9911796707
TMI Blog2023 (1) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... important raw material required for manufacture of SLS and SLES is Lauryl alcohol. The Respondent, it is submitted, has been sourcing Lauryl alcohol either through indigenous purchase on payment of appropriate excise duty or it is imported under advance licence without payment of duty or it is imported on payment of customs duty. In the present case, the Respondent had obtained five advance licences with actual user condition. 3. Under General Exemption no.81 pursuant to Notification No.30/97-CUS dated 1 April 1997 as amended by Notifications upto No.63/2004-CUS dated 14 May 2004 (the "said notification"), materials imported into India against an advance licence with actual user condition in terms of paragraph 7.4 of the Export and Import Policy 1997-2002 (for short the "EXIM Policy") would be exempt from the whole of the duty of customs leviable thereon. 4. During the period from 16 October, 1998 to 5 November, 1998, 83,128 kgs of imported Lauryl alcohol was received in the Respondent's M-3 Unit Tarapur instead of its V-23 Taloja Unit. Pursuant to intelligence received by the Department that Lauryl alcohol imported by the Respondent under the Advance Licence Scheme by avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aside the Order in Original passed by the Commissioner of Customs for violating of condition of exemption notification and advance licence? (b) Question of law is whether in the facts and circumstances of the case and in law, the interpretation given by the Tribunal to the word "actual user" in the policy is justified? 9. We have heard the learned Counsel for the parties and with their able assistance we have perused the papers and proceedings and also considered the rival contentions. 10. Mr. Walve, learned Counsel for the Appellant, would submit that the show cause notice dated 20 September 2009 was issued to the Respondent demanding duty of Rs.24,25,856/- by proposing to deny the benefit of the said Notification on the ground that the imported Lauryl alcohol ought to have been used atTaloja, whereas the Respondent had used the imported duty free goods in the M3 Unit at Tarapur instead of V-23 Unit at MIDC Taloja. This, according to the department, amounts to diversion of the inputs and violates condition (vii) of the said Notification. According to the Appellant, the condition (vii) of the said exemption Notification clearly provides that exempt materials shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation but also the EXIM Policy have been breached by the Respondent. He would submit that if the conditions of the Notification are found violated after the importation of the material, the same are liable for confiscation under Section 111 (o) of the Customs Act. 14. Learned Counsel would submit that the statutory record i.e. RG-23A Part-I Register has corroborated the statements of various officials of the Respondent recorded in this connection which clearly show that during the period from 16 October 1998 to 5 November 1998 the quantity of 83,128 kgs of imported Lauryl alcohol was received in M-3 Unit Tarapur instead of V-23 Taloja Unit of the said Respondent as required by the aforesaid statutory provisions. He would submit that when the unit M-3 Tarapur is not having the facility to manufacture resultant export product, SLS or identical product, then it is questionable as to why imported duty free Lauryl alcohol was diverted from V-23 plant Taloja to M-3 Tarapur. Learned Counsel would submit that, therefore, the Respondent had the intention of using the imported Lauryl alcohol to manufacture other products meant for domestic market and that is why the quantity of 83,128 kgs w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tarapur unit in each of those licences. Part B refers to names and addresses of factories where the ancillaries of the resultant products for export are manufactured. He submits that Part A contains the name and addresses of the unit where the manufacturing activity takes place which does not contain the name of the unit where the inputs have been diverted. Learned Counsel submits that, therefore, the questions of law as admitted be held in favour of the Appellant Revenue and the Appeals be allowed. 16. On the other hand Mr. Sriram Sridharan, learned Counsel for the Respondent Company would submit that there has been no violation of condition (vii) of the exemption notification nor has there been any violation of the Advance licences. He would submit that the Lauryl alcohol that has been imported duty free has been used by one of the units of the Respondent at Tarapur. Referring to condition (vii) of the exemption notification, learned Counsel submits that the clear language thereof indicates that the transfer within the units of the same person is not at all prohibited. He refers to the language of the said condition no. (vii) and submits that restriction to sell or trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e), issued by the Licensing Authority in the form of specified in the schedule annexed to this notification, in respect of the value, quantity, description, quality and technical characteristics. (vii) exempt materials shall not be disposed of or utilised in any manner except for utilisation in discharge of export obligation or for replenishment of such materials and the materials so replenished shall not be sold or transferred to any other person." 20.2 Paragraph 3.4 of the EXIM Policy defines "Actual user" and admittedly as Respondent is an "Actual user (Industrial)" , Paragraph 3.5, the same is also quoted as under: "3.4 "Actual User" means an actual user who may be either industrial or non-industrial. 3.5 "Actual User (Industrial)" means a person who utilises the imported goods for manufacturing in his own industrial unit or manufacturing for his own user in another unit including a jobbing unit. " 20.3 Paragraph 3.37 defines 'person' as under : "3.37 "Person" includes an individual, firm, society, company, corporation or any other legal person." 20.4 Paragraphs 7.4, 7.16, 717 of the EXIM Policy with reference to the Duty Exemption Scheme are also usefully q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EXIM Policy where a company is also included in the said definition. 'Actual User (Industrial)' is defined to mean a person who utilizes the imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit. The Respondent is the person and V-23 and M-3 are the units are of the same person viz. the Respondent and if the imported duty free goods are utilized for his own use in another unit (viz. M-3 at Tarapur unit) then going by the definition of 'Actual User (Industrial)' in paragraph 3.5 of the EXIM Policy, the question of transfer to any other person would not arise. 22. Therefore, the question of breach of paragraph 7.4(ii) of the EXIM Policy which clearly provides that Advance Licences and / or materials imported thereunder shall not be transferable even after completion of the export obligation would not arise. Also, the question of breach of paragraph 7.16 of the EXIM Policy which pertains to actual user condition and provides that the licences granted under this scheme are subject to actual user condition till endorsement of transferable by the Licencing Authority would not arise, as there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of registration was only to enable a dealer to collect tax payable by him to the purchaser, but it did not have the effect of carving out an independent existence for the registered unit or to delink it from the other units for the purposes of the Act. The Hon'ble Court observed that, therefore, when furniture manufactured in the petitioner unit was transferred to other units, there was no transfer of property in goods from one person to another, and hence, no sale liable to tax under the Act. 25. The above decision supports our view, and therefore, there would be no violation of condition (i) or (vii) of the Notification No. 30/97-CUS dated 1 April 1997 as amended by Notifications upto No. 63/2004-CUS as there is no transfer in violation of the actual user condition, the discharge of export obligation not being in question. 26. Having regard to the above discussion, the questions as raised are answered as under: "Q(a) Question of law is whether in the facts and circumstances of the case and in law, the Tribunal is right in setting aside the Order in Original passed by the Commissioner of Customs for violating of condition of exemption notification and advance licence? Answ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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