ASHOK ENTERPRISES Vs. CC

JUDGEMENT

(1.) This appeal is directed against the Order -in -Original No. 1851/2004 dated 31.3.2004 passed by the Commissioner of Customs (Exports), Chennai, by which the Commissioner has held that 500.716 MTs of SS utensils valued at Rs. 5,43,75,495 is inadmissible towards the export obligation inasmuch as exported goods were locally procured. The Commissioner has also denied the benefit of duty exemption under Notification Nos. 30/97 dated 1.4.97, 51/2000 -Cus. dated 27.4.2000 and 48/99 dated 29.4.1999 is amended for the import of 638.368 MTs of SS Coils/sheets valued at Rs. 3,84,32,02. He has demanded duty of Rs. 2,57,82,659 (Rupees two crores, fifty seven lakhs eighty two thousand six hundred and fifty nine) on 638.368 MTs of SS coils/sheets imported, under proviso to Section 28(1) of the Customs Act, 1962 read with terms of the bond executed by them as per the conditions of the Customs Notification No. 30/97 dated 1.4.1997, 51/2000 dated 27.4.2000 and 48/99 dated 29.4.99 as amended. He has also demanded interest under Section 28AB of the Act ibid and has also ordered enforcement of the bonds/bank guarantee executed towards recovery of duty and other adjudication liabilities. He has also confiscated the goods imported duty free, under Section 111(o) of the Act ibid and since the goods were not available, a fine of Rs. 40,00,000 (Rupees Forty lakhs) has been imposed under Section 125 of the Act, besides a penalty of Rs. 2,57,82,659 (Rupees Two crores fifty seven lakhs, eighty two thousand six hundred fifty nine) under Section 114A of the Act.

(2.) Brief facts of the case are that on specific intelligence that some of importers of Stainless Steel Coils/Sheets and Exporters of Stainless Steel utensils under Advance Licence (DEEC) who availed the benefit of Customs Notification Nos. 30/97 -Cus dated 1.4.97,51/2000 -Cus dated 27.4.2000 and 48/99dated 29.4.1999 were misusing the Advance licences by diverting the duty free imported raw materials instead of utilizing the same for manufacture of the resultant export products, some of the units were not in existence and some of them were not actual manufacturers/actual users of the raw material imported duty free, the officers of the Dri visited the office of the appellants and took over certain documents from its proprietor Shri R. Goutham Chand. On verification. It was found that the appellants had filed applications in the prescribed form to the JDGFT, Chennai for issue of Advance licences. The name and address of the applicant/appellants was mentioned as M/s Ashok Enterprises No. 327, 1st Floor, Mint Street, Chennai -3 and they have declared themselves as the manufacturer -exporter having factory for manufacture of export product at 183 Waltax Road, Chennai -3. The licence was issued as per actual user condition and in terms of the actual user and other conditions, the appellants were liable to utilize the imported raw material for the manufacture of Stainless Steel Utensils (SS Utensils for short). As a follow up action, statements were obtained from various persons. The outcome of the investigation conducted by the DRI was informed to the JDGFT, Chennai for appropriate action. The said authority issued a show cause dated 14.2.2003 proposing action for imposing fiscal penalty, cancellation/suspending the IE Code, cancelling all the licences issued to them and to refuse further licences to the appellants. A report dated 4.2.2003 was sent to the Regional Director of Industries and Commerce, Chennai for appropriate action. The show cause notice issued by the JDGFT culminated in the adjudication order by order dated 10.12.03 whereby all the penal action contemplated in the show cause notice was dropped and only a nominal penalty of Rs. 10,000 was imposed on the appellants for not obtaining prior permission from the licensing authority for getting the job work done. Show cause was also issued to the appellants by the Additional Director General of DRI, vide F.No. VIII/26/291/2002 -DRI dated 26.3.2003 for the alleged violations of the conditions of the licence/Notifications, as mentioned in the show cause notice asking the appellants to show cause to the Commissioner of Customs (Exports), Chennai and the show cause notice culminated in the order of adjudication passed by the Commissioner whereby he has passed the order, as noted in para 1 above.

(3.) Shri V. Balasubramaniam, learned Counsel appearing for the appellants invited our attention to the grounds of appeal and submitted that as per the definition of "Actual User (Industrial)" in terms of the EXIM Policy for the year 1997 -2002, the importer of the raw material under the DEEC scheme could either utilize the goods for manufacturing export product in his own factory or get the export product manufactured out of such material in job workers' premises. He submitted that the appellants' activities were carried on mainly through job workers and the raw material was stored at Royapurm, polishing work and manufacturing activities were carried out at 183, Waltax Road and the final packing and export operations were carried out from Godown at 11, Pillayar Koil Street, Waltax Road Chennai -600 003. He has submitted that in terms of the licence, the appellants have imported 638.368 MT of Stainless Steel and exported 500.716 MT of utensils and thus filled the export obligation and this fact cannot be disputed. He has further submitted that after effecting the exports, appellants have obtained necessary shipping bill, which were released after testing the export cargo by the Customs and based on such shipping bills and Test Reports, Export Obligation Discharge certificate was issued by the JDGFT to prove the export obligation to the Customs authorities. The appellants have fulfilled the export obligation in respect of all the 12 licences and furnished necessary proof to the Customs department as well as for cancellation of the bonds given by appellants. He has further submitted that it is an admitted fact by the Revenue that there was fulfilment of the export obligation, realization of foreign exchange, discharge of customs bond, return of the Bank Guarantee by them and cancellation of the bond by the Bank. He has also submitted that the Commissioner's finding that the appellants had procured utensils from the domestic market and exported the same was not supported by any evidence. He has further pleaded that the appellants, despite being a manufacturer -exporter were entitled to get the manufacture of exported goods done in a jobbing unit which was admittedly done by them at 183, Waltax Road and the final packing and export operations were carried out from the Godown at 11, Pillar Koil Street, Waltax Road, Chennai -3. He has also submitted that there was no allegation made against the appellants in the show cause notice that the appellants failed to maintain proper records of the manufacturing done by the appellants themselves and those got done from the job worker. He has pleaded that in any event, inasmuch as the export -obligation has been fulfilled, and the JDGFT has dropped all the penal proceedings against the appellants and that order having not been challenged, it has attained finality, there cannot be any charge of non -fulfilment of the conditions of the licence/Notifications. He has also submitted in identical case, in the case of M/s. Navjyothi International vide Final Order No. 806/04 dated 9.9.2004, this Tribunal has passed an order in favour of the appellants therein, and he therefore, prayed, for similar orders.