Tribunal's order perverse for ignoring deliberate wrong export scheme code to evade scrutiny, suppression, and notification violations; failed to distinguish inadvertent error from wilful act; original order disallowing duty exemption restored.

JUDGMENT :

Dr.G.JAYACHANDRAN, J.

1.M/s APP Enterprises, having its registered office at Delhi is a partnership firm run by Mr.Vinod Agarwal and Mr. Dwarka Parsad Parekh as its partners. At its factory in Haryana for conversion of ‘Areca nuts/Betel nuts’ into ‘Betel nut Tannin’ as a job work imported huge quantity of areca nuts/betel nuts from their foreign supplier M/s P.T. Ganpathi Trading Indonesia. It declared that on conversion into ‘Betel Nuts Tannin’, same will be exported to the supplier at Indonesia and availed the duty free concession under the notification No: 32/97 dated 01/04/1997.

2. As per the Customs Department Notification No: 32/97, to avail the concession, the importer has to ensure the following conditions:-

“(i)that the goods are imported for execution of an export order placed on the importer by the supplier of the goods for jobbing.

(ii)that the goods so imported, including resultant products, are re-exported to the supplier of the goods or to any other person which the said supplier may specify within six months, provided that the wastage arising during the process of jobbing, as determined in terms of SION norms published vide P.N.No.2(P.N)/1997-2002 and to where such SION norms for resultant product have not been published, the satisfaction of Assistant Commissioner of Customs or Deputy Commissioner of Customs and Central Excise shall be disposed off in the manner as may be specified by them.

(iii)that the goods are utilized only for the discharge of export obligation and no part there of shall be sold, loaned, transferred or otherwise used or disposed of.

(iv)that the jobbing is undertaken in accordance with the procedure set out in the Customs (Import of goods at Concessional rate of Duty for Manufacture of Excisable Goods) Rules 1996.”

3. Based on information and reasonable belief that the areca nut/betel nut imported were diverted for manufacturing Pan Masala/ Gutka for local consumption instead for the job work and export of ‘Betel Nuts Tanning’ in contravention of the notification condition (iii) read above, SIIB Chennai Customs took up the matter for investigation of the past imports.

4. While that investigation was under process fresh consignment of about 1500 MT of betel nuts, arrived at the Chennai Port claiming it as covered under job work order dated 25/10/2005. When the Bills of Entry filed for clearance, the Commissioner of Customs (imports) ordered to release the Cargo provisionally, pending finalisation of investigation on executing 25% Bank Guarantee for the differential duty and P.D.Bond. The importers challenged the said order filing writ petition before the High Court. In respect of the 6 bills of entry as directed by the High Court, show cause notice issued on 12/03/2007 to the importers namely, M/s APP Enterprises and its partners, calling upon them to explain as to why the duty exemption granted under Notification 32/97 not be disallowed and demand and recover duty along with other consequential action under Sections 111(d) , 111(o) and 112(a) of the Customs Act,1962. The importerst replied to the show cause notice on 20/03/2007. The Commissioner of Customs (Seaport–Export) Chennai passed the Order in Original on 05/03/2008 by concluding that the have no doubt that a careful modus-operandi was devised wilfully and intentionally to defraud the Government of its legitimate dues. For the failure to fulfil the export obliga