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C/890/2010 IN FORCE Export policy & incentives ·?
C/890/2010 — Scottish Chemical Industries vs COMMISSIONER OF CUSTOMS(EXPORT PROMOTION)-MUMBAI
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Document text
C/890,891/2010
1
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL MUMBAI
REGIONAL BENCH – COURT NO. 1
(E-HEARING)
Customs Appeal No.890 Of 2010
[Arising out of Order-in-Original CAO No.75/2010/CAC/CC/SS dated 25.08.2010
passed by the Commissioner of Customs (EP), Mumbai]
M/s Scottish Chemical Industries …. Appellant
407-412, Span Centre, South Avenue,
Santacruz (W), Mumbai-400054
Versus
The Commissioner of Customs
(Export Promotion) …… Respondent
2nd floor, New Customs House, Ballard Estate,
Mumbai-400001
With
Customs Appeal No.891 Of 2010
[Arising out of Order-in-Original CAO No.75/2010/CAC/CC/SS dated 25.08.2010
passed by the Commissioner of Customs (EP), Mumbai]
M/s Scottish Chemical & Fluxes …… Appellant
407-412, Span Centre, South Avenue,
Santacruz (W), Mumbai-400054
Versus
The Commissioner of Customs
(Export Promotion) …… Respondent
2nd floor New Customs House, Ballard Estate,
Mumbai-400001
APPEARANCE:
Shri R.V. Desai, Senior Advocate and Shri Rohit Pardeshi,
Advocate for the Appellant
Shri Mahesh Patil, Authorised Representative for the Respondent
CORAM:
HON’BLE DR. D.M. MISRA, MEMBER (JUDICIAL)
HON’BLE Mr. P. ANJANI KUMAR, MEMBER (TECHNICAL)
FINAL ORDER No. 86816-86817/2025
Date of Hearing: 24.07.2025
Date of Decision: 14.11.2025
A, MEMBER (JUDICIAL)
HON’BLE Mr. P. ANJANI KUMAR, MEMBER (TECHNICAL)
FINAL ORDER No. 86816-86817/2025
Date of Hearing: 24.07.2025
Date of Decision: 14.11.2025
C/890,891/2010
2
P. ANJANI KUMAR:
M/s
Scottish
Chemical
Industries,
the
appellants,
are
a
manufacturing and exporting Unit; they have been utilizing Advance
Licenses, for import of Per Chloro Ethylene (PCE) as input for
manufacture and export of HexaChloro Ethane (Hexa) as per SION
norms. During the year 1997-2002, the Appellant, imported 5179,374
MTS PC under 9 Licenses; used 4199.099 MT (82%) in own factory for
manufacturing Hexa and used 980.275 MT (18%) in sister concern M/s.
SCF, which is also in Taloja; goods were moved to M/s. SCF, in terms of
Rule 57F (4) and Notification No.214/86, using 249 Job Work Challans
issued under stamp and seal of jurisdictional authorities. Export
Obligation was fulfilled; Remittances received; DGFT redeemed all 9
Licenses and Customs cancelled the Bonds executed. Revenue issued an
SCN dated 30.9.2003 for Rs.1.22 Cr, alleging that the appellants
misrepresented before DFGT in obtaining SION; imported excess 980.275
MTs PCE and diverted goods for job work to sister concern. Appellant paid
Rs.54.16 Lakhs during investigation; the SCN issued was not adjudicated
till 2009, Appellant approached the Hon’ble High Court with a Writ
Petition No.2511/ 2009. Hon’ble High Court, vide Order dated 25.1.2010,
disposed of the Petition, as Revenue gave undertaking to decide the SCN
in a time bound period.
n’ble High Court with a Writ
Petition No.2511/ 2009. Hon’ble High Court, vide Order dated 25.1.2010,
disposed of the Petition, as Revenue gave undertaking to decide the SCN
in a time bound period. Commissioner Export adjudicated SCN; though
he did not uphold allegation of excess of import, held that condition of
notification Custom Notification 30/97 was violated on ground that job
work was without permission and as such goods are to be treated as
diverted. He confirmed the demand of Rs.1, 22, 84,534 and equal
penalty under Section 114A and penalty of Rs.6 Lakhs on M/s. SCF.
C/890,891/2010
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2.
