VORIN LABORATORIES LTD. Vs. CC

JUDGEMENT

(1.) All these appeals arise from common Order -in -Original No. 24/98 dated 22.3.98 by which the Commissioner of Customs (Adjn.) has denied the benefit of Notification No. 204/92 dated 19.5.92 and confirmed customs duty liability of Rs. 16,28,171 on the misutilized goods. He has also imposed interest at the rate of 24% per annum on the goods from the date of clearance of duty free materials given in respect of each clearance to the date of final payment under Para 128 of the Handbook of Procedures 1992 -97 specified under Para 16 of Import and Export Policy 1992 -97. There is an order of confiscation of the goods in terms of Section 111(o) of the Customs Act and since the goods were not available for confiscation, there is imposition of fine of Rs. 1 lac. A penalty of Rs. 3 lakhs under Section 112(a) of the Customs Act has also been imposed.

(2.) The appellants were issued quantity based advance licence No. 34875 dated 24.5.93 by the Director General of Foreign Trade (DGFT), Hyderabad for export of 10000 legs of Ibuprofen with a condition that the goods imported a gainst the aforesaid licence shall be utilized in accordance with the provisions of Customs Notification No. 204/92 dated 19.5.92. However, on investigation by Central Excise Officers, it was revealed that they had imported 7380 kgs of Acetyl Chloride, 20000 kgs of Iso propyl Alcohol, 10000 kgs of Iso bytyl Benzene and 3000 kgs of Sodium Metal and subsequently sold in the local market. However, it was noticed that they had exported their final product viz. Ibuprofen, by availing credit of Central Excise duty on imports procured locally and additional duty in respect of inputs permitted import under Rule 57A of C.E. Rules, 1944. They had completed the export obligation by exporting 11,500 kgs of Ibuprofen as against 10000 kgs to be fulfilled as per advance licence by utilising duty paid indigenous and imported raw materials. The appellant's plea was that there was fire accident in the factory and due to which the inputs were destroyed and they feared about contamination of imported raw materials and they immediately took decision to dispose them of. However, subsequently, by using the indigenous material they had fulfilled the export obligation. Their contention that since the fire accident took place in the factory, they sold part of the inputs to save it from the contamination and as they had already fulfilled their export obligation, the question of paying duty, redemption fine and penalty does not arise. They also submitted that the export bond which had been executed in the matter had been fulfilled and during the period when the department investigated, they were not under the DEEC scheme as the export obligation had been fulfilled. It is their contention that Commissioner's order directing them to pay duty on the imported raw material and also to pay penalty does not arise. They submitted that as the circumstances were beyond their control, they had to sell the imported raw material to save it from damage/destruction. Hence, their action was bonafide and no penalty was required to be imposed on them.

(3.) We have heard Ld. Counsel Shri R. Ganesan and Shri A. Jayachandran, Ld. DR.