security equal to the customs duty with a binding to pay the duty himself in the event of failure of the conditions of the said notification. The conditions stipulated in the DEEC Advance Licence and DEEC Book are part of the conditions of the notification. The appellant obtained these licences as manufacturer-exporter declaring the factory premises for manufacture of resultant product and it is proved that there is no such factory of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial evidence viz. the conduct of Amba Lal in making conflicting statements, could not be taken into account because he was never given an opportunity to explain the alleged discrepancies. The status of Amba Lal viz. that he was an immigrant from Pakistan and had come to India in 1947-before the customs barrier was raised-bringing along with him the goods in question, had greatly strengthened the initial presumption of innocence in his favour. Amba Lals case thus stands on its own facts. The apex Court's above decision is squarely applicable to the present case as we find the appellant has not adduced any evidence or records against the charges levelled by the revenue either on the receipt of materials in their factory or consumption and manufacture of finished goods in the said premises. Since the appellant declared themselves as actual user manufacturer-exporter, it is mandatory to maintain the production records as per the Hand Book of Policy. Instead of producing valid evidences to prove that they had utilized the imported S.S coils/sheets in the manufacture of resultant product in their above declared factory address, the appellants chose to take shelter under JDGFT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itive materials that they are entitled to exemption. It is not for the Department to prove otherwise. It is trite that exemption notification should be construed strictly. 18. The customs authorities exercise jurisdiction under the Customs Act. Section 111 empowers the Customs Department to confiscate the goods improperly imported from the place outside India. Section 111(o) deals with confiscation of exempted goods, in case the conditions under which import was permitted was not fulfilled. The jurisdiction of the Director General of Foreign Trade on this issue is entirely different. The said authority is concerned only with the violation of license conditions, which is relevant for the purpose of cancelling the license. It is only when the assessee is given a license, they would be in a position to import materials without payment of duty. The question is whether the importer has satisfied the conditions laid down in the customs notification, is a matter to be decided by the Customs Authorities. The Director General of Foreign Trade has no jurisdiction in such matters. In case it is made out that the assessee has violated the conditions, necessarily, they will be liable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lization of the imported materials would fall under Section 111(o) of the Customs Act, When the Customs Department is given independent authority to decide the question regarding the claim of exemption and as to whether the assessee has complied with the conditions so as to enable them to claim exemption, it cannot be said that they are not entitled to proceed in case the Joint Director General of Foreign Trade decides the matter in favour of the assessee. ... .... ..... 26. The claim of the assessee was on the basis of exemption notifications. Therefore, it is for the assessee to prove that they are entitled to the exemption. 27.In Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, 2010 (260) E.L.T. 3 (S.C.), the Supreme Court observed that the exemption clause should receive strict construction. The Supreme Court said :- Exemption clause - Strict construction The law is well settled that a person who claims exemption 22. or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd relied apex Court judgements in the case of CC Vs Harichand Sri Gopal (supra) and relied Navin Chemicals Mfg. Trading Co. Ltd. Vs Collector (supra), Sheshank Sea Foods Pvt. Ltd. Vs Union of India (supra) and also relied Madras High Court's decision in South India Exports Vs JDFT (supra) and held that mere discharge of export obligation per se cannot put an end and customs authorities has right to initiate proceedings against the importer for breach of condition of the exemption notifications. It is clearly established from the facts discussed in preceding paragraphs that the appellants had not utilised the quantity of S.S. coils imported under the DEEC Advance Licences and cleared duty free under the said exemption notification and failed to comply the condition of the notification and the adjudicating authority rightly denied the benefit of exemption notification. 17. In this regard, the Hon'ble Supreme Court judgement in the case of Seshank Sea Foods Pvt. Ltd. Vs UOI (supra) held the powers of customs under Section 110 and Section 111 (o) and Section 124 of the Customs Act for breach of condition of exemption notification. The relevant paragraphs are reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Annual Advance licence in question. ... ... .... 31. We are entirely in agreement with the law laid down by the Division Bench of this Court as stated above, which has followed the decision of the Honble Supreme Court in the case of Sheshank Sea Foods and we are inclined to accept the contention of the Appellant-Department. Admittedly in the present case the misrepresentation made by the importer has not been denied while submitting the explanation to the show cause notice and the importer look a technical stand that because the licences were seized by the DRI prior to the period of expiry, it has disabled them from discharging the export obligation. Though the past conduct of the importer is not the subject matter of the show cause notice/adjudication in question, we cannot be asked to turn a blind eye to the allegations made in the show cause notice which remains unrebutted to the following effect. (vii) M/s. Gaur Impex has not made any export so far even though they have already made imports of 445.162 mts., of Copper Scrap free of duty by availing benefit of Customs Notification No. 48/99 during the period from September, 2001 to Nov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confer any right on the importer and as such he cannot be allowed to plead any equity. Therefore we find that the order passed by the Tribunal is not sustainable and liable to be set aside. 34. In the result the questions which have been framed in the above appeal are answered in favour of the Revenue. It is has been represented that the goods have been cleared on payment of duty at merit rate and in respect of the Bank Guarantee furnished 50% has been released pursuant to interim orders of this Court and that the Department is retaining Bank Guarantee to the tune of ₹ 15,00,000/-. In view of the order passed by us in this Appeal, the Department shall be entitled to appropriate the said sum of ₹ 15,00,000/- towards the duty and penalty demanded and initiate appropriate proceedings for recovery of the balance amount from the 2nd Respondent in accordance with law. The Hon'ble Supreme Court had upheld the above Madras High Court's order and dismissed the SLP filed by M/s.Gaur Impex as reported in Gaur Impex Vs Commissioner (supra) The above Hon'ble High Court decision and the Court's judgements are squarely applicable to the facts of the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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