COMMISSIONER OF CUSTOMS, CHENNAI Vs. VXL INSTRUMENTS LIMITED

JUDGEMENT

(1.) This is an appeal filed by the Commissioner of Customs, Chennai against the Order -in -Original No. 262/1997, dated 29 -12 -1997 passed by the Commissioner of Customs, Madras.

(2.) THE facts in brief are that M/s. VXL Instruments Limited, Bangalore, were issued Value Based Advance Licences (VABAL) under DEEC Scheme, in terms of Export -Import Policy 1992 -1997 for import of various materials for manufacture of goods meant for export under the DEEC scheme. The respondents have imported consignments of various goods under various Bills of Entry by availing the benefit of Notification No. 203/92 -Cus., dated 19 -5 -1992. In terms of Para (V) of the said Notification, the export obligation is to be discharged by exporting the goods for which no input stage credit is obtained under Rule 56A/57A of Central Excise Rules, 1944. Since the importers had availed Modvat credit on the goods used in the manufacture of products exported under VABALs, they have violated the condition stipulated in Para (V) of the Notification No. 203/92 -Cus. and consequently the respondents were not eligible for duty free import under the said licences. A Show Cause Notice was, therefore, issued to them demanding customs duty amounting to Rs. 6,88,187/ - under Section 28(1) of Customs Act, 1962 on inputs cleared duty free. Interest of 24% p.a. on the above duty not paid on these inputs from the date of clearance to the date of payment was also demanded besides proposal for confiscation of the goods released free of duty and imposition of penalty. The case was adjudicated by the Commissioner of Customs (Adjudication), Madras, under the impugned order wherein he held that customs duty of Rs. 6,88,187/ - is not recoverable from M/s. VXL Instruments Limited, Bangalore, as demanded in the Show Cause Notice and no penalty is required to be imposed and he withdrew the case proceedings initiated against M/s. VXL Instruments Limited, Bangalore.

(3.) IN the appeal, the grounds raised are that the adjudicating authority has arrived at a wrong conclusion without considering all aspects of the case and conditions of the Amnesty Scheme and erroneously dropped the proceedings by condoning the delay in payment of interest for which he had no authority. The Amnesty Scheme was announced by the Government to avoid penal action against the exporters who were issued with the Show Cause Notice demanding customs duty on the goods imported by them under VABAL Scheme/Customs Exemption Notification 203/92 -Cus., dated 19 -5 -1992 in view of the breach of conditions of the said Scheme/Notification and availing of double benefits by prima facie suppression/misrepresentation of the facts, provided that the conditions stipulated in the Amnesty Scheme are followed strictly. The respondents had availed of Modvat benefit on inputs used in production of consignments exported towards discharge of export obligation. This was clearly in violation of the conditions stipulated in Notification No. 203/1992 -Cus. Subsequent to export, they reversed the credit taken initially, but this did not extinguish the contravention and the corresponding duty liability for import of inputs effected without payment of duty subsequently. In the Amnesty Scheme, a special dispensation was given by the Government as a one time special gesture, not to take action for violation of condition of Notification No. 203/1992 -Cus. for availing Modvat credit etc., provided the laid down conditions were satisfied in a stipulated time period i.e. by 31 -1 -1997. This period was not extended by the Government and, therefore, for claiming immunity from penal action and action for recovery of duty for violation of condition of Notification No. 203/1992 -Cus., the importers were required to reverse the Modvat credit and pay interest due thereon by 31 -1 -1997. The respondents have failed to fulfil the conditions of the said Amnesty Scheme and failed to pay the interest by 31 -1 -1997, as required. The adjudicating authority has, therefore, wrongly dropped the duty demanded and interest chargeable and also wrongly failed to impose proper penalty on the importer.