ORDER
K.S. Venkataramani, Vice President
1. As the appeal itself lies in a short compass and can be disposed of, after hearing the ld. Counsel Shri Daruwalla for the applicants and Shri V.K. Puri, the ld. SDR for the Revenue, we grant stay and take up the appeal for disposal.
2. The appellants have been granted Value Based Advance Licence and DEEC Book for importing aniline oil. One of the conditions of the licence is that the appellants shall export sulphanilic acid. In the corresponding Customs notification allowing exemption being Notification No. 203/92 imposes a condition that import of material against a Value Based Advance Licence are exempted from duty subject to the condition which is relevant to the present case that the export obligation is discharged within the time limit, and also that no input stage credit is obtained under Rule 56A or 57A of the Central Excise Rules. The Department initiated proceedings against the appellants on the ground that the condition regarding non availment of Modvat credit in the notification has been violated by the appellants because it came to the notice of the Customs House that the appellants had suppressed the fact of the availment of Modvat credit while availing the exemption under the notification. Hence, the view was taken that the export would not qualify the export obligation under the advance licence. Show cause notice was issued under Section 28 for recovery of duty which resulted in the impugned order, whereby, the Commissioner of Customs ordered recovery of duty of Rs. 17,86,537/- with interest of 20% under Section 28AB of the Customs Act, 1962. He also held the goods liable for confiscation under Section 111(d) and 111(o) of the Customs Act. But the goods had already been released and therefore, he imposed a penalty of Rs. 5 lakhs on the appellants.
3. The ld. Counsel Shri Daruwalla pointed out that much before the issue of show cause notice in this case, the appellants themselves had realised that they could not avail of the Modvat credit when claiming exemption under Notification No. 203/92 and they had reversed the Modvat credit availed with interest between Feb., 1995 and Feb., 1996 by debit in their PLA/RG 23. The details of such debits had been communicated by them to the jurisdictional Supdt. of Central Excise vide their letter dated 30-1-1997. The ld. Counsel pointed out further that problem had occurred in the case of other imports against VBAL, and the Board had occasion to go into the “problem and had issued instruction which has been reproduced in the Trade Notice No. 5/97, dated 7-1-1997 of the Commissioner of Central Excise and Customs, Cochin. The Board has clarified the matter after examining, keeping in view the legal and administrative implications as well as repercussions on the export trade if the Department had to initiate enforcement proceedings against the exporting community for the breach of the condition of the scheme as well as the Customs exemption notification. The Board observed that enforcement action in terms of law may not only adversely affect export efforts but would also cast a tremendous administrative burden in the adjudication of cases. The Board, therefore, relaxed the relevant condition in the Notification No. 203/92 ex post facto subject to certain conditions. It was laid down that the concerned exporters should reverse the Modvat credit incorrectly availed of by them on the goods exported under the scheme, together with interest at the rate of 20% on the said amount of Modvat credit retained by them between the date of export and the date of reversal. It was also laid down by the Board that if the reversal of Modvat credit and payment of interest as contemplated in the instruction is completed by 31-1-1997 and thereupon no demand of Customs duty leviable on goods imported against the VBAL shall be payable.
4. After hearing the ld. SDR, we find that the Board’s clarification fully covers the present case of the appellants where they have reversed the Modvat credit with interest of 20% before the cut off date mentioned in the Board’s letter. Therefore, the demand is not sustainable. The need for penalty also disappears when there is a general amnesty given by the Board itself. The appeal is, therefore, allowed.