Per G.N. Srinivasan:

This is an appeal filed by the department against the decision of the CommissionerofCustoms(Appeals), Mumbai, made in Order-in-Appeal No. 112/96 BCH dated 13.2.1996 reversing the Order-in-Original No. S/16-1 )ECC-14691 ,'95 VII dated 9.12.1995 passed by the Assistant Commissioner of Customs. AG-VII. Mumbai. The respondents had imported a consignment of Chinese sewing thread made of pure silk vide bill of entry No. 7154 dated 18.5.1994 and claimed benefit of Customs Notification 204/92 dated 19.5.1992 for clearance of the said imported goods against a transferable Quantity Based Advance Licence No. 2141363 dated 24.2.1994 issued in the name of M/s. Syntex Corporation, Mumbai. The said licence was issued against export obligation of 100% cotton fabrics/madeups(bedsets) dyed/ printed (mill made). The case of the department was that silk sewing thread which had been imported could not have been used in the manufacture of cotton madeups. Importer was asked why benefit of Notification 204/92 could not be denied to them resulting in the Order-in-Original being passed by the Assistant Commissioner denying the exemption. On appeal, the Commissioner (Appeals) reversed the finding of the Assistant Commissioner. Hence the department's appeal.

2. It is contended by the DR, Smt. Reena Arya, that in terms of condition I of the said notification the material imported should be covered by the DEEC in respect of value, quantity, description, quality and technical characteristics. Even in the case of transferable advance licence, it is argued in the grounds of appeal that only the goods of the same quality as used in the manufacture of resultant product can be allowed to be imported. In the instant case it is pointed out in the grounds of appeal that actual extent of sewing thread used was not disclosed by the exporter in the relevant shipping bills for export made under the said advance licence. Therefore the benefit of the said notification is rightly to be denied. On the other hand it is argued by Shri Naresh Thacker, learned counsel, that in similar matters it has been held by the Tribunal's Delhi Bench in the case of CC, Bombay Vs. Indian Tube Mill Metal Industries 1998 (29) RLT 25 = 1999 (105) ELT 187 and the Mumbai Bench in the case of CC, Nhava Sheva Vs.Alfa Exim & Sandeep Impex P. Ltd. 1997 (71) ECR 287, that once the export obligation has been fulfilled and the licence has been permitted to be transferred, the Customs cannot ask the transferee to establish nexus between the imported goods and the exported goods.

3. We have considered the rival submissions. In this case no show cause notice has been given. This is an admitted position. In the finding portions the learned Assistant Commissioner has held as follows:-

"I find that the export products are millmade bedsets. From the photographs produced and the certificates produced from the manufacturers it appears that sewing thread is used on 100% cotton bedsets to give them a fashionable and exotic look as per the taste of the buyer. It can be therefore, easily inferred that the cotton bedsets where silk thread will be used would be normally made to order bedsets, whereas, from the description of the resultant product in the licence it is evident that the goods are not custom built. No evidence has also been produced from the original licence holder. who is also a manufacturer exporter, that silk sewing thread had actually being used as per the request of their buyer. In above view of the matter I am not inclined to accept the arguments of the importer that silk sewing thread is commercially known to be usable on the cotton bedsets.

4. As against this, when we look into the finding portion as recorded by the Commissioner (Appeals), it is found as follows:

"I also find that the lower authority has passed the impugned order on an assumption as it is mentioned in the said order that it appeared that 100% silk sewing thread could not have been used in the manufacturing of