NCS SUGARS LTD. Vs. COMMISSIONER OF CUSTOMS, VISAKHAPATNAM

JUDGEMENT

(1.) M /s. NCS Sugars Ltd., the appellant herein had obtained advance license No. 0910019136, dated 30 -6 -2004 for duty free import of 50,000/ - MTs of raw sugar with actual user condition and with obligation to export 47,620 MTs of white sugar. The initial period of 18 months prescribed for fulfillment of export obligation from the date of issue of license was extended to 24 months by the DGFT vide Public Notice No. 2 (RE -05)/2004 -09, dated 20 -4 -2005. The assessee imported a quantity of 21,300 MTs of raw sugar against the advance license availing exemption from customs duty under Notification No. 43/2002 -Cus., dated 19 -4 -2002. The appellants converted the imported raw sugar into white sugar and cleared it on payment of applicable excise duty into the DTA. Pursuant to investigations conducted by the DRI in or around August 2006, the authorities came to a tentative conclusion that the assessee was not entitled to exemption under Notification No. 43/2002 -Cus. in respect of 2954.400 MTs of raw sugar of value Rs. 2,85,81,668/ - involving duty of Rs. 2,59,39,995/ -. A show cause notice was issued on 10 -4 -2007, alleging inter alia that the assessee had sold the white sugar manufactured from 21,300 MTs of raw sugar imported under the advance license and that it had incurred liability to pay appropriate duty of customs as well as penalty as the goods imported were rendered liable for confiscation under Section 111 of the Customs Act, 1962 (the Act). Adjudicating allegations raised in the show cause notice, the Commissioner of Customs, Visakhapatnam found that a quantity of 2466.250 MTs of white sugar exported by M/s. Emmsons International Ltd., (Emmsons) under Shipping Bill No. 1053189 dated 16 -6 -2006 was not eligible to be counted towards fulfillment of export obligation by M/s. NCS Sugars claimed by it as a third party export. He confirmed demand of exemption availed in respect of 2954.400 MTs of raw sugar working out to Rs. 2,59,39,995/ - relatable to the above quantity of white sugar exported under Shipping Bill No. 1053189 dated 16 -6 -2006. He found 2954.400 MTs of raw sugar of value Rs. 2,85,81,668/ - liable for confiscation under Section 111(o) of the Act and ordered a fine of Rs. 50,00,000/ - since the said goods had already been released to the importer. He imposed a penalty of Rs. 25,00,000/ - on M/s. NCS Sugars under Section 112(a) of the Act. M/s. NCS Sugars are in appeal before the Tribunal and have raised the following grounds.

(2.) IT is submitted that the Commissioner had wrongly held that export of 2466.250 MTs of sugar through Emmsons could not be held as third party export since the appellants name had not been shown as exporter and the name Emmsons had not been shown as third party in the shipping bill. It was incorrectly held that the appellant could not be treated as third party exporter since the export order was in the name of Emmsons. It is submitted that sugar is an essential commodity notified under Essential Commodities Act, 1955. In terms of the powers conferred on the Central Govt. under this Act and the Sugar Control Order 1966, the Govt. had powers to direct the owner of any sugar factory as to the manner and delivery, distribution etc., of the sugar produced in the factory. This included the power to direct any owner to deliver for export of any specified quantity of sugar. The assessee had been directed to off -take certain quantities of sugar from designated sugar factories for the purpose of export and utilize the said quantities of sugar to discharge export obligation. The sugar produced by the assessee would have been similarly allocated by the Directorate of Sugar for use in some other manner. As per release order dated 2 -3 -2006, the appellants were permitted to procure 19,000 MTs of sugar from different sugar factories noted therein. As per the release order, the appellants purchased sugar from M/s. Halasidanath SSK Ltd., (HSSK) under contract dated 25 -2 -2006 between the appellant and the said M/s. Halasidanath SSK Ltd. The release order allowed the appellants to purchase 19000 MTs of sugar for export in fulfillment of export obligation against the subject advance license; the contract between the appellants and the said sugar factory also contained a clear agreement that the sugar purchased was meant for export purposes. The contract entered into by the appellant with Emmsons would show that the entire quantity of sugar purchased from HSSK was meant for export and in compliance with the directions contained in the release order of the Directorate of Sugar. The appellants raised commercial invoice dated 27 -6 -2006 for export of 2466.250 MTs of sugar which showed the consignee as the Trading Corporation of Pakisthan, Karachi while the buyer was shown as Emmsons. The said commercial invoice provided for TT remittance of the export proceeds. In the Shipping Bill No. 1053189, Emmsons was shown as exporter and the appellants were shown as third party exporter. It was submitted that in respect of a controlled commodity like sugar it was not possible to mention exporter itself as third party exporter and to mention some other person as exporter. There was no dispute that export proceeds were realized as per the Bank Realization Certificate (BRC) issued by the Indian Overseas Bank dated 4 -12 -2006 which contained a reference to exports made by Emmsons on account of the appellants, among others. It could be discerned from the BRC that an amount of Rs. 5,48,33,747/ - out of a total of Rs. 28,13,31,308/ - was export proceeds relatable to 2466.250 MTs of sugar exported under Shipping Bill No. 1053189. It is submitted that in the circumstances, the export of 2466.250 MTs of sugar by Emmsons had to be treated as third party export under the relevant Exim Policy/Foreign Trade Policy.

(3.) ACCORDINGLY the terms Exporter and Importer can be said to cover one or more than one exporter/importer of the goods within the meaning of Section 2(20) and Section 2(26) of the Customs Act, 1962. In view of Ministry of Laws opinion, it has been decided that there is no objection to allowing third party exports under the Customs Act.