Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs Pradeep Drug Co. Ltd. on 4 May, 1996
Equivalent citations: 1997(89)ELT590(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal is filed by the Revenue against the order of the CC (A), Madras. The facts of the case as set out in the order of the learned CC (A) are as under:
The facts giving rise to the present appeal are that the appellants filed a Bill of Entry No. 39855, dated 13-10-1992 for a consignment of 31 drums of erithromysin thiocynate valued at Rs. 24,39,590/- imported from M/s. Biemsgluss & Sohn, West Germany. The importers produced advance licence dated 16-10-1990 and declaring that the same has been revalidated upto 31-12-1992 and accordingly sought free entry under Customs Notification No. 159/88. The goods were extended under benefit of free entry against the advance licence produced alongwith the letter from Chief Controller of Import and Export, New Delhi dated 17-8-1992 for revalidation. Subsequent to the clearance it was found out that the C.C.I.E's letter dated 17-8-1992 has only extended the period of export obligation upto 31-12-1992 and not revalidating the licence upto 31-12-1992 as declared and claimed by the importer. A demand notice for an amount of Rs. 35,97,186/- proposing to reassess the goods under Customs Tariff Heading [2941.50] at 65% + 45% and (sic) Central Excise Tariff Heading at 15% plus 15%. The importers replied in their letter dated 24-10-1992 that they were not aware of the implications in letter dated 17-8-1992 of the C.C.I.E. and they were under the impression that the licence itself was revalidated upto 31-12-1992. They however promised that they would get the licence revalidated within two months time to justify the clearance already made against the advance licence under the Customs Notification No. 159/88. The importer did not produce the revalidated licence before the Assistant Collector. The Assistant Collector held that the consignment invoice specifically mentions the fact that the goods are freely importable under Item No. 495 Part A of Appendix 3 Code No. 34-1232/00-3 and also that payment were to be made against L/C No. 0956/92-93/439 dated 16-9-1992. The Assistant Collector held that the goods were to be cleared on payment of duty. He accordingly confirmed the demand.
2. The learned lower original appellate authority as seen from the above has demanded duty for the reason that the import had not been made against a valid licence the condition precedent for purpose of free duty clearances under Notification No. 159/88. The lower appellate authority after taking note of the pleas of the respondents has held as under :
3. I have carefully considered the appeal. From the explanation given at the time of personal hearing, it is clear that the appellants were under the impression that the licence was revalidated, as it was mentioned so in the letter at Annexure 2 of the appeal (cited above). The permission given for extension of the export period was mistaken as the revalidation of licence. Subsequently, revalidation of the licence was also obtained from the C.C.I. & E. In view of this, the technical lapse is condoned. The demand of duty is set aside. The appeal is allowed extending the benefit of Notification No. 159/88.
3. In the grounds of appeal, the learned Commissioner the following has been urged:
The learned Collector (Appeal) has failed to observe that at the time of arrival and clearance of the goods from the Customs, the import licence was dead and revalidation of the licence has been done only with a view to misleading the Customs in order to clear the goods free of duty. Since the goods were under OGL for an actual user, the licence gains currency only in relation to clearance of the goods, duty free in terms of Notification No. 116/88. In terms of the said Notification the exemption is permitted only against a valid advance licence issued under Import (Control) Order, 1955. The endorsement on the licence shows that the licence is granted under the Government of India, Ministry of Commerce and Industry Order No. 17/55, dated 7-12-55, as subsequently amended, issued under the Imports & Exports (Control) Act, 1947 (XVIII of 1947) and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of their arrival. From the above condition, it is imperative the licence should be valid not only to cover import of the items in relation to the date of shipment of the goods, but also should be valid when actual import takes place. As per endorsement of the DEEC, the export obligation period was extended thrice on 31-10-1991, 17-8-1992 and 17-6-1993 upto 30-6-1993. In view of these endorsements which had been done at the request of the importers, none can come to conclusion that the appellant were under a mistaken impression that the extension of Export obligation period is taken for extension of validity of the Advance licence.
The appellate authority has further failed to observe the instructions given in Para 125 (Page 37) of the Hand Book of Procedures, (1-5-1992 -31-3-1997) on the aspect of revalidation of licence. These instructions inter alia specify that the application for revalidation shall be made before the expiry of the licence. In the instant case it is beyond reasonable doubt, that the application for revalidation was made by the appellant after the expiry of the said Advance Licence. This is not in the nature of technical lapse as viewed by the appellate authority. This is a clear case of flagrant violation by the appellant of the procedures as laid down by the licensing authorities.
4. The learned SDR Shri V. Thyagaraj adopted the reasoning of the learned lower authority as set out in the grounds of appeal. He also pleaded that the licence produced by the respondents for clearance of the goods had expired and the clearance of the goods was allowed by the lower authority without taking note of this fact. The validity of the licence expired on 31-10-1991. The respondents had got the period for export obligation extended and the authorities while allowing the clearance of the goods were under the impression that the validity period of the licence had also been extended. He pleaded that under Notification No. 16/82, it is envisaged that the importer should have a valid licence for the purpose of importation of the goods duty free. Since at the relevant time the validity period of the licence, had expired the licence produced could not be taken to be covered for the importation and therefore, duty was required to be paid. He referred us to Para 125 of the policy book in this regard.
