Entitlement of interest in respect of refunds sanctioned - for what duration/period such interest is payable to the respondent importer?
Whether interest is payable or not? - HELD THAT:- The refund claims filed by the respondent importer on 08.01.2014 is not proper from the angle of completion of documents. Further, such refund claim is also pre-mature in nature, as the assessment finally providing the concessional CVD was extended to the impugned goods on the basis of earlier decision passed in order dated 15.01.2015, by finally assessing the 28 B/Es on 27.03.2018. Further, the angle of unjust enrichment in respect of such refund claims was also examined after the respondent importer submitted additional documents on 30.08.2016. Similarly, in the case of other 2 B/Es, the additional documents were submitted on 27.03.2018 and on 27.04.2018 for completing the submission of proper refund claim. Thus, from these factual evidence also it can be concluded that there is no case of delayed payment of refunds in this case.
In terms of the provisions of Section 27 ibid, read with Customs Refund Application (Form) Regulations, 1995 framed thereunder, the complete refund application was submitted by the Respondent importer only after all the requisite documents evidencing the payment of differential duty, relevant agreements and the sale invoices for the products were produced before the Customs authorities, to demonstrate that the burden of differential duty paid by the importer respondent was not passed on to any other person. Hence, on the factual matrix of the case, it cannot be considered that the refund application in the present case was submitted on 08.04.2014, as claimed by the importer respondent.
The assessment order passed under Section 17 ibid, relates to the import of dietary supplement during the period 01.04.2011 to 30.03.2012; whereas the import of dietary supplements for which refunds has been claimed and sanctioned relates to the subsequent period viz., 31.03.2012 to 18.02.2013. Hence, the above facts clearly prove that the assessment order dated 15.01.2015 finalizing the benefit of concessional rate of CVD cannot form the direct basis for claiming consequential refund sanctioned through orders dated 05.10.2016 and 30.05.2018.
The stand taken by the learned Advocate that there was no dispute in respect of the twin issues determined by original authority, and the dispute is limited to only the point of determining whether the imported dietary supplement is a food or not, cannot be accepted. It is also a fact that the importer respondent did not object to the order dated passed by the Commissioner of Customs (Appeals) by filing an appeal, on the above stand. Hence the same cannot be agitated at this stage. For the same reason, the finding given in the impugned order that the dispute in respect of extending concessional benefit of CVD was finalized by the Commissioner of Customs (Appeals) in his order dated 09.10.2014 is also factually incorrect. Hence, there are no merits in the grounds argued by the learned Advocate on this point.
The impugned order allowing payment of interest claimed on refunds already sanctioned to the importer respondent, is not legally sustainable and hence the same is set aside - appeals filed by the appellant department is allowed by setting aside the impugned order.
Recovery of short levied duty alongwith interest on the said short levied duty - wrong exemption claimed by the petitioner by classifying the goods on wrong customs heads - competence of Deputy Commissioner of Customs to issue SCN - SCN barred by limitation under the provisions of Section 28(9) of the Customs Act, 1962 or not - HELD THAT:- The imported goods covered in the bill of entry No. 7517069, dated 24-4-2020 were out of charge on 5-5-2020 and, therefore, the last date for issuance of Show Cause Notice would be 3-5-2022. However, the subject Show Cause Notice was issued on 20-4-2022 and, therefore, the said notice was well within time.
The next objection of the petitioner is in respect of the demand for the Bills of Entry Nos. 7572108, dated 2-5-2020 and 7985069, dated 23-6-2020 which were said to be barred by limitation under the provisions of Section 28(9) of the Customs Act, 1962 was also rejected. It was said that only an interim Show Cause Notice was issued vide the letter dated 23-5-2022. Later on, a corrigendum to Show Cause Notice was issued on 15-10-2022 for a change of adjudication authority due to the monetary limit in terms of Notification No. 29/2022-Customs (N.T.), dated 31-3-2022. The petitioner did not submitted any reply to the show cause notice. In due observance to the principles of natural justice, the new adjudication authority had given the importer reasonable opportunity of personal hearing before the adjudication of the case.