Hence, Appeal Nos. C/890/2010 and C/891/2010 were filed by the
appellant and Revenue filed an appeal C/974/2010 for enhancing Penalty
to include Interest amount in penalty. These three appeals were decided
by this Bench vide Final Order No. A/86208-86210/2019 dated
05.07.2019 vide which Appeal No. C/890/2010 was dismissed and
Appeal No. C/891/2010 was partly allowed by reducing the penalty
imposed while the appeal No. C/974/2010 filed by the Department was
also dismissed. The appellants have filed these applications for
rectification of mistake on the grounds specified in the applications. The
appellant submits that the following are the mistakes apparent on record.
(i)
Tribunal did not consider the submissions based on the
decision in the case of Mangali Impex & Others wherein it was held that
DRI has no jurisdiction.
are the mistakes apparent on record.
(i)
Tribunal did not consider the submissions based on the
decision in the case of Mangali Impex & Others wherein it was held that
DRI has no jurisdiction.
(ii)
Finding in the order that 980.275 MT of inputs imported for
replenishment were not received under statutory documents is factually
incorrect; it was held that the imported items should have been used in
export contrary to the facts of the case that the imports were affected
after the completion of the export obligation.
(iii)
Moreover, Tribunal misread the statement of Mr. Khandelwal
in coming to the conclusion that 156.278 MT of raw material is related to
980.275 MT whereas the same is not related.
2.1. The said application for rectification of mistake was heard by this
Bench and vide Miscellaneous Order No. 85256-85257/2024 dated
21.03.2024 was allowed by recalling the Final Order dated 05.07.2019.
Accordingly, the Registry has listed the case for hearing before us.
h and vide Miscellaneous Order No. 85256-85257/2024 dated
21.03.2024 was allowed by recalling the Final Order dated 05.07.2019.
Accordingly, the Registry has listed the case for hearing before us.
C/890,891/2010
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3.
Learned Counsel for the appellants reiterates the grounds thereof
and the submissions made during the hearing of the original appeal. Gist
of his submissions is that the Tribunal did not consider the submissions
based on the decision in the case of Mangali Impex & Others wherein it
was held that DRI has no jurisdiction; Finding in the Final Order that
980.275 MT of inputs imported for replenishment were not received
under statutory documents is factually incorrect; it was held that the
imported items should have been used in export contrary to the facts of
the case that the imports were affected after the completion of the export
obligation and that the Tribunal misread the statement of Mr. Khandelwal
in coming to the conclusion that 156.278 MT of raw material is related to
980.275 MT whereas the same is not related. He submits that the Bench
may consider to recall the impugned order and remand the matter to
Adjudicating Authority and direct to dispose of the matter after the
Hon'ble Supreme Court decides the UOI Vs Mangali Civil Appeal as
ordered by Mumbai Tribunal in SEAMEC LTD. He relies on the following
cases:
Mangali Impex Ltd (SC) – 2020 (371) ELT A226 and
2016 (335) ELT 605 (Del.)
Seamec Ltd (Tri-Mum) – 2018 (364) ELT 611 and 2019
(367) ELT A19
SRF Ltd (Tri-Delhi) – 2019 (367) ELT 457 (Tri.
Mangali Impex Ltd (SC) – 2020 (371) ELT A226 and
2016 (335) ELT 605 (Del.)
Seamec Ltd (Tri-Mum) – 2018 (364) ELT 611 and 2019
(367) ELT A19
SRF Ltd (Tri-Delhi) – 2019 (367) ELT 457 (Tri. Del.)
Saurashtra Kutch Stock Exchange (SC) – 2008 (230)
ELT 358
Aditya Birla Novo Ltd. (HC-Kar) – 2021 (378) ELT 42
Sant Lal Gupta (SC) – 2010 (262) ELT 6
Suncity Strips and Tubes Pvt Ltd. (SC) – 2022 (379)
ELT 417
Beriwala
Impex
Pvt.
Ltd.
