ISI BARS LTD. Vs. COMMISSIONER OF CUSTOMS (EXPORT)

JUDGEMENT

(1.) THE above appeals arise out of the order of the Commissioner of Customs, Mumbai, who confirmed the duty demand of Rs. 10,47,651/ - against M/s. ISI Bars Limited in respect of 27 Metric Tones of Calcium Silicide under Section 28 of the Customs Act, 1962, imposed penalty of Rs. 5 lakhs on them, imposed penalty of Rs. 25,000/ - on its Director and dropped the proceedings for recovery of balance duty amount against M/s. ISI Bars Limited and entire duty demand against M/s. India Steel International and M/s. India Steel International Private Limited, and proposal of penal action against the above mentioned 3 companies as well as their officers, supporting manufacturers/job workers and the transporter.

(2.) THE Revenue has preferred appeals aggrieved by dropping of proceedings while M/s. ISI Bars Limited and its joint Managing Director Shri Sudhir Gupta are in appeal against the confirmation of pn duty demand and imposition of penalties.

(3.) THE brief facts of the case as made out in the Show Cause Notice dated 27 -7 -1995 read with Addendum dated 4 -3 -1996 issued by the Customs Authorities is that M/s. ISI Bars Limited, M/s. India Steel International and M/s. India Steel International Private Limited (hereinafter referred to as "Licence Holders") had discharged export obligations under various Value Based Advance Licence (VABAL) as well asl Quantity Based Advance Licence (QBAL) by exporting goods manufactured by them by availing Input Stage Credit under Rule 57A of the Central Excise Rules, 1944 in respect of export goods; that they have exported Stainless Steel Bright Bars by fraudulently misdeclaring the same as 'Stainless Steel Bars and Rods in order to wrongly import items appearing against Sr. No. 717 under heading "Engineering Products" of the Standard Input Output and value addition norms given in the Handbook Of Procedures 1992 -97; that some of the materials imported duty free in terms of Customs Notification Nos. 203/92 and 204/92 were sold by the Licence Holders in the domestic market in contravention of the condition of the exemption Notification mentioned above and Provisions of EXIM Policy 1992 -97; and that they had made some of their licences transferable, which were contrary to the conditions of the Customs Notification and EXIM policy. On the above basis, it was alleged that 3 Licence Holders were not entitled to duty free import under respective Notifications, and that customs duty was required to be paid by them on the entire quantity of input imported by them. Show Cause Notice proposed recovery of duty of Rs. 15,97,48,720/ - from the 3 Licence Holders together with interest at the rate of 24% per annum, proposed confiscation of imported inputs and export goods. Penal action was also proposed against the Licence Holders; on M/s. Madhya Pradesh Iron and Steel Company, who sold the resultant products converted out of the said duty free Ferro Nickel sent to them by M/s. ISI Bars Limited under Notification No. 214/86 -C.E., dated 25 -3 -86 in the domestic market; on M/s. Panchamal Steel Limited, M/s. Viraj Alloys Limited, M/s. Ferro Alloys Corporation Limited, and M/s. Mukund Limited all 4 being supporting Manufactures/job workers of the Licence Holders, on M/s. Manohar Manek Alloys Pvt. Ltd., Transferee of Advance Licence and its Director, Shri Manohar P. Kanungo, on Shri Jawahar P. Kanungo, proprietor of M/s. Manek Metal Corporation, who had purchased 27 Metric Tonnes of Calcium Silicide imported by M/s. ISI Bars Limited, on M/s. Ashok Goods Transport Services who transported the exempted material, and on Shri Harbans Lal Gupta, Shri Ashwin Gupta and Shri Sudhir Gupta directors of M/s. ISI Bars Limited. The notice was adjudicated by the Commissioner, who dropped the charge of availment of Modvat credit contrary to condition of the Customs Notification No, 203/92, being satisfied that Licence Holders reversed Modvat Credit as per the formula laid down by the Government of India vide D.O.F. No. 605/140/95 -DBK, dated 3 -1 -97, he held that for the year 1993 -94 as per the formula in the Circular, credit required to be reversed was Rs. 61.16 lakhs whereas Licence Holders reversed the credit of Rs. 66.21 lakhs and therefore, for the Value Based Advance Licences issued during the period, there is no breach of condition v(a) by Notification 203/92. Therefore, he set aside the demand for duty in respect of imported Ferro Silicon and Ferro Chrome made against such licences in the year 1993 -94. For the year 1994 -95, he accepted the submission of the Licence Holders that exports under Quantity Based Advance Licence are not required to be included in the total value of clearances for home consumption and left it to the competent authority to quantify and recover the correct amounts by reversal. However, he did not accept their contention of non contravention of the condition (v) of Notification No. 203/92 in respect of VABALs issued during the period 1994 -95; he therefore, examined the question as to whether duty free material imported against VABALs issued during 1994 -95 had been utilised in accordance with the Notification and on finding that there is no allegation regarding diversion or sale of any such duty free material imported against VABALs during 1994 -95, held that demand for duty in respect of goods imported under VABALs during this period was not sustainable.