M.C. Daver Aromatics P. Ltd. Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. the applicants imported 3 consignments of perfumery compound free of duty in terms of notification no. 203/92-cus., dated 19-5-1992 being in receipt of a transferred value based advance licence. these imports were made in august, 1994. vide show cause notice dated nil issued in may, 1996 duty leviable on these goods amounting to rs. 2,73,004/- was demanded on the ground that in respect of the goods exported towards fulfilment of export obligation, the manufacturer had availed the benefit of modvat credit. it was alleged that by virtue of this availment the benefit of the notification was not available. proviso to section 28 of the customs act, 1962 was invoked to sustain the demand made for the extended period. as per the impugned order of the commissioner, it appears that the importer did not file any reply nor did they appear for personal hearing before the commissioner. the commissioner in his ex parte order confirmed the demand and also imposed a penalty of rs. 2,75,000/- on the importers. the importers filed the appeal and also the present application for waiver of pre-deposit of the duty confirmed and penalty imposed as well as stay of recovery thereof.2. we have heard shri anil balani, for the applicant and shri ashokan for the revenue.3. shri balani's main claim was that the transferee cannot be asked to explain the lapses in the procedure and the averments in securing the import licences by the transferer. it is his case that in terms of the very notification, the benefit is available because the licensing authority has after due scrutiny of the discharge of the obligation made by the first applicant has allowed the licences to be transferred.his second point is that in terms of section 28 of the customs act, 1962 the extended period can be invoked where the importer has made a wilful statement or has suppressed the fact. here in this case the suppression or misdeclaration if any, was made by a person who acquired the licence and not by the importer who was the transferee.4. shri ashokan, on the other hand strongly supports the commissioner's order and submits that the conditions of the exemption notification having been violated duty has rightly been demanded.goodluck industries v. c.c.e., calcutta 1999 (108) e.l.t. 818, the tribunal was examining the applicability of condition no. 5 in the notification no. 208/92. it was held that it was to be presumed that the licensing authority had satisfied themselves about the fulfilment of its conditions before making endorsement of transferability of the licence. once that is done the burden of proving condition no. 5 could not be thrown on the ultimate importer who imported the goods on the strength of a transferred licence. the situation in the present case is even more in favour of the importer. in terms of section 28 the statement etc. is to be made by the very person who is the importer. where the person who is made the misdeclaration is different the burden under section 28 cannot be put on the importer. on the ground of limitation, a prima facie case having been made by the applicants, we grant unconditional stay and waiver of pre-deposit of duty confirmed and the penalties imposed.

Judgment:
1. The applicants imported 3 consignments of Perfumery Compound free of duty in terms of Notification No. 203/92-Cus., dated 19-5-1992 being in receipt of a transferred value based advance licence. These imports were made in August, 1994. Vide show cause notice dated Nil issued in May, 1996 duty leviable on these goods amounting to Rs. 2,73,004/- was demanded on the ground that in respect of the goods exported towards fulfilment of export obligation, the manufacturer had availed the benefit of Modvat credit. It was alleged that by virtue of this availment the benefit of the notification was not available. Proviso to Section 28 of the Customs Act, 1962 was invoked to sustain the demand made for the extended period. As per the impugned order of the Commissioner, it appears that the importer did not file any reply nor did they appear for personal hearing before the Commissioner. The Commissioner in his ex parte order confirmed the demand and also imposed a penalty of Rs. 2,75,000/- on the importers. The importers filed the appeal and also the present application for waiver of pre-deposit of the duty confirmed and penalty imposed as well as stay of recovery thereof.

2. We have heard Shri Anil Balani, for the applicant and Shri Ashokan for the Revenue.

3. Shri Balani's main claim was that the transferee cannot be asked to explain the lapses in the procedure and the averments in securing the import licences by the transferer. It is his case that in terms of the very notification, the benefit is available because the licensing authority has after due scrutiny of the discharge of the obligation made by the first applicant has allowed the licences to be transferred.

His second point is that in terms of Section 28 of the Customs Act, 1962 the extended period can be invoked where the importer has made a wilful statement or has suppressed the fact. Here in this case the suppression or misdeclaration if any, was made by a person who acquired the licence and not by the importer who was the transferee.

4. Shri Ashokan, on the other hand strongly supports the Commissioner's order and submits that the conditions of the exemption notification having been violated duty has rightly been demanded.Goodluck Industries v. C.C.E., Calcutta 1999 (108) E.L.T. 818, the Tribunal was examining the applicability of condition No. 5 in the Notification No. 208/92. It was held that it was to be presumed that the licensing authority had satisfied themselves about the fulfilment of its conditions before making endorsement of transferability of the licence. Once that is done the burden of proving condition No. 5 could not be thrown on the ultimate importer who imported the goods on the strength of a transferred licence. The situation in the present case is even more in favour of the importer. In terms of Section 28 the statement etc. is to be made by the very person who is the importer. Where the person who is made the misdeclaration is different the burden under Section 28 cannot be put on the importer. On the ground of limitation, a prima facie case having been made by the applicants, we grant unconditional stay and waiver of pre-deposit of duty confirmed and the penalties imposed.