(Tri-Kol)-
Final
Order
No.75125/2022 dated 23.02.2022
C/890,891/2010
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4. Learned Counsel submits that for the appellants submits, during the
hearing and vide written submissions dated 7-3-19 and 18-3-19 that
the SCN proceeds on Excess imports than required for export goods; the
SION norms have been determined by the DGFT; Commissioner
Adjudication has dropped charge of excess import; the adjudicating
Authority proceeded on extraneous material declaring Appellant as
“Merchant Exporter” and presumes that Sister Concern SCF as
“Supporting Manufacturer”; 18% job work by SCF is covered by Condition
No (viii) of Custom Notification No.30/97; Appellant is an “Export
Manufacture”, condition (viii) is not applicable; entire finding and demand
confirmed on the basis of Merchant and Supporting Manufacturer basis;
as the ownership always remained with the appellants, the view of
Learned Commissioner is contrary to Section 5 of India Transfer Property
Act, 1882; the Sister Concern SCF is a Manufacturer and also
Trader/Importer of PTE Raw Material;
e appellants, the view of
Learned Commissioner is contrary to Section 5 of India Transfer Property
Act, 1882; the Sister Concern SCF is a Manufacturer and also
Trader/Importer of PTE Raw Material; (SCN page 63): M/s SCF purchased
1266.211 MT PCE; the alleged 156.278 MT is out of this purchase;
statements of, 3 persons out of 7 Purchasers, has no relevance material
imported as replenishment under 9 DEEC licenses; Appellants confesses
that he sent for job work to SCF-Sister Concern; statutory records also
support that of 18% of imported material was sent for job work and
returned; Learned Commissioner, though accepted this fact, raised a new
ground of Merchant and Supporting Manufacture treating “Appellant –
Export Manufacture” as Merchant Manufacture and Job Worker as
Supporting Manufacture; in the instant case as against export obligation
of 4,500,000 KG, 4,531,226 Kg were Exported; actual User conditions
complied with; all Licenses issued on same SION and redeemed and Job
work challans contains there Office Seal and acknowledgment.
4,500,000 KG, 4,531,226 Kg were Exported; actual User conditions
complied with; all Licenses issued on same SION and redeemed and Job
work challans contains there Office Seal and acknowledgment.
C/890,891/2010
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5.
Learned Counsel further submits that a majority of input i.e. 82%
was used by them and a mere 18% used in Sister Concern M/s. SCF; Shri
Kamal Khandelwal has categorically stated that 980 MT PCE was sent on
job work to SCF; Department itself has shown SCF purchased 1266.211
MT of PCE locally during 1997 to 2002 and have also imported 40.504 MT
on 5.11.98; Therefore, M/s. SCF sold 156.278 MT PCE, out of this
1306.715 MTs and not out of 980.275 MTs PCE; further, as far as
264.841 MTs sale to SCF is concerned, two traders stated that it was
paper transaction out of fear. Department did not Charge these persons
for aiding abetting. Some of them could not be traced.
6.
Learned Counsel submits further that Exim Policy permits job work;
A minor quantity of goods manufactured through job worker as per Para
3.5 of EXIM policy as Actual User; it is not violation of Custom
Notification Custom Notification 30/97; taking permission for sending
Imported goods as replenishment, for job work (though Assistant
Commissioner permitted) is not a mandatory and essential condition; it is
procedural, directory or technical condition; therefore there is no breach
of
condition
of
notification.
ough Assistant
Commissioner permitted) is not a mandatory and essential condition; it is
procedural, directory or technical condition; therefore there is no breach
of
condition
of
notification.
Disallowing
exemption
benefit
by
misconstruing and on technical ground is defeating and frustrating the
purpose, object and spirit of beneficial notification; there is no bar on
completing export obligation by the goods sent for job work; there is no
mandate that job work cannot be carried out without permission or
intimation. He relies on the following cases:
CC (Prev) Amritsar Vs Malwa Industries Ltd. 2009 (235)
ELT 214 (SC)
C/890,891/2010
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CC (Prev) Mumbai vs. M. Ambalal & Co. 2010 (260) ELT
487 (SC)
Maheshwari Solvent Extraction Ltd Vs CCE, Nagpur
2014 (299) ELT 116 (Tri. Bom)
Stump Schule & Somappa Ltd. Vs CC (Exports),
Chennai, 2005 (190) ELT 257,
Tetra Pak (I) Ltd. V/s CC Nhava Sheva, 2006 (202) ELT
495
7.
Learned Counsel submits also that the condition that merchant
exporter needs to declare supporting manufacturer for job work is new
being introduced by Commissioner; it was held in CC Delhi V Multivac
India Pvt. Ltd 2017 (357) ELT. 1148 (Tri. – Del) that department cannot
introduce extraneous condition in the notification; the ratio of CC,
Hyderabad vs. Pennar Industries Ltd.
C Delhi V Multivac
India Pvt. Ltd 2017 (357) ELT. 1148 (Tri. – Del) that department cannot
introduce extraneous condition in the notification; the ratio of CC,
Hyderabad vs. Pennar Industries Ltd. 2015 (322) ELT 402 (SC) is not
applicable; in the present case replenishments are imported after fulfilling
the export obligation where as in Pennar case, no export was made and
exempted imports were used in manufacture and sale in the local market.
The Commissioner did not consider their submissions that removal for job
work is not transfer or diversion and not violation of based Notification
No.30/1997; he relies on clarification given by the Office of DGFT and
following cases.