Short payment of customs duty and wrong exemption claimed by the petitioner by classifying the goods on wrong customs heads - HELD THAT:- There are no substance in the challenge to the order-in-original on the ground of barred by limitation. The 2nd ground that the Show Cause Notice was not issued by the competent authority, the petitioner never took this objection before the adjudication authority in his reply or the submissions. This is the first time the petitioner has raised this objection before this Court. Even the Show Cause Notice is not challenged in this writ petition, and it is only the order-in-original which has been challenged. Even otherwise it is the order-in-original which is under challenge and that has been passed by the competent authority. It is not the case of the petitioner that the order-in-original has not been passed by the competent authority.
This writ petition is hereby dismissed leaving it open to the petitioner to approach the appellate authority if he so advised against the impugned order-in-original, and if appeal is filled, the same shall be adjudicated in accordance with the law.
Refund along with interest at the rate of 12% p.a. on pre-deposit - HELD THAT:- Section 129EE of the Customs Act 1962 envisages that any amount that may have been deposited by way of a pre-deposit by an assessee is to be refunded along with interest not below 5% p.a. and not exceeding 36% p.a., and at such rate as may be notified by the Union Government.
In terms of the aforesaid provision, the Union Government by way of a notification dated 12 August 2014 has prescribed interest on refund to be fixed at the rate of 6% p.a. In that view of the matter, the order impugned cannot be sustained.
Interest shall consequently be computed and paid @ 6% p.a. - the impugned order is set aside - appeal allowed.
Export of non-Basmati White Rice - grievance of the petitioner- Company is that it has already entered into contract for supply of aforesaid rice to various foreign entities prior to issuance of notification (Annexure P-1) and if terms of the contract are not fulfilled, then of-course same will be create various hardship to the petitioner alongwith goodwill of his business - HELD THAT:- Considering the fact that contract was already entered into for supply of non- Basmati White Rice with foreign entities and letter of credit has also been issued by the petitioner for the said quantity, therefore, this Court finds that prima facie point is made out for consideration and considering the facts of the case, objection raised by learned Deputy Solicitor General is not found to be appropriate to disallow the aforesaid application.
The respondents are directed to permit the petitioner to export the Non-basmati White Rice to foreign entities in compliance of contract entered into between them, to which letter of credit has been issued by the petitioner for supply of quantity - Application allowed.
Application of Government's Litigation Policy on appeal amount threshold - HELD THAT:- On perusal of the record, we find that amount involved is less than Rs. 50 Lakh. In terms of Board’s circular on Government’s Litigation Policy instruction vide F. No. 390/Misc/30/2023-JC dated 02.11.2023, Revenue is not supposed to file appeal where the amount involved is not exceeding Rs. 50 Lakhs.
Accordingly, the appeals are dismissed in view of aforesaid Government’s Litigation Policy. Cross also stand disposed of.
Conspiracy with the consignee and other persons - Smuggling - cigarettes - alloy wheels - metal scrap - initiation of proceedings under Sections 112 and 117 of Customs Act - notice was issued in compliance of provisions of Section 155(2) of the Act - HELD THAT:- The factual aspect has to be gone into by the authorities as to whether the petitioner was responsible for clearing the container along with his co-employee. Apparently, the fact remains that he was placed under suspension immediately, which is also conceded as such by the Counsel for the petitioner, on the detection of the container having been cleared without following the procedure prescribed and the fact that the said container contained the goods which had not been declared.
The larger issue thus, remains whether there was a conspiracy with the consignee and other persons. These are factual aspects which the writ Court will not go into. Since the reply has already been filed, it is opined that it is for the authorities to take a decision on the above said show cause notices and it is not for the writ Court to entertain the petition of an employee who prima facie is guilty of eating the fence.
The present petition is dismissed at this stage without commenting upon the merits of the case leaving it open to the petitioner to take all his pleas before the authorities concerned.
Refund of SAD - SAD had been paid, not in cash, but by utilising the DEPB scrip - HELD THAT:- The said issue came up before the Hon’ble Delhi High Court in the case of ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA & ORS. [2016 (2) TMI 247 - DELHI HIGH COURT], wherein it was held that Although it is sought to be projected that the circulars which are subject matter of the challenge in the present petitions were issued to streamline the procedure and to remove ambiguities, in fact what the circulars seek to amend is Notification No. 102/2007-Customs itself by introducing an additional condition for being entitled to refund, which condition does not find place in Notification No. 102/2007-Customs.
