Customs, Excise and Gold Tribunal - Delhi
Sehgal Knitwears vs Commissioner Of Customs, New Delhi on 14 May, 2002
Equivalent citations: 2002(143)ELT653(TRI-DEL)
ORDER K.K. Bhatia, Member (T)
1. The appellants held an Advance Licence dated 16-2-95 and the corresponding DEEC issued to them in terms of Notification No. 204/92, dated 19-5-92. In the Advance Licence, they were described as manufacturer-exporter. On 27-8-97, they filed a shipping bill at the Air Cargo Unit, New Delhi for the export of 19667 PCS. of woollen blended knitwears for FOB value of Rs. 38,10,044.98 under the DEEC Scheme. On exmination of the export goods, it was found that the 4440 PCS. of Ladies Coaty valued at Rs. 12,63,446.40 packed in 74 bags were not manufactured by the appellants. Instead they were found to be manufactured by Uday Manufacturers, Woolways India Ltd. and Gee Sons Knitwear as per the tags/labels found attached to these goods. Consequently, the proceedings were initiated against the party. The party, however, vide their letter dated 28-8-97 requested the customs authorities to allow the shipment otherwise their export orders were liable to be cancelled and their export obligation period under DEEC scheme would also have expired on 31-8-97. The goods were accordingly allowed to be exported, as such. The party dispensed with the show cause notice. The Addl. Commissioner (Export), Air Cargo Unit, New Delhi adjudicated the case vide his Order dated 6-7-98. He observed in his order that the subject DEEC was covered under the aforestated notification and the party was issued the advance licence as a manufacturer exporter. As such, all the goods of the export consignment ought to have been manufactured by the party themselves and should not have been procured from other manufacturers. The party vide its aforesaid letter dated 28-8-97 admitted that the Ladies Coaty were got manufactured from different manufacturers but stated that they actually got them manufactured on job work basis. The Addl. Commissioner in his order rejected this submission of the party. He observed that this explanation was not sustainable, as the job work fabricators may complete the process of the manufacture but they would not affix tags/labels declaring themselves to be the manufacturers of the goods. He further observed that as per the policy provisions, if the goods are intended to be got manufactured on job work basis from the supporting manufacturer, the DEEC licence holder is required to give the name of the supporting manufacturer while obtaining DEEC licence; that the names of the supporting manufacturers were not given in DEEC licence rather party declared themselves to be the manufacturers; that fully manufactured ladies coaties were procured from other manufacturers and the labels attached to them showed that they were bought out and not manufactured by the party; that the exporter made an attempt to export the goods in contravention of the DEEC scheme by mis-declaring the goods as manufactured by them. He further observed that the exemption under Notification No. 204/92 was subject to several conditions which inter alia stipulated that the imported material shall not be disposed of or utilised in any manner till the export obligation has been discharged in full and the export proceeds realised. He therefore held that the party attempted to export the bought out items as manufacturer exporter in clear contravention of the provisions of the DEEC Scheme. Consequently, he held that 4440 PCS. of ladies coaty already exported are liable to confiscation under Section 113(d) of the Customs Act, 1962. He however gave an option to the party to redeem the same on payment of a fine of Rs. 2 lakhs. He also imposed a penalty of Rs . 50,000/- on them under Section 114.
2. The party filed an appeal. The Commissioner of Customs (Appeals), New Delhi in his Order dated 13-8-2001 observed that as per Para 120 of the EXIM Policy -1992-97, the endorsement of the name of the jobber or other manufacturer is mandatory where prior import before export is a condition of the Advance Licence; that the appellants had been issued the Advance Licence as a manufacturer exporter and as such all the goods of the consignment ought to have been manufactured by the appellants themselves; that the party have not given any reason for not getting the Advance Licence endorsed in the names of other manufacturers or jobbers. The lower appellate authority, therefore, did not find any substance/force in the appeal of the party and accordingly, he rejected the same.
3. This appeal is against the impugned order of Commissioner (Appeals). I have heard Shri Yogesh Putney, Advocate for the appellants and Shri A.S. Bedi, SDK for the respondents. The Id. Counsel for the appellants has reiterated the same submissions as made before the original as well as the lower appellate authority. The main allegation against the appellants in respect of the ladies coaty sought to be exported is that these goods are manufactured by Uday Manufacturers, Woolways India Ltd. and Gee Sons Knitwears, as they were bearing tags/labels of these manufacturers; that these goods were not manufactured by the appellants themselves; that if the goods were intended to be procured from other manufacturers, their names as job workers should have been got endorsed in the Advance Licence as per Para 120 of the EXIM Policy 1992-97. This para is reproduced below:
Actual user condition and facility of comanufacturers :
"120. The licence granted under this scheme shall be subject to the Actual User condition till redemption of BG/LUT. The licence holder is free to have the material processed through any other manufacturer including a jobber. However, the licence holder under this scheme shall be solely responsible for the imported items and fulfilment of export obligation. If the applicant desires to have the name of any manufacturer or jobber added to the licence, he may apply for such endorsement. However, such endorsement shall be mandatory where prior import before export is a condition of the Advance Licence and the licence holder desires to have the material processed through any other manufacturer or jobber. Upon such endorsement made by the licencing authority, they shall be regarded as co-licensees and the obligation of the licence holder shall become the joint and several obligation of the co-licensees. Any one of the co-licensees may import the goods in his name or in the joint names. The BG/LUT shall also be furnished in their joint names".
4. The appellants are not contesting the fact that the ladies coaty were manufactured by the other manufacturers. This is admitted in their letter dated 28-8-97 addressed to the customs authorities in which they also requested for allowing the shipment as otherwise their export order would be cancelled. In Para (vi) under the heading 'Grounds' of their written Memo. of Appeal before this Forum also, they have stated "that all the goods were manufactured in the factory of the appellants. Lady Coaty being specialized item and the L/C period also nearing expiry the appellants had to get the same fabricated from another SI unit by giving our own raw material imported against the above licence". The appellants are however contending that the conditions under the aforestated Para 120 of the Policy are applicable only if the manufacturer who is also a licence holder desires the fabricator to become a joint and several obligation as a co-licencee for import of goods in his or in joint-names or submit BG/LUT in joint names then the endorsement of fabricator is required otherwise it is required only in the case of Merchant-Exporters and that this condition is not applicable in the case of appellants. I have considered these submissions and find no force in them. The above are the mandatory conditions in respect of the Advance Licence granted under the DEEC Scheme to the appellants and the same are applicable with equal force to the manufacturer /exporter as well as to the merchant-exporter. It is very clearly stated in the above para, "If the applicant desires to have the name of any manufacturer or jobber added to the licence, he may apply for such endorsement. However, such endorsement shall be mandatory where prior import before export is a condition of the Advance Licence and the licence holder desires to have the material processed through any other manufacturer or jobber". The appellants have therefore clearly violated this condition of the Advance Licence. Consequently, no fault can be found with the orders of liability to confiscation of the offending goods, imposition of redemption fine and the penalty on the appellants. However, in this case since the export of the goods is duly effected with the permission of the Customs authorities, in my view, the matter of quantum of fine and the penalty would call for taking a lenient view. I therefore, reduce the redemption fine to Rs. 1 lakh (Rupees one lakh only) and penalty to Rs. 20,000/- (Rupees twenty thousand only). But for this modification, the appeal otherwise fails and the same is accordingly rejected.