9911796707
TMI Blog2003 (7) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... instalment i.e. 12th instalment being of ₹ 5,63,990/- to be paid by 20-9-2002. This has been complied with. 3.0 The basic details of the case are already furnished in the aforesaid admission order dated 19-9-2001 of this Bench. To repeat the essential details alone, according to the SCN dated 6-11-2000, the applicant had been issued with four advance licenses No. 10000906 dated 23-6-97, 10001008 dated 23-7-97, 2042504 dated 8-5-96 and 0005346 dated 22-7-96 under DEEC Scheme, which they got registered with Cochin Custom House. They had imported and cleared goods as per these licenses, availing duty concession permissible as per the prevalent Customs Notifications. Subsequently, they failed to discharge to the satisfaction of the Customs the export obligation cast on them in terms of these advance licenses and, therefore, became liable to pay the duty and interest thereon, in respect of the goods imported and cleared availing exemption. As a consequence, duty of ₹ 3,25,20,531/- has been demanded, along with interest thereon, under the SCN 6-11-2000 read with its corrigendum. The licensewise break up of duty proposed to be demanded as clarified in Commissioner's repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught for immunity from interest, penalty and prosecution. In this context, it is also pleaded that by the Finance Act of 2003-2004, the interest rate itself has been reduced to 15% with retrospective effect in respect of Notifications 149/95-Cus. dated 19-9-95, 80/95-Cus. dated 31-3-95, and 30/97-Cus. dated 31-3-97 which apply to imports under the licences involved in the proceedings. 5.0 The applicant was heard on 12-8-2002 and 24-3-2003, when Shri Lakshmi Kumaran, Advocate appeared for the applicant, while Shri Nazeer Khan S, Appraiser from Custom House appeared on behalf of Revenue. An Interim Order had been issued by the Bench on 8-11-2002, directing Revenue to work out the duty due proportionate to the extent of failure to meet the export obligation in terms of the advance licenses No. 2042504 dated 8-5-96 and 10000906 dated 23-6-97, pending a final view by the Bench on Revenue's comments on the various pleas raised in the application, as also in subsequent submissions of the applicant, on their failure to discharge the export obligation in full and consequent duty liability. 5.1 License No. 2042504 dt. 8-5-96. It is contended at the outset that there is no disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.4 It is also contended that the entire materials imported have been used by the applicant only for the manufacture of export garments, that the remaining garments are lying in the applicant's factory and that the officials of JDGFT, Cochin have also inspected their (applicants) premises on 14-6-2000 and found that there is no misuse. With reference to export corresponding to realization of US $ 17,670, it is pleaded that the relevant SB No. 1494 dated 8-8-97 was against two advance licences viz. 10000858 and 10000906 and the documents in original were furnished to the Customs Deptt. with the first licence stated above for redemption. Accordingly, it is pleaded that the export entries were not logged in respect of licence No. 100096, which the applicant can get rectified now also. It is, therefore, requested that the export may be deemed valid and export obligation considered discharged to that extent. 6.0 Accordingly, the applicant contests the quantum of duty liability alleged in the SCN, and seeks review. It is prayed that even if export obligation discharge is not certified by DGFT, Customs can work out the extent of compliance of export obligation as directed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o discharge of export obligation by export of specified products, without any stipulation on realization of the export proceeds. It is also pleaded that even the definition of the phrase 'export obligation' in the EXIM Policy does not refer to such realization of foreign exchange. Condition No. (3) of the licence, itself refers only to the nature of currencies in which export proceeds have to be realized, and does not place a precondition of realizing export proceeds in foreign exchange. The plea of the applicant broadly is that the Customs Exemption Notification 30/97 is not inter-linked with the provisions of the EXIM Policy and that 'exports' per se should be deemed to be in discharge of export obligation, even when sale proceeds of exports are not realised. 6.2 As an alternate plea, and without prejudice to the above stand, the applicant has also contended that they were eligible for the benefit of Notification 32/97 dated 1-4-97 in respect of the subject goods. It is pleaded that the imported materials had been received only for job work and there was no physical outflow of funds for the imported material. It is further clarified that though the supplier had raised comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Handbook of Procedure and that even according to condition No. (2) of the license also, all provisions of Handbook and Procedure shall be applicable. 7.1 In response to the Interim Order dated 8-11-2002 directing Revenue to work out the duty liability proportionate to the extent of failure to meet the export obligation, Revenue has reported in relation to licence No. 2042504 that credit can, if at all, be given in the light of the specific directions of the Interim Order only to the export of 39,876 full set of suits and not to the additional 11,796 pants (alone) exported by the applicant. On this basis, the revised duty liability on account of the unfulfilled export obligation is worked out to ₹ 36,03,206/-. However, in regard to license No. 10000906 dated 23-6-97, the Revenue has reiterated that credit cannot be given even in respect of export corresponding to US $ 17,670 realized as export proceeds, as the said export is not endorsed in DEEC Book. Accordingly, Revenue has reiterated the recoverability of the entire duty liability in respect of import under this license. 7.2 Referring to the plea of the applicant that the shipping bill No. 1494 dated 8-8-97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23-7-97 ₹ 51,77,170/- 2042504 dt. 8-5-96 ₹ 36,03,206/- 10000906 dt. 23-6-97 ₹ 1,04,02,203/-* Total ₹ 2,25,24,923/- *(Duty liability originally demanded in the SCN read with corrigendum in respect of this licence is only ₹ 1,04,01,598/-. Revenue reports in their letter dated 28-5-2003 that the duty amount has been revised during recalculation). 