CCE, Hyderabad Vs Sunder Steel 2005 (181) ELT 154
SC
Navjyothi International Vs CC, Chennai 2004 (177) ELT
875(T)
Ashok Enterprise V/s. CC Chennai 2005 (186) ELT 497
(T)
8.
Learned Authorized Representative for the Revenue submits that
the order emphasized that the Actual User condition was not fulfilled, as
the raw materials transferred to SCF were not for SCI's; Adjudicating
thorized Representative for the Revenue submits that
the order emphasized that the Actual User condition was not fulfilled, as
the raw materials transferred to SCF were not for SCI's; Adjudicating
C/890,891/2010
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Authority rightly confirmed the demand based on the violation of the
Actual User condition as the appellant did not use 980.275 MT of PCE out
of 5179.374 MT of imported PCE in their own factory; the order explicitly
states that the facility of transferring duty-free goods for job work is only
available to "Merchant Exporters," and SCI, being a "Manufacturer
Exporter," was supposed to manufacture the goods themselves; the
appellant, as a "Manufacturer Exporter," was obligated to utilize the duty-
free imported PCE in its own factory for the manufacture of export goods;
Commissioner correctly distinguished the case laws cited by the
appellant; the Appellant contends that job work was carried out in
accordance with the EXIM Policy, and the license holder (SCI) completed
its export obligation, returning the final product (Hexa) to SCI for export;
adjudicating authority clearly stated that no records maintained for
receipt and dispatch, no proper entries in RG 23A register. No. 214/1986-
Central Excise Dated: 25/3/1986 provides detailed process for Exemption
to specified items if manufactured in a factory as a job work and used in
the manufacture of final products.
r. No. 214/1986-
Central Excise Dated: 25/3/1986 provides detailed process for Exemption
to specified items if manufactured in a factory as a job work and used in
the manufacture of final products. responsibility to produce evidence that
the said supplied goods have been used or removed in the manner
prescribed in notification is on the appellant and they have not produced
any evidence in support of job work is produced by the Appellants.
9. Learned Authorised Representative submits that the order relies on
statements, particularly from Shri Kamal Khandelwal, admitting that
excess PCE was diverted to SCF's factory for manufacture and
subsequent sale in the domestic market, in violation of advance license
conditions; it also notes that the transactions with certain firms for PCE
purchases by SCF were "paper transactions" (Refer OIO, Para 8, 16);
C/890,891/2010
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while the EXIM Policy may permit job work in certain scenarios, but in
this specific case, the job work arrangement between SCI and SCF
resulted in a violation because, SCI was a "Manufacturer Exporter" and
the provisions for job work transfer of duty-free goods were primarily for
"Merchant Exporters"; the PCE transferred to SCF was not ultimately for
SCI's "own use" as per the "Actual User" definition, especially since SCF
was also selling products manufactured from this PCE in the domestic
market; investigation revealed that many "purchases" of PCE by SCF
from other firms to account for the diverted PCE were mere "paper
transactions" with no actual physical movement of goods;
mestic
market; investigation revealed that many "purchases" of PCE by SCF
from other firms to account for the diverted PCE were mere "paper
transactions" with no actual physical movement of goods; redemption of
licenses by DGFT does not automatically nullify customs violations,
especially if based on misrepresented facts. Learned Authorised
Representative justifies the invocation of extended Period due to "wilful
mis-statement" and "suppression of facts" by SCI at several levels,
including misrepresenting the amount of raw material required and re-
shifting facts about manufacturing in their own factory; the order rightly
rejects the contention that imports beyond 5 years fall outside the scope.
10.
Heard both sides and perused the records of the case. There are
two issues involved in the case for our consideration. The first being the
issue of competency of the officers of DRI to issue show cause notice.
The appellants have raised the issue relying on the decision in the case of
Mangli Impex (supra). We find that the issue has been set to rest by the
amendment brought by the Government and the decision of the Hon’ble
Apex Court in the case while deciding the Review Petition of the
Government in the case of Canon India – 2024 (390) ELT 545 (SC). We
find that Hon’ble Apex Court has observed that:
of the Hon’ble
Apex Court in the case while deciding the Review Petition of the
Government in the case of Canon India – 2024 (390) ELT 545 (SC). We
find that Hon’ble Apex Court has observed that:
C/890,891/2010
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168. -------------------------------------------------
--------------------------------------------------
(iii). This Court in Canon India (supra) based its
judgment on two grounds: (1) the show cause notices
issued by the DRI officers were invalid for want of
jurisdiction; and (2) the show cause notices were
issued after the expiry of the prescribed limitation
period. In the present judgment, we have only
considered and reviewed the decision in Canon India
(supra) to the extent that it pertains to the first
ground, that is, the jurisdiction of the DRI officers to
issue show cause notices under Section 28. We clarify
that the observations made by this Court in Canon
India (supra) on the aspect of limitation have neither
been considered nor reviewed by way of this decision.
