JAYANTILAL BHOGILAL, USHA Vs. COMMISSIONER OF CUSTOMS, MUMBAI

JUDGEMENT

(1.) THIS group of appeals has been filed by advance licence holder as well as letter of authority holder and others in respect of free import of aromatic chemicals, paper board and LAB. The question involved in this group of appeals is whether the importer has violated the provisions of Customs notification 159/90 and whether reversal of modvat credit by the importer would absolve him from the rigors of the conditions mentioned in the said notification.

(2.) THE appellant in Appeals C/260 to 562 was a merchant exporter. He obtained five advance licences for the import of linear alkyl benzene, aromatic chemicals and paper board. The export product was synthetic detergent powder. The advance licence holder, the appellants in three appeals did not have manufacturing facility. Therefore it had contacted the other appellants, namely Mili Detergents and Jayantilal Bhogilal as supporting manufacturers. The names of these two persons were indicated in the application for advance licence as supporting manufacturers. The names were found in the advance licence and DEEC books along with the names and addresses of the factories of the supporting manufacturers. The ultimate Mili Detergents and Jayantilal Bhogilal and hand over to Usha Intercontinental who in turn exported it. Export obligation was fulfilled by the licence holder. This is undisputed. The licence holder gave letter of authority to the supporting manufacturers. It is an admitted fact that no permission from the licensing authority was obtained for issuing such a letter of authority in favour of the supporting manufacturers. On the strength of the letters of authority Mili Detergent and Jayantilal Bhogilal imported the goods and filed bill of entry in their names. It was assessed to duty at nil rate under notification 159/90.

(3.) THE case of the department was, who issued three show cause notices, that the two supporting manufacturers who had imported the goods, have sold the imported goods in the open market; the said manufacturers had availed modvat facilities on the inputs purchased by them from the indigenous market which were used in the manufacture of the detergent power exported. This, the department alleges, was a violation of notification 159/90 and further the notice charged the supporting manufacturers that they have sold the imported material in violation of the Policy. The show cause notices also alleged that the permission of the licensing authority was not obtained for sale of LAB and which was violated by the appellant Usha Intercontinental. It is further stated in the show cause notice that paper board and aromatic chemicals falling under Appendix 13F of the Policy. Therefore in terms of paragraph 250(3) of the Policy transfer is permitted only subject to actual user condition. Transfer to somebody else is permitted only with the permission of the licensing authority and that too subject to the actual user condition and subject to the further condition that modvat should not have been availed. According to the department, there was violation of the provisions of Section 111(m) and (o) of the Customs Act. Therefore duty was sought to be claimed from Usha Intercontinental, Jayantilal Bhogilal and others. It was specifically stated in the notices that duty should be recovered from Usha Intercontinental on the above imported goods in case Jayantilal and Bhogilal and Mili Detergent fail to pay the duties. Penalties were also sought to be levied on each of the appellants.