Commissioner Of Customs(Export ... vs M/S. Diamond Polyprints

[Arising out of Order-in- Original No. 93/2003/CA/CC/SK dtd. 30/10/2003 passed by the Commissioner of Customs(Export Promotion), New Custom House, Mumbai]

For approval and signature:

Honble Mr. P.S. Pruthi, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Commissioner of Customs(Export Promotions), Mumbai. : Appellants

VS

M/s. Diamond Polyprints : Respondent

Appearance

Shri. D.K. Sinha, Asstt. Commissioner(A.R.) for the Appellants None for the Respondent

CORAM:

Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 20/8/2015 Date of decision 20/8/2015

ORDER NO.

Per : Ramesh Nair

This Revenues appeal is directed against Order-in- Original No. 93/2003/CA/CC/SK dtd. 30/10/2003 passed by the Commissioner of Customs(Export Promotion), New Custom House, Mumbai. Respondent also filed Cross Objection in this appeal.

2. The brief fact of the case is that the respondent engaged in the manufacture of excisable goods. They purchased part of the value based DEEC licenses bearing No. PL2320527 dated 6/8/1993., PL2050114 dated 5/3/1993 and NIL2049930 dated 26/2/1993 for enabling them to import input free from custom duty. The said licenses were duly transferred in favour of the respondent by the proper DGFT authorities. The respondent had imported three consignments of their inputs under Bills of Entry No. 11390 dated 28/3/1994, No. 11688 dated 29/3/1994 and No. 2755 dated 8/4/1994. The consignments of the inputs imported against the aforesaid Bills of Entry were cleared without payment of Custom duty under the exemption available under the aforesaid duty free import licenses. The respondent was issued show cause notice F. No. S/16-MISC-340-40/96 dated 27/1/1999, proposing that benefit of exemption under the said notification is not available to the respondent. Based on the above allegation show cause notice proposed to demand custom duty of Rs. 22,54,257/- The said show cause notice came to be adjudicated by the Ld. Commissioner who vide impugned order dropped the proceedings of the show cause notice. Aggrieved by the said order, Revenue is before us.

3. Shri. D.K. Sinha, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue submits that the respondent has availed exemption under Notification No. 203/92-Cus dated 19/5/1992 on the goods imported under DEEC Licence as transferee of the said licenses. As per the condition V(a) of the Notification original license holder i.e. exporter should not avail the input stage modvat credit. However, this condition was not satisfied. The Ld. Commissioner dropped the proceedings merely by relying upon Honble Supreme Court Judgment in case of Goodluck Industries Vs. C.C.[1999(108) ELT 818(Tri)]. He submits that unless until the condition of non availment of input stage credit is satisfied, the exemption notification No. 203/92-Cus is not admissible to the importer. Therefore the Commissioner has erred in dropping the proceedings.

4. When the matter was called for, none appeared on behalf of the respondent, nor any request for adjournment was on record, therefore we proceed to decide the matter on merit. The respondent has filed cross objection, they submitted that liceses were duly transferred in their favour by the proper authorities. They being bonafide purchaser of the licenses. As regard condition of non availment of input stage by the original license holder, it could not be insisted to be complied with by the transferee of the licenses. Condition of the non availment of modvat credit is applicable on the exporter of the goods, they being transferee and importer of the goods are not supposed to comply with the condition of modvat credit, therefore the said allegation of availment of modvat credit cannot be made against respondent. The respondent further submits that in the show cause notice, it was alleged that in respect of goods exported towards fulfillment of export obligation under the said liceses input stage credit under Rule 57 A was in fact availed by the manufacturer of the said goods but in support of such allegation no any evidence either in the show cause notice or otherwise was brought on record by the Revenue. On perusal of the show cause notice it was found that show cause notice was issued without relied upon document. The appellant also submitted that in the notice itself it is stated that the exporter had made declaration on the export documents to the effect that no input stage modvat credit had been availed on the input used in the manufacture of export goods. In the notice it was alleged that such declaration is wrong as manufacturer exporter has availed the modvat credit. The respondent in this regard submit that no evidence was adduced either in the show cause notice or otherwise to prove that declaration given in the export documents is wrong and also the exporter manufacturer has availed modvat credit. therefore without having any evidence the entire allegation made in the show cause notice has no legs to stand.

5. We have carefully considered submissions made by Ld. A.R. and submission made by respondent in Cross Objection.

6. We find that in the show cause notice there is allegation that manufacturer/exporter i.e. original licence holder has availed modvat credit and made wrong declaration in the export documents to the effect that no modvat credit was availed and as such violated the condition V(a) of Notification No. 203/92-Cus. However, it is undisputed facts that show cause notice has no base or infact no single document has been relied upon in the show cause notice that the manufacturer exporter made a wrong declaration on the export documents that no modvat credit was availed on the input used in the export goods, the entire proceedings is vitiated by the Revenue as it failed to prove that the declaration is incorrect. Allegation of charge is possible only by adducing tangible documentary evidences such as modvat invoices, modvat account in respect of input of manufacturer exporter. No such exercise was carried out in order to issue effective show cause notice. In view of this fact the show cause notice and the allegation made there under without support of any evidence cannot stand. Though the Ld. Commissioner has dropped the proceedings relying on the Honble Supreme Court Judgment in case of Goodluck Industries (supra) but even after considering the grounds of appeal made by Revenue this fact is not under dispute that the show cause notice is an skeleton, as allegation made in the show cause notice has no basis of any evidence. Moreover, it is also a settled legal position that the transferees import under legitimate transferred licence cannot be disputed on the ground that obligation casted on exporter manufacturer regarding non availment of Modvat credit was not satisfied. This gets support from the judgment of Larger Bench of this Tribunal in the case of Collector of Customs, Bombay V/s. Hico Products Ltd., Bombay[1988 (34) E.L.T. 643 (Tribunal)] which was upheld by the Apex Court as reported in [1997 (95) E.L.T. 12 (S.C.)]. In view of our above discussion, appeal of the Revenue is not maintainable and the same is dismissed. CO also stands disposed of accordingly.

(Operative part pronounced in court)

P.S. Pruthi Member (Technical) Ramesh Nair Member (Judicial)

sk

6 C/114/04-MUM, C/CO/34/05