Wazir Chand And Co. (P) Ltd. vs Collector Of Customs on 21 December, 1995

Customs, Excise and Gold Tribunal – Delhi
Wazir Chand And Co. (P) Ltd. vs Collector Of Customs on 21 December, 1995
Equivalent citations: 1996 (83) ELT 383 Tri Del


Jyoti Balasundaram, Member (J)

1. The above appeal has been preferred against the order dated 6-1-1992 of the Additional Collector of Customs, Import Air Cargo, I.G.I. Airport, New Delhi levying custom duty of Rs. 9,34,514/- together with interest thereon at the rate of 18% from the date of importation till the date of payment and imposing a penalty of Rs. 1 lakh upon the appellants herein. The brief facts of the case are that the appellants submitted their Import and Export Passbook dated 7-6-1988 and requested for issue of No Objection Certificate. From a verification, of the passbook, it transpired that the appellants had not utilised 36104.50 wtg brass scrap imported free of duty for the manufacture of their resultant product specified in the passbook, namely Brass Art Wares and Handicrafts. The non-utilisation of this quantity has been arrived at by subtracting the quantity utilised as indicated in the passbook in Part G from the quantity actually imported which is as follows :

(a) Quantity imported (in M.T. 63.904).

(b) Quantity exported M.T. 27.799/(-) M.T. 36.104.

A show cause notice was issued to the appellants on this basis and in reply they said that they had fulfilled the export obligation though fulfilment was not endorsed in the passbook but to limiting factor of export obligation and that they had utilised the entire imported material only for manufacture and export of hand made brass articles. The adjudicating authority, on consideration of the submissions and statement of export produced by the appellant, held that the export passbook contained entries of only 10 snipping bills mentioned at Serial No. 1 to 10 and that there was no co-relation between the statement of export covering 42 bills with the imported material. She held that the statement of export does not have co-relation with the export passbook. The contention of the appellants that they were only required to fulfil export obligation in terms of value and not in terms of quantity as per Appendix 14A was rejected, holding that Para 271(2) of the relevant policy that is the 1988-91 Policy, has to be read not in isolation but alongwith other relevant paragraphs namely Paras 259(1), 271(1) and 271(2) and alongwith Notification No. 117/88, dated 30-3-1988 under which goods are permitted to be imported free of duty on condition of utilisation in the resultant export product.

2. We have heard Shri J.S. Sinha, the learned advocate appearing alongwith Shri Randhir Singh and Shri R.A. Sheikh, the learned Departmental Representative and carefully considered their submissions.

3. The contention of the appellant that the passbook was issued to them as per import entitlement rate given in Appendix 14A wherein according to para 271(2) of the 1988-91 Policy, the export obligation will have to be fulfilled in terms of value only, is not acceptable as (a) Licence does not contain any endorsement or indication that the passbook was issued under Appendix 14A and (b). The raw-material imported, i.e. brass scrap figures in Appendix 14-C at Serial No. 9 under list of sensitive items. The argument of the Appellants that Chapter XX covering the Import-Export passbook is applicable only to the passbook granted as per Appendix 14A is not correct as Chapter XX containing Paragraphs 257 to 283 also covers passbooks granted in terms of Appendix 14C as evident from Para 261(2) which states that the description of items, quantity and value upto which each item is to be allowed will be based on the declaration of the applicant. He will have to give a declaration to the effect that items sought for import values, and quantities mentioned against each, are actually, required for the manufacture of the export product. For items appearing in Appendix 14C, a certificate certifying the actual requirement of the items in the export product from the concerned Chartered Engineer will have to be produced alongwith the application. In sectors where Chartered Engineers are not available, the CCI & E may permit certification by the concerned Export-Promotion Council. Therefore, since the passbook has not been issued in terms of Appendix 14A, but in terms of Appendix 14C the export obligation will have to be fulfilled both in terms of quantity and value. Having held thus, duty exemption is available only where the appellants have fulfilled export obligation in terms of quantity and value. The evidence adduced by the appellants to support their contention that such obligation has been fulfilled, consists of a statement of export produced by its Deputy Managing Director. However, this statement is not a proof of manufature and export of Brass Art Wares out of the raw-material imported free of duty by the appellant who are claiming benefit of Notification 117/88. According to the condition of this notification, the imported goods shall be used for the purpose specified in this notification namely for manufacture of export products. Since the appellant have not been able to specifically account for utilisation of the quantity of 36104.50 Kg, they have contravened the condition stipulated in the above notification. Similar is the provision regarding utilisation of exempt material imported under a licence under the Import-Export Passbook Scheme as seen from Para 281 thereon. The further contention of the appellants that in the absence of any charge that the imported material had been loaned or sold or transferred or disposed of contrary to the condition of the notification, there is no warrant for penalty in terms of Section 112(a), cannot also be accepted as we find that the charge against the appellants is of contravention of Section 111(o) of the Customs Act which charge has been established in the above paragraphs and hence the provisions of Section 112(a) are attracted to the facts of this case. In the result, we uphold the order of the Additional Collector of Customs but however reduce the penalty imposed on the appellants to Rs. 40,000/- The appeal is disposed of accordingly.

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