8.0 The Bench has considered the pleas raised by the applicant, the rejoinder from the Revenue and the relevant records produced by both. 9.0 In regard to duty liability in respect of imports against license No. 2042504, the Bench is not persuaded to agree with Revenue's contention that Department can accept only the certificate of DGFT for discharge of export obligation. In respect of post 1995 licences Customs authorities are monitoring authorities for exports effected to demand duty in case of any default by the license holder. Customs Notification 30/97, for instance, provides for execution of a bond by the importer at the time of the clearance of imported materials with the Assistant/Deputy Commissioner of Customs, binding himself to pay on demand an amount equal to the duty leviable bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the finished products and exported, the Bench does not find it necessary to get into debate regarding alterability of export obligation by the license holder on his own, without sanction from the license issuing authority. 10.0 In regard to license No. 10000906, the Bench does not agree with the basic plea of the applicant that the Import Policy and the Customs Exemption Notification are not inter-linked and should not be read together. It is reported by the Respondent Commissioner that Ministry of Commerce/DGFT decides the policy on export, including DEEC Schemes, and on the basis of the Policy, the Customs Department issues corresponding Customs Exemption Notifications to provide appropriate duty exemption envisaged in the Policy. It is an integrated exercise, with announcement of the Policy by Ministry of Commerce, and monitoring and implementation (for duty purposes) by Customs though Customs Notifications. Even the Notification 30/97 dated 1-4-97 as amended, covering the imports under this license, exempts materials imported against an advance license with actual user condition in terms of para 7.4 of EXIM Policy 1997-2002. Conditions No. 2 & 9 of the license also refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by the licencing or competent authority'. In addition, according to clause (iii) of para 7.4 of the said Policy, 'Advance licenses shall be issued in accordance with the Policy and Procedure in force and the date of issue of license and shall be subject to the fulfilment of a time bound export obligation and value addition as may be specified'. The procedure referred to in Policy is available in the Handbook of Procedures. Para 7.25 of the Hand Book provides that 'The license holder shall furnish the following documents in support of having fulfilled the export obligation :- (i) Bank Certificate of Exports and Realisation in the form given at Appendix 25 or payment Certificate from the Project Authority in the form given in the Appendix 14B. In the case of Advance Intermediate Licenses and Special Imprest Licenses for supplies to the EPZs/EOUs/EHTPs/STPs, documentary evidence from the Bank substantiating the realization of proceeds from the duty free license holder or EOUs/EPZs/EHTPs/STPs as the case may be through the normal Banking channel, shall be required. However, the realization of the export proceeds shall not be insisted if the shipments are made against confirmed irr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisions of Hand Book of Procedure regarding manner of fulfilment into the Customs Notification 30/97 as the said provision is not specifically referred to in the said Notification. According to the applicant, in the above case before the High Court, the petitioner had challenged invoking of the penal provisions of Central Excise Rules for non-payment of Additional Duty of Excise under the Additional Duty of Excise (Goods of Special Importance) Act, 1997. It had been pleaded in the said case that under Section 3 of the Additional Duties Act, only the provision of Central Excises Act and Rules made there-under in relation to levy and collection of Excise duty are made applicable to the levy and collection of Additional Duty of Excise, and not the penal provisions. The Hon'ble Delhi High Court had held that there is no mandate in the Additional Duties Act for levy of penalties, and the Central Excises Act and the Rules made thereunder cannot be imported in the Additional Duties Act for the purpose of levy and penalty. On the other hand, the issue involved in the instant case relates to manner of fulfilling 'export obligation' referred to in Customs Notification 30/97. The Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions quoted by the applicant are also not relevant to the issue. 10.5 The Bench, therefore, concurs with the Revenue that the applicant has failed to establish complete discharge of export obligation in relation to licence No. 140906 dated 23-6-97 on account of their admitted non-realisation of export proceeds, excepting for the realization of US $ 17,670. However, the applicant would rightly be entitled to liquidation of duty liability proportionate to the export effected, in respect of which US $ 17,670 has been realized. As brought out in para 7.2 above, the Revenue itself has admitted in their report dated 28-5-2003 that the proportionate reduction on this account would be ₹ 4,63,147/- in terms of duty. Though the revised duty liability in relation to this licence has been worked out as ₹ 1,04,02,203/-, as mentioned in para 3.0 above, the SCN itself has proposed to demand only an amount of ₹ 1,04,01,598/-. Accordingly, adopting the show caused amount of ₹ 1,04,1,598/-, the net duty liability in respect of this licence works out to ₹ 99,38,451/- (Rs. 1,04,01,598 - ₹ 4,63,147/-). 11.0 As a result, the total amount of duty liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin 30 days of the receipt of this order, and immediately thereafter inform compliance to both this Bench and the Respondent Commissioner. (ii) M/s. Kitex Garments Limited shall pay simple interest at the rate of 10% per annum, and immunity is granted in terms of Section 127H(1) of the Customs Act, 1962 in excess of the said 10% per annum. The Respondent Commissioner shall work out and inform the applicant the amount of interest due from the date the above duty ought to have been paid till the date of payment, within 15 days from the date of receipt of communication about payment of the balance amount mentioned above. M/s. Kitex Garments Limited shall pay the said interest amount within 15 days of receipt of advice from the Respondent Commissioner and report compliance to this Bench and the Respondent Commissioner. (iii) Immunity is granted to M/s. Kitex Garments Limited in terms of Section 127H(1) of the Customs Act, 1962 from prosecution and penalty under the provisions of the Customs Act, 1962. 12.1 The above immunities are liable to be withdrawn if at any point of time it comes to the notice of the Settlement Commission that in obtaining the above immunities, any fra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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