Thus, this decision will not disturb the findings of this
Court in Canon India (supra) insofar as the issue of
limitation is concerned.
(iv) The Delhi High Court in Mangali Impex (supra)
observed that Section 28(11) could not be said to have
cured the defect pointed out in Sayed Ali (supra) as the
possibility of chaos and confusion would continue to
subsist despite the introduction of the said section with
retrospective effect.
have
cured the defect pointed out in Sayed Ali (supra) as the
possibility of chaos and confusion would continue to
subsist despite the introduction of the said section with
retrospective effect. In view of this, the High Court
declined to give retrospective operation to Section
28(11) for the period prior to 08.04.2011 by
harmoniously construing it with Explanation 2 to
Section 28 of the Act, 1962. We are of the considered
view that the decision in Mangali Impex (supra) failed
to take into account the policy being followed by the
Customs department since 1999 which provides for the
exclusion of jurisdiction of all other proper officers once
a show cause notice by a particular proper officer is
issued. It could be said that this policy provides a
sufficient safeguard against the apprehension of the
issuance of multiple show cause notices to the same
assessee under Section 28 of the Act, 1962. Further,
the High Court could not have applied the doctrine of
harmonious construction to harmonise Section 28(11)
with Explanation 2 because Section 28(11) and
Explanation 2 operate in two distinct fields and no
inherent contradiction can be said to exist between the
two. Therefore, we set aside the decision in Mangali
Impex (supra) and approve the view taken by the High
Court of Bombay in the case of Sunil Gupta (supra).
(v) Section 97 of the Finance Act, 2022 which, inter-
alia, retrospectively validated all show cause notices
issued under Section 28 of the Act, 1962 cannot be
said to be unconstitutional.
upra).
(v) Section 97 of the Finance Act, 2022 which, inter-
alia, retrospectively validated all show cause notices
issued under Section 28 of the Act, 1962 cannot be
said to be unconstitutional. It cannot be said that
Section 97 fails to cure the defect pointed out in Canon
C/890,891/2010
11
India(supra)nor
is
it
manifestly
arbitrary,
disproportionate and overbroad, for the reasons
recorded in the foregoing parts of this judgment. We
clarify that the findings in respect of the vires of the
Finance Act, 2022 is confined only to the questions
raised in the petition seeking review of the judgment in
Canon India (supra). The challenge to the Finance Act,
2022 on grounds other than those dealt with herein, if
any, are kept open.
(vi) Subject to the observations made in this judgment,
the officers of Directorate of Revenue Intelligence,
Commissionerates of Customs (Preventive), Directorate
General
of
Central
Excise
Intelligence
and
Commissionerates of Central Excise and other similarly
situated officers are proper officers for the purposes of
Section 28 and are competent to issue show cause
notice thereunder. Therefore, any challenge made to
the maintainability of such show cause notices issued
by this particular class of officers, on the ground of
want of jurisdiction for not being the proper officer,
which remain pending before various forums, shall now
be dealt with in the following manner:
a.
ticular class of officers, on the ground of
want of jurisdiction for not being the proper officer,
which remain pending before various forums, shall now
be dealt with in the following manner:
a. Where the show cause notices issued under Section
28 of the Act, 1962 have been challenged before the
High Courts directly by way of a writ petition, the
respective High Court shall dispose of suchwrit
petitions in accordance with the observations made in
this judgment and restore such notices for adjudication
by the proper officer under Section 28.
b. Where the writ petitions have been disposed of by
the respective High Court and appeals have been
preferred against such orders which are pending before
this Court, they shall be disposed of in accordance with
this decision and the show cause notices impugned
therein shall be restored for adjudication by the proper
officer under Section 28.
c.
