ORDER
Jyoti Balasundaram, Vice President
1. Two Quantity Based Advance Licences were issued to the appellants herein who are exporters of aromatic chemicals, natural essential oils, various dyes and dye intermediates etc., by the office of the Joint Chief Controller of Imports and Exports, Bombay (subsequently the Joint Director General of Foreign Trade, Mumbai) bearing (a) Advance Licence No. 2073306 dt. 23.1.1995 and DEEC Book No. 147981 dt. 23.1.1995, and (b) Advance Licence No. 2073442 dt. 7.2.1995 and DEEC Book No. 156023 dt.15.2.1995, under the provisions of Chapter 7 of the EXIM Policy 1992-97. In accordance with these licences, the appellants imported Beta Napthol and Aniline Oil and clearance thereof was permitted duty free in terms of Notification No. 204/92-Cus. dt. 19.5.1992. In the advance licence dt. 23.1.1995, M/s. Amrut Dye Chem Industries were shown as supporting manufacturer and five other companies were shown as supporting manufacturers in the second licence. The imported Beta Naphtol was delivered by the appellant to M/s. Amrut Dye Chem Industries, who manufactured Gama Acid out of it and cleared 10 consignments under AR4. Out of the 10 consignments, 7 consignments were exported from Mumbai Port and 3 consignments were exported from Jawaharlal Nehru Port. The Customs authorities at Mumbai accepted the export of goods covered by shipping bills at Serial Nos. 1 to 5 and logged the same in Part F of DEEC Book and the Customs authorities at Jawahar Port accepted the export of goods covered by shipping bills at Serial Nos. 6 and 7 and logged the same in the DEEC Book. The dispute in the present appeal is in respect of the three remaining shipping bills. Similarly, Aniline oil imported by the appellants under the Advance Licence dt. 7.2.1995 was delivered to one of the supporting manufacturers namely M/s. J.K. Pharma, who converted the raw material into Vinyl Sulphone Ester, and exported the final products under different AR4s. 10 consignments were exported in discharge of export obligation, out of which export covered by three shipping bills was accepted. The dispute in the present appeal is in respect of the remaining 7 consignments covered by 7 shipping bills.
2. Vide Order dt.28.3.2001, the Deputy Commissioner of Customs rejected the logging of exports as claimed by the appellants under the two Advance Licences on the ground of violation of conditions of Notification No. 204/92 and Public Notice No. 217/95; by order dt. 13.3.2003, the Commissioner of Customs (Appeals) remanded the proceedings to the adjudicating authority, holding that the impugned order had been passed by the Deputy Commissioner without considering the submissions of the appellant. After remand the Deputy Commissioner passed fresh order dt. 3.2.2006, once again rejecting the logging of the export for the same reason as in the earlier order. The lower appellate authority rejected the appeal of the appellants; hence this appeal.
3. We have heard both sides. The contention of the appellants is that they have fulfilled export obligation and they have not sold/diverted the material imported duty free. The alternate submission is that even if it is established that the duty free material import under the licence was sold in the domestic market, even then, such sale will not be in contravention of the condition in the notification which prohibits sale or diversion of the duty free imports prior to fulfillment of export obligation, for the reason that they have sold the imported material only after fulfilling the export obligation.
4. We find that the shipping bills giving the description of the product exported and the details of the advance licence against which the export was sought to be made and details of raw material used in the export consignments were filed by the appellants and the shipping bills were passed by the customs authorities. The shipping bills related of the goods to the description specified as export obligation. The fact that there is a long gap between the date of import of the raw materials duty free and the date of export and the further fact that the value mentioned in the invoice is higher than the job charges paid by the appellants is not sufficient to hold that the conditions of the relevant notifications have been violated, particularly when identical pattern has been adopted in respect of other exports which have been logged by JNPT Customs as well as by Bombay Port Customs themselves. Reliance placed upon the admission of the appellants that the imported material as such was given to the supporting manufacturer who manufactured of goods exported under the Passbook Scheme does not advance the case of the Revenue for the reason that, in any event, goods manufactured out of the imported raw materials were exported, although under the Passbook Scheme, and the period for fulfillment of export obligation was extended on payment by the appellants of a compensation fee of 5% of the FOB value as provided in Public Notice No. 38/97.
5. In the above circumstances, the Tribunal’s order, in the case of Dolphin Drugs Pvt. Ltd. 2000 (115) ELT 552 (T) holding that as long as the export obligation was fulfilled within the time allowed to the licensee or within the period extended by the DGFT authorities, there is no violation of condition of Notification No. 203/92 or 204/92 and the Tribunal’s order in the case of Galaxy Surfactants Ltd. v. Commissioner of Customs , holding that it is immaterial whether material imported duty free was first used for domestic clearances of final products in the manufacture of which the import material was used, and exports were made later on, or vice versa are squarely applicable to the facts of this case. The conclusion reached by the Assistant Commissioner in the present case that the goods exported are not made out of the imported goods, resulting in contravention of Notification No. 204/92-Cus is also not tenable, as it is contrary to the decision of the Tribunal in the case of Kitply Industries Ltd. v. Commissioner of Customs, New Kandla reported in 2001 (135) ELT 786 (Tri.Kolkata)] holding that after export obligations have been discharged in full, exempt material can be disposed of in the open market. In the light of the above, we accept the appellant’s contention that they were entitled to logging of exports under the two advance licences in question, set aside the impugned order and allow the appeal.
(Pronounced in court)