1. The Customs authorities are in appeal against an order of a Bench of three learned Members of the Customs, Excise and Gold (Control) Appellate Tribunal. Two Members took the view that the provisions of Section 15(1)(c) of the Customs Act, 1962 were attracted to the facts of the case. The dissenting member took the view that Section 15(1)(a) was attracted.
2. The respondents manufactured detergent powder within the Kandla Free Trade Zone. They imported soda ash in August, 1984 for use in the manufacture of detergent powder in the Free Trade Zone. They did not pay Customs duty on the imported soda ash by reason of the notification, dated 17th April, 1980 issued in exercise of powers conferred by Section 25(1) of the said Act. There under, the Central Government exempted goods that were specified when imported into India for the production of the goods for exports out of India or for being used in connection with the production or packaging of goods for exports out of India or for the promotion of such exports by units within the Kandla Free Trade Zone...
from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (5 of 1975) and the additional duty, if any, leviable thereon... subject to the following conditions :
(7) the importer shall pay, on demand, an amount equal to the duty leviable
(a)...
(b) on goods other than capital goods as are not proved to the satisfaction of the Collector of Customs to have been -
(i) used in connection with the production or packaging of goods (with in the Zone) for export out of India....
(Emphasis supplied)
3. The respondents did not utilise the entire quantity of the imported soda ash in the manufacture of detergent powder within the Free Trade Zone. They requested the administration of the Free Trade Zone for permission to remove the surplus soda ash to the domestic tariff area on payment of duty. Accordingly, they filed six bills of entry : on 13th January, 1985, 14th January, 1985; 30th January, 1985 and 31st January, 1985.
4. The question in this case is what is the date that is relevant for the purposes of assessment of the Customs duty payable on the soda ash so cleared to the domestic tariff area. If it is the date upon which the duty was paid, the respondents get the benefit of an exemption notification.
5. In our view, the obligation of the respondents must be determined solely upon the basis of the said notification, dated 17th April, 1980. They were exempted from paying the "duty leviable" on the imported soda ash that they cleared into the Free Trade Zone by reason of that notification. It was a condition of that notification that they would pay on demand on the soda ash that they had not used in connection with the production of detergent powder within the Free Trade Zone an "amount equal to the duty leviable" thereon. In other words, it was clearly a condition of the said notification that the respondents would pay on the surplus soda ash the amount of the duty which had not been paid thereon when the soda ash was cleared into the Free Trade Zone. It must, therefore, be held that the respondents are liable to pay the amount of the duty that would have been leviable on the surplus soda ash had it not been cleared into the Free Trade Zone under the said notification.
6. The civil appeal is allowed, with costs.