5. The learned Consultant for the respondents pleaded that the respondents subsequent to the importation of the goods had' got the licence re-validated and this re-validation of the licence should be taken for all purposes and covering the entire event of import of the goods as set out in the licence . He pleaded that the very fact that the licensing authority extended the period of exportation of the goods for fulfilment of the export obligation in respect of the goods to be imported against this licence shows that the respondents could get the imported goods against the licence issued by the authorities. By re-validation of the licence, they have clearly endorsed this view. He pleaded that in this view of the matter, the goods should be taken to be covered by the import licence produced. He pleaded that the appellants had fulfilled the export obligation and therefore, the question of demand of duty at this stage would not arise. He, therefore, pleaded for acceptance of the licence. He also pleaded that if the appellants had kept the goods in bond and produced the re-validated licence subsequently, before clearance of the goods, the re-validated licence would have been accepted. He, therefore, prayed for acceptance of the licence, taking into consideration the scheme under which goods have seen imported.
6. We have considered the pleas made by both the sides. We observe that the respondents had been issued a licence under the export oriented scheme which has been described as advance licence for manufacture of specified export product and the items allowed for import are duty free as being covered by the description of the goods in the licence and the DEEC book whose number is also endorsed on the licence. The respondents as seen from the endorsement made in the licence executed a bond for the purpose of fulfilment of the export obligation before the present importation. The respondents had also made several importation against this licence earlier. The Duty Exemption Entitlement Certificate (DEEC) is dated 16-10-1990. The import licence under which the goods have been imported is incorporated therein. In terms of this certificate, the appellants have been allowed the benefit of exemption Notification No. 116/88 dated 30-3-1988 and the certificate has been signed by the Assistant Controller of Imports and Exports. This certificate carries Parts A, B, C & D and annexures in which name and address and the factory in which the resultant product has to be manufactured is in Part A and the list of raw materials are endorsed in Part C of this and these are duly signed by the JCCI & E authorities. The respondents have been making debits in regard to the importations made in Part D of this DEEC. The respondents, it is seen could not export the product as endorsed in the licence within the stipulated period as endorsed in the licence issued and they approached the authorities for extension of this period and the authorities allowed them extension for the purpose and there are endorsement on the DEEC wherein the period for export obligation has been extended. It was during this extended period of the export obligation period, that the respondents imported the goods in question. The goods in question were not imported during the validity period of the licence as originally endorsed in the import licence. The respondents, it is seen from the sequence of events as set out in the narration of facts above and the pleas made understood that the licence had also been extended by virtue of the endorsement made in the DEEC and also the customs authorities interpreted this endorsement for extension likewise. It was only later that the authorities felt that since validity period of the licence had not been extended as such the endorsement for extension of the period for export obligation would not cover the goods imported under this licence produced and therefore, the respondents would not be entitled to the benefit of their importation in terms of the Notification No. 116/88. The respondents, however, approached the authorities later for extension of the validity period of the licence and the authorities re-validated the licence upto 30-4-1993. The importation has been made within the period upto which the licence has been re-validated. The short point that falls for consideration is whether in the facts and circumstances of the case it can be held that the importation made earlier and allowed duty free clearances can be taken to be covered by the licence which was re-validated by the licensing authorities. We observe from the licence produced before us that the scheme of advance licence for the duty free import of goods is linked up with the export obligation and the DEEC is duly endorsed by the licensing authorities. Therefore, the importation of the goods and the use of the same for export purpose and ultimate export of the finished product are part of the integral scheme and the period of export is therefore linked with the event of import. The importation of the goods has to be planned by the importer depending upon his capability of export. If there is any difficulty in the matter of export, necessarily the plan of importation will also be equally affected. The respondents in the present case, felt the need for the period of export obligation to be extended and the licensing authorities allowed this and endorsed the extended period in the DEEC. This would mean that the respondents could import the goods in the sequence in a manner to be able to export the goods till the extended period of the export obligation. The appellants should have in the normal course simultaneously approached the authorities for endorsement on the face of the licence for extension of the period for the importation of the goods as per the licence. However, it is seen that the respondents obtained only the extension for meeting the export obligation. They had at that time lot of time to import the raw material to meet the export obligation since the period of export obligation had been extended. It was clear that the respondents could yet import the raw materials which were required to be imported against the licence which was endorsed in the DEEC. The respondents for getting the endorsement for extension for importation on the face of the licence approached the licensing authorities separately by letter dated 24-10-1992 in which they clearly brought out that they had already completed 46% of their export obligation and they also listed out the items which had been imported , by them and they also submitted that they could not get the re-validation done in respect of the licence earlier. They furnished various details about the imported goods. They also pointed out to the authorities that there was some lapse on their part and that the validity period of the export obligation has been extended. The respondents further stated as under in their letter dated 24-10-1992 addressed to the Chief Controller of Exports and Imports.
We are now requesting for extension of validity period by two months until 31st December 1992. As you will see, extension requested is only for two months but technically the extension is for fifteen months.
The licensing authorities granted them re-validation of the licence as prayed for by the respondents. We observe that the respondents brought on record all the facts about their imports and also about the lapses on their part in not having got the licence re-validated earlier. The licensing authorities allowed revalidation without any condition as per their request. In such a situation where there is time bound obligation for export under the advance licence issued as endorsed in the DEEC the re-validation done has to be taken to be in respect of the goods which are covered by the licence within the value limit for the intended export product. Once the re-validation has been done it should be taken to cover the past imports so long as the respondents meet the export obligation. In the present case, it has been stated that the respondents have met the complete export obligation. In the above view of the matter, we hold that in the facts and circumstances of the case re-validation of the licence in the above background can be taken to cover the imports which were made earlier and which have been used for the manufacture of the export product. We, therefore, uphold the order of the learned CC (A) and dismiss the appeal.