Document Fragment View

Matching Fragments

3. The arguments were advanced by the learned Counsel at great length and he contended that the period in question is 1996 to 2000. The Show Cause Notice had been issued on 21-3-2003. All the details required had been furnished in the declarations. The same was pointed out to the Bench and submitted that when all the details had been furnished, the question of invoking larger period does not arise and the demands were barred by time. It was also pointed out that the assessees are manufacturers of various kinds of Springs and the main raw material used are "Spring Steel Wire". The main input viz. "Spring Steel Wire", required for the manufacture of "Helical Springs" is procured both from the domestic as well as overseas sources. They had obtained during the period 1996 to 2000, 24 Advance Licences whose details are not questioned. The goods were imported as replenishments against the raw material viz. Spring Steel Wires used in the manufacture of the resultant products, which had already been exported under the said scheme. The DRI's allegation in the Show Cause Notice is that the raw materials imported under the said Advance Licences as replenishments were different from the raw materials used in the manufacture of exported goods in terms of their diameter i.e. size (thickness) from the material used in the export product. The contention of the Counsel is that the relevant policy of the said order had defined the terms "Raw material" as - "Raw materials, components, intermediates, consumables, computer software and parts required for manufacture of resultant products specified in Part E of the said Certificate". As against this definition, the earlier definition of Raw material in 1998 Policy is "materials means goods which are raw materials, components, intermediate products or consumables used in the manufacture of resultant, products and their packings, or mandatory spares to be exported along with the resultant products". He pointed out that the Commissioner has followed the ratio of Zenith Tin Works v. CC, Bombay 1997 (93) E.L.T. A176 (S.C.) and that of Garment Craft v. CC 2001 (130) E.L.T. A271 (S.C.) which was in terms of the earlier definition of raw materials in the Policy and has failed to follow the judgments rendered subsequently under the later Policy under the definition of "Raw materials" which are required for manufacture of the resultant product. He submitted that the ratio of the judgment rendered by the Apex Court in the case of Oblum Electrical Industries Pvt. Ltd. v. CC and that of the Tribunal in the case of Jay Engineering Works Ltd. v. CC apply to the facts of this case. He further submitted that in terms of the later definition, the exact correlation need not be between the export product and the imported raw materials as held by the Tribunal in the following cases :

10. On a careful consideration of the submissions made, it is very clear from the record that the definition of the word 'Materials' and 'Raw materials' as in the Notification Nos. 116/88-Cus, dated 30-3-1988 and 159/90-Cus, dated 30-3-1990 has been amended in the subsequent Notification of 204/92-Cus, dated 19-5-1992 because on 30-3-1988, the definition of "materials" meant "Goods which are raw materials, components, intermediate products or consumables used in the manufacture of resultant products...." This has been amended to mean "Raw Materials, components, intermediates, consumables, and parts required for manufacture of resultant products". The appellants have contended that the Commissioner has applied the ratio of Zenith Tin Works, which interpreted the term 'Raw materials' as applicable in the earlier Notification 116/88 which stated that the "materials" means raw materials used in the manufacture of resultant products which is subsequently been altered to mean "raw materials required for manufacture of resultant products". In this connection, the subsequent judgment of the Apex Court in the case of Oblum Electrical Industries Pvt. Ltd., and Jay Engineering Works Ltd. (cited supra) has been relied. In the case of Oblum Electrical Industries Pvt. Ltd. (supra), the Apex Court has clearly held that in the Notification, two different expressions have been used namely, 'materials required to be imported for the purpose of manufacture of products' and 'replenishments of materials used in the manufacture of resultant products' which indicates that the two expressions have not been used in the same sense. The Apex Court further clarifies that the expression 'materials required to be imported for the purpose of manufacture of products' cannot be construed as referring only to materials, which are used in the manufacture of products. It is further held that the exemption must be given its natural meaning to include materials that are required in order to manufacture the resultant products. On that view, the Court further clarified that the exemption cannot be confined to materials, which are actually used in the manufacture of the resultant product but would also include materials, which though not used in the manufacture of the resultant product are required in order to manufacture the resultant product. Similarly, in the case of Jay Engineering Works Ltd. (supra), the Tribunal again went into the definition of the term "required for manufacture of the export product" and have clarified that the Notification places no restrictions on actual use. It clarifies that once a specified item has a standard input (aluminium alloy) for manufacture of ceiling fans and an Advance Licence has been issued for the import of the said aluminium alloy, it is a material required for the manufacture of ceiling fans. It has been held in dealing with the Revenue's contention that the use of the imported raw materials is the option of the importer. He can either use it in the export product or import it and keep it in the factory, manufacture the export product using inputs procured from other sources, fulfil the export obligation and, thereafter, dispose off the raw materials imported as per Standard Input/Output Norms. It has been held that if the Customs authorities take a view that certain materials are not required for the manufacture, contrary to the view of the Standard Input/Output Norms of the EXIM Policy, it would lead to disharmonious situation, as while import licences granted will entitle the import under DEEC Scheme while the clearances of the same into the country would not be in conformity with the DEEC Scheme. It has been held that the EXIM Policy of the Government has to be harmoniously interpreted and no discordant notes be made. It has been further held that if Input/Output Norms permit, clearance as per Policy have to be allowed by the Customs. If the norms are not correct, the norms could be changed not the clearances effected. In a like situation, the Tribunal, in the said case, has held that once export obligations have been fulfilled, then the raw materials imported for replenishment be used in the manufacture of the goods, which are sold in the domestic market and that the Customs authorities cannot demand duty on the ground that the goods imported have not been used in the exported goods. The Tribunal has relied on the judgments of Dolphin Drugs (P) Ltd, Standard Industries Ltd. and CC, Hyderabad v. Cheminor Drugs Ltd. (supra).