Where
the
orders-in-original
passed
by
the
adjudicating authority under Section 28 have been
challenged before the High Courts on the ground of
maintainability due to lack of jurisdiction of the proper
officer to issue show cause notices, the respective High
Court shall grant eight weeks’ time to the respective
assessee to prefer appropriate appeal before the
Customs Excise and Service Tax Appellate Tribunal
(CESTAT).
d.
otices, the respective High
Court shall grant eight weeks’ time to the respective
assessee to prefer appropriate appeal before the
Customs Excise and Service Tax Appellate Tribunal
(CESTAT).
d. Where the writ petitions have been disposed of by
the High Court and appeals have been preferred
against them which are pending before this Court, they
shall be disposed of in accordance with this decision
and this Court shall grant eight weeks’ time to the
C/890,891/2010
12
respective assessee to prefer appropriate appeals
before the CESTAT.
e. Where the orders of CESTAT have been challenged
before this Court or the respective High Court on the
ground of maintainability due to lack of jurisdiction of
the proper officer to issue show cause notices, this
Court or the respective High Court shall dispose of such
appeals or writ petitions in accordance with the ruling
in this judgment and restore such notices to the
CESTAT for hearing the matter on merits.
f.
Where
appeals
against
the
orders-in-original
involving issues pertaining to the jurisdiction of the
proper officer to issue show cause notices under
Section 28 are pending before the CESTAT, they shall
now be decided in accordance with the observations
made in this decision.
169. In view of the aforesaid, we allow the Review
Petition No. 400/2021 titled Commissioner of Customs
v. M/s Canon India Pvt. Ltd. and the connected Review
Petition Nos.
de in this decision.
169. In view of the aforesaid, we allow the Review
Petition No. 400/2021 titled Commissioner of Customs
v. M/s Canon India Pvt. Ltd. and the connected Review
Petition Nos. 401/2021, 402/2021 and 403/2021
insofar as the issue of jurisdiction of the proper officer
to issue show cause notice under Section 28 is
concerned. As discussed, the findings of this Court in
Canon India (supra) in respect of the show cause
notices having been issued beyond the limitation
period remain undisturbed.
11.
In view of the above, the first premise of the appellants on the
jurisdiction of the officers of DRI to issue show cause notice is no longer
valid. We find that the officers of DRI have competency to issue show
cause notices in view of the above.
12. Coming to the other issue raised by the appellants, we find that the
Commissioner Adjudication has dropped charge of excess import;
however, the adjudicating Authority proceeded declaring Appellant as
“Merchant Exporter” and presuming that Sister Concern SCF as
“Supporting Manufacturer”. We further find that the issue of merchant-
exporter was not raised in the show cause notice; learned Commissioner
has raised the issue for the first time in the adjudication which is not
acturer”. We further find that the issue of merchant-
exporter was not raised in the show cause notice; learned Commissioner
has raised the issue for the first time in the adjudication which is not
C/890,891/2010
13
permissible as Commissioner cannot go beyond the show cause notice.
We find that the Commissioner held that though the appellants have
fulfilled export obligation, have violated the conditions of the Notification
No.30/97. Learned Counsel for the appellants submits that it is wrong on
the part of the Commissioner to hold that the Job-work undertaken by
SCF is covered by Condition No (viii) of Custom Notification No.30/97. We
find that Department itself found that the appellant purchased 1266.211
MT of PCE locally during 1997 to 2002 and have also imported 40.504 MT
on 5.11.98.
13. We find that the question involved in this case is as to whether
manufacturer-importer can send the goods for job-work while importing
under Notification No.30/97. Learned Commissioner concluded that there
is no mandate for the appellants to send the goods for job-work in terms
of the said Notification. We find that learned Counsel for the appellants
relies on the judgment of Hon’ble Bombay High Court in the case of
Galaxy Surfactants – 2023 (384) ELT 357. This Bench while passing the
Final Order dated 05.07.2019 did not have the benefit of this judgment.
We find that Hon’ble Bombay High Court held as under:
19.
axy Surfactants – 2023 (384) ELT 357. This Bench while passing the
Final Order dated 05.07.2019 did not have the benefit of this judgment.
We find that Hon’ble Bombay High Court held as under:
19. Before proceeding further, it would be apposite to
set out the relevant conditions in the said Notification
as well as the relevant paragraphs in the EXIM Policy.
20.1 Condition (i) and Condition (vii) as contained in
the said General Exemption Notification is quoted as
under :
“(i) that the materials imported, are covered by an
Actual User Duty Exemption Entitlement Certificate
(hereinafter referred to as the said certificate), issued
by the Licensing Authority in the form of specified in
the schedule annexed to this notification, in respect of
the value, quantity, description, quality and technical
characteristics.
(vii) exempt materials shall not be disposed of or
utilised in any manner except for utilisation in discharge
C/890,891/2010
14
of export obligation or for replenishment of such
materials and the materials so replenished, shall not be
sold or transferred to any other person.”
