ASHOK ENTERPRISES Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) This application seeks waiver of pre deposit and stay of recovery in respect of an amount of duly of Rs. 2,57,82,659/ - and an equal amount of penalty, it appears from the records that the adjudicating authority confirmed a demand of duty to the aforesaid extent on the appellants by denying them the benefit of exemption under Notification Nos. 30/97, 48/99 and 51/2000 for the period 1997 -2001. The demand is on the main ground that the raw materials imported by the appellants on the strength of 12 Advance Licences issued by the Director -General of Foreign Trade ("DGFT", in short) in the DEEC scheme during the material period were not actually used for manufacture of export goods but diverted to the market. The penalty is based on findings of suppression etc. Ld. Counsel for the appellants submits that the demand of duty is unsustainable on the facts of the case inasmuch as the appellants had utilised the imported goods for manufacture of export goods, exported the latter goods, got the DEEC Books logged and obtained the Redemption Certificates in respect of all the 12 licences. Counsel points out that the Commissioner himself acknowledged the factum of fulfilment of export obligation. It is further submitted that the benefit of the Notifications has been denied illegally without challenging the logging of DEEC Book which, according to the appellants, was an appealable proceeding. In this connection, Id. Counsel relies on the Tribunal's decision in Marmo Classic v. CC, Mumbai [2002 (143) E.L.T. 153], wherein it was held that, where the logging of DEEC Book had been accepted by the proper officer of Customs, it was beyond their jurisdiction to demand duty without first getting such logging set aside. It is further pointed out that the Tribunal's decision in Marmo Classic (supra) has been affirmed by the Apex Court in 2003 (152) E.L.T. A85 (S.C). Ld. Counsel also relies on an order passed by the Jt. DGFT on 10 -12 -2003, copy whereof is available on record. The question before the Jt. DGFT was whether the aforesaid 12 Advance Licences required to be cancelled on the ground of violation of 'actual user' condition pertaining to the imported raw materials. Counsel points out that, after a detailed examination of all the relevant facts and circumstances, Jt. DGFT answered the question in the negative. This apart, Counsel has also relied on certain findings of the Jt. DGFT. Jt. DGFT found that the appellants had manufactured a major part of the export goods in their own premises and had obtained the rest manufactured through job workers. Therefore, the finding of the adjudicating authority that no part of the export goods had been manufactured in the appellants' premises is not correct. It is further submitted that the Jt. DGFT's order dated 10 -12 -2003 has not been challenged by the Department and, therefore, the Commissioner's findings contra to those recorded in the said order cannot be sustained. Ld. Counsel thus claims a strong prima facie case.

(2.) Ld. SDR opposes this claim on the strength of a judgment of the Hon'ble Madras High Court in South India Exports, Chennai and Ors. v. Jt. DGFT and Anr. [2004 (177) E.L.T. 57 (Mad.) = 2004 (91) ECC 555 Mad.]. It is submitted that orders similar to the one passed by the Jt. DGFT on 10 -12 -2003 in favour of the present appellants were considered by the Hon'ble High Court in certain Writ Petitions filed by some other exporters and that, in its judgment (cited above), the High Court recorded adverse observations vis -a -vis the orders of the Jt. DGFT. The reference is to certain observations contained in Para 13 of the judgment of the High Court. Ld. SDR, also, reiterates the findings of the Commissioner.

(3.) We have carefully considered the submissions. The appellants imported raw materials and exported their final product. The question which will arise before this Bench at the final hearing stage of the case is whether the imported raw materials had satisfied 'actual user' condition of the relevant Notifications. The demand of duty confirmed by the Commissioner is based on a finding that the imported raw materials had been diverted to local market and similar materials, procured from the local market were utilised in the manufacture of the export goods. Insofar as this finding is concerned, the Jt. DGFT's order dated 10 -12 -2003, which admittedly was not challenged by the Department before any judicial forum, has a strong bearing. The Jt. DGFT categorically found that M/s. Ashok Enterprises (appellants) used a major quantity of the imported raw materials in the manufacture of export goods in their own premises. This finding, not so far challenged by the Revenue, runs against the Commissioner's finding that there is no evidence to show that the appellants had manufactured the export goods by utilising the imported raw materials in their declared premises. Ld. SDR has also argued on the merits of the Jt. DGFT's order. We note that the Hon'ble High Court itself found, that it had no jurisdiction to sit in appeal over similar orders of the Jt. DGFT. Similarly, it is not open to us to sit in judgment over the legality, or otherwise, of the Jt. DGFT's order dated 10 -12 -2003. In Para 13 of its judgment, the Hon'ble High Court made certain observation, which has been heavily relied on by the SDR. This observation reads thus : "however, we must say and express that there is hardly any reference to the evidence in that order, which evidence is undoubtedly presently available with the Customs authorities as per their own claim." The order referred to in the High Court's observation can be similar to the order dated 10 -12 -2003 of the Jt. DGFT figuring in the present proceedings. But we are unable to draw any support from the above observation, as we have nothing to do with the legality or otherwise of the Jt. DGFTs order dated 10 -12 -2003. For the present, we have found a strong prima facie case for the appellants inasmuch as, admittedly, they have fulfilled export obligation in respect of the imported raw materials and have shown, through the Jt. DGFT's order, that they had utilised most of the raw materials in their own premises for manufacture of the export goods. It is also not disputed that the logging of DEEC Book in this case has not been challenged by the Department. Prima facie, in such circumstances, the demand of duty will not be sustainable in view of the decision in Marmo Classic. Consequentially, prima facie, the penalty is also not sustainable. Therefore, we grant waiver of predeposit and stay of recovery in respect of the duty and penalty amounts. However, as rightly pointed out by Id. SDR, the appeal requires to be heard as early as possible, as it involves high stake for the Revenue. The appeal is posted to 7 -10 -2004 for final hearing.