As the issue is no more res-integra in view of the judicial pronouncement of the Hon’ble High Court and the Tribunal and the ld. Commissioner (Appeals) has followed the same - there are no infirmity in the impugned order and the same is upheld.
Seeking release of various models of second hand Highly Specialised Equipment digital Multifunction Print, Copying & Scanning Machines, imported - HELD THAT:- This Court had already dealt with the similar issue M/S. SIMPLE MACHINES VERSUS THE COMMISSIONER OF CUSTOMS (CHENNAI II) IMPORT, THE ADDITIONAL COMMISSIONER OF CUSTOMS (CONCOR ICD) , THE DEPUTY COMMISSIONER OF CUSTOMS (CONCOR ICD) [2023 (12) TMI 198 - MADRAS HIGH COURT] held that Sl.No.(b) of Notification No.5/2015-2020, dated 07.05.2019, states that all electronics and IT goods notified under the Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time are “restricted”. Therefore, they are supposed to get authorization from the DGFT. When the said policy was in force, at that point of time also several imports have been made for importing second hand multi-function devices and similar issue was raised that these are all the multi function devices coming under Sl.No.(b). Therefore, unless otherwise authorization is obtained from the DGFT, the same cannot be imported.
There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of three (3) weeks thereafter - For payment of such duty, quantification shall be made by the Customs forthwith within one (1) week from the date of receipt of a copy of this order. On receipt of such quantification, the payment shall be immediately made by the petitioners and on receipt of the payment in entirety, the goods shall be released as indicated above at the outer limit of three (3) weeks.
Validity of SCN - Power of DRI to issue SCN - delayed adjudication of the show cause notice, which was issued almost about 8 years back - Jurisdiction of adjudicating authority to adjudicate the show cause notices - HELD THAT:- There is no dispute that the impugned show cause notice has been issued by the Director of Revenue Intelligence (DRI). Prima-facie, there are substance in the submission as urged on behalf of the petitioners - as the show cause notice has been issued by the DRI, the same would certainly attract the law laid down by Canon India Pvt. Ltd. [2021 (3) TMI 384 - SUPREME COURT].
Contention of the respondents that show cause notice should be proceeded - reliance placed in this regard on the orders passed by this Court in the case of LAXMI ORGANIC INDUSTRIES LTD VERSUS UNION OF INDIA, THROUGH ITS SECRETARY, DEPARTMENT OF REVENUE & ORS. [2023 (12) TMI 1157 - BOMBAY HIGH COURT] - HELD THAT:- The said decision is not applicable to the facts of the present petitioners. In Laxmi Organic Industries Ltd, show cause notice was of October 2019 which was followed by Covid-19 Pandemic from March 2020 and, therefore, the adjudication of the show cause notice was not of a nature falling on the principles discussed in the case of Coventry Estate Pvt. Ltd. [2023 (8) TMI 352 - BOMBAY HIGH COURT]. In the case of the present petitioners, the show cause notice is dated 29th February 2016 which is thus 8 years old. Therefore, on such facts, the order relied upon by the Respondents in the case of Laxmi Organic Industries Limited would not assist the respondents.
The impugned show cause notice dated 29th February 2016 shall remain stayed. Pending hearing and final disposal of the petition - The Respondents are at liberty to move this Court for vacating the interim stay if the Respondents are of the opinion that such orders ought not to be continued and/or after decision of the Supreme Court on the review proceedings filed in Canon India Private Limited and on the final adjudication on the challenge to the Finance Act, 2022.
Seeking immediate release of the goods without charging any demurrage or rent charges - goods were detained and re-valuation was done - petitioner deposited custom duty on the declared transaction value to take release the goods - HELD THAT:- Since the issue in hand is not res judicata and the same has already been decided by the Division Bench of this Court in the case of M/s Continental Carbon India Ltd. [2015 (10) TMI 2131 - ALLAHABAD HIGH COURT] where it was held that the respondent was not entitled to charge any demurrage charge from the goods so detained by the custom authorities.
Learned counsel for the respondent heavily relied upon the recent judgement of Delhi High Court in the case of Bhavik S. Thakkar [2023 (