20.2 Paragraph 3.4 of the EXIM Policy defines “Actual
user” and admittedly as Respondent is an “Actual user
(Industrial)”, Paragraph 3.5, the same is also quoted as
under :
“3.4 “Actual User” means an actual user who may be
either industrial or non-industrial.
dmittedly as Respondent is an “Actual user
(Industrial)”, Paragraph 3.5, the same is also quoted as
under :
“3.4 “Actual User” means an actual user who may be
either industrial or non-industrial.
3.5 “Actual User (Industrial)” means a person who
utilises the imported goods for manufacturing in his
own industrial unit or manufacturing for his own user in
another unit including a jobbing unit.”
20.3 Paragraph 3.37 defines ‘person’ as under :
“3.37 “Person” includes an individual, firm, society,
company, corporation or any other legal person.”
20.4 Paragraphs 7.4, 7.16, 7.17 of the EXIM Policy
with reference to the Duty Exemption Scheme are also
usefully quoted as under :
“7.4 (i) Notwithstanding anything contained above,
exemption from payment of additional Customs duty
and Antidumping duty shall he allowed in respect of
Advance Licences, issued with actual user condition to :
(a)
Manufacturer exporter;
(b)
Merchant exporter where the merchant exporter
agrees to the endorsement of the name(s) of the
supporting manufacturers) on the relevant DEEC Book.
(ii) Such advance licences and/or materials imported
thereunder shall not be transferable even after
completion of export obligation.
(iii) Such licences shall be issued with a positive value
addition without stipulation of minimum value addition
as prescribed in paragraph 7.9.
7.16 Licences granted under this scheme shall be
subject to the Actual User condition till endorsement of
transferability by the licensing authority.
alue addition
as prescribed in paragraph 7.9.
7.16 Licences granted under this scheme shall be
subject to the Actual User condition till endorsement of
transferability by the licensing authority.
7.17 The licence holder has the option to have the
material processed through any other manufacturer
including a jobber. However, the licence holder shall
solely for the imported items \ and fulfilment of export
obligation.”
(Emphasis supplied)
21. The said exemption Notification which exempts
customs duty on material imported into India against
an Advance licence with actual user condition is subject
to the condition that the said materials imported are
covered by an Actual User Duty Exemption Entitlement
Certificate issued by the Licencing Authority as well as
the condition that the exempt materials shall not be
disposed of or utilized in any manner except for
C/890,891/2010
15
utilization in discharge of the export obligation or for
replenishment of such materials and the materials so
replenished shall not be sold or transferred to any other
person. This means that the exempt materials can
either be utilized for discharge of an export obligation
or for replenishment of exempt materials and the
exempt materials so replenished cannot be sold or
transferred to any other person. It is not in dispute that
the export obligation has been met.
n
or for replenishment of exempt materials and the
exempt materials so replenished cannot be sold or
transferred to any other person. It is not in dispute that
the export obligation has been met. It has been argued
on behalf of Appellant that the exempt materials have
been diverted to M-3 unit at Tarapur, instead of V-23
Taloja unit and that, therefore, there has been a
transfer resulting in breach of condition (vii). It is not in
dispute that the V-23 Taloja unit as well as the M-3
Tarapur unit are units of the Respondent. The
Respondent is a ‘person’ as denned in paragraph 3.37
of the EXIM Policy where a company is also included in
the said definition. ‘Actual User (Industrial)’ is denned
to mean a person who utilizes the imported goods for
manufacturing
in
his
own
industrial
unit
or
manufacturing for his own use in another unit including
a jobbing unit. The Respondent is the person and V-23
and M-3 are the units are of the same person viz. the
Respondent and if the imported duty free goods are
utilized for his own use in another unit (viz. M-3 at
Tarapur unit) then going by the definition of ‘Actual
User (Industrial)’ in paragraph 3.5 of the EXIM Policy,
the question of transfer to any other person would not
arise.
22. Therefore, the question of breach of paragraph
7.4(ii) of the EXIM Policy which clearly provides that
Advance Licences and/or materials imported thereunder
shall not be transferable even after completion of the
export obligation would not arise.
4(ii) of the EXIM Policy which clearly provides that
Advance Licences and/or materials imported thereunder
shall not be transferable even after completion of the
export obligation would not arise. Also, the question of
breach of paragraph 7.16 of the EXIM Policy which
pertains to actual user condition and provides that the
licences granted under this scheme are subject to
actual user condition till endorsement of transferable by
the Licencing Authority would not arise, as there has
been no transfer in the instant case as the materials
have been received by one of the Units of the
Respondent. Paragraph 7.17 of the EXIM Policy relied
upon by Mr. Sham Walve, the Learned Counsel for the
Appellant, merely provides that the licence holder has
the option to have the material processed through any
other manufacturer or jobber and that the licence
holder shall be solely responsible for the imported items
and fulfilment of the export obligation. The Respondent
has used the imported material for manufacturing in its
own M-3 Unit at Tarapur and there is also no dispute as
regards fulfilment of the export obligation. Therefore, in
ligation. The Respondent
has used the imported material for manufacturing in its
own M-3 Unit at Tarapur and there is also no dispute as
regards fulfilment of the export obligation. Therefore, in
C/890,891/2010
16
our view, the contentions of the Learned Counsel for
the Appellant appear to be misplaced. The arguments
of Mr. Waive with respect to Part A and Part B of the
said licences as well as the other arguments on facts do
not persuade us to take any other view in the matter.
23. Paragraph 10 of the decision of the Kerala High
Court in the case of Government Wood Works v. State
of Kerala (supra), relied upon by the Learned Counsel
for the Respondent is also useful and is quoted as
under.
“10. The Tribunal seems to have thought that if the
other units to which the furniture was supplied were not
“branches” of the petitioner, a sale has to be
postulated. The Tribunal has in fact mentioned that the
other units are not registered as branch units of the
petitioner and that the petitioner has not paid renewal
fee for registration, for the branches, and has on the
other hand, paid renewal fee of Rs. 10 only for itself.
Logically, an inference of sale has been drawn. We do
not
agree
with
this
proposition.
The
effect
of
registration is only to enable a dealer to collect the tax
payable by him from the purchaser. It does not have
the effect of carving out an independent existence for
the registered unit or to delink it from manufactured in
the petitioner-unit was transferred to other units of
SIDECO.
ser. It does not have
the effect of carving out an independent existence for
the registered unit or to delink it from manufactured in
the petitioner-unit was transferred to other units of
SIDECO. there was no transfer of property in goods
from one person to another and hence no sale liable to
tax under the Act. The turnover of Rs. 1,60,746 was
therefore, rightly excluded in the original assessment
and was wrongly brought to assessment by the order of
the Deputy Commissioner.”
(Emphasis supplied)
24. We note that the Kerala High Court while
considering the units of Petitioner in the decision above
observed that the effect of registration was only to
enable a dealer to collect tax payable by him to the
purchaser, but it did not have the effect of carving out
an independent existence for the registered unit or to
delink it from the other units for the purposes of the
Act. The Hon’ble Court observed that, therefore, when
furniture manufactured in the petitioner unit was
transferred to other units, there was no transfer of
property in goods from one person to another, and
hence, no sale liable to tax under the Act.
25. The above decision supports our view, and
therefore, there would be no violation of Condition (i)
or (vii) of the Notification No. 30/97-Cus., dated 1 April
1997 as amended by Notifications upto No. 63/2004-
Cus. as there is no transfer in violation of the actual
no violation of Condition (i)
or (vii) of the Notification No. 30/97-Cus., dated 1 April
1997 as amended by Notifications upto No. 63/2004-
Cus. as there is no transfer in violation of the actual
C/890,891/2010
17
user condition, the discharge of export obligation not
being in question.
14.
We find that Hon’ble High Court in the case cited above has put to
rest the dispute regarding the transferability of material imported under
Notification No.30/97 after the completion of export obligation. We find
that Hon’ble High Court has held that the raw material imported under
the Notification cannot be sold as such but can be transferred for job-
work. We find that the appellants are importer-manufacturer-trader and
M/s SEF is a sister concern of the appellants and therefore, we find that
the sending of the goods for job-work is not in violation of the conditions
of the Notification. We also find that it was held similarly in the case of
Tetrapack (I) Ltd. – 2005 (190) ELT 257 and 2004 (177) ELT 875. We
further find that not taking permission of the Assistant Commissioner of
Customs before sending the goods, imported or replenished, is at the
most a procedural lapse and duty cannot be fastened on the appellants
for this reason.
15.
In view of the above, Appeal Nos. C/890/2010 & C/891/2010 are
allowed.
(Order Pronounced in the open court on 14.11.2025)
(D.M.
In view of the above, Appeal Nos. C/890/2010 & C/891/2010 are
allowed.
(Order Pronounced in the open court on 14.11.2025)
(D.M. MISRA)
MEMBER (JUDICIAL)
(P. ANJANI KUMAR)
MEMBER (TECHNICAL)
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Subject
Scottish Chemical Industries vs COMMISSIONER OF CUSTOMS(EXPORT PROMOTION)-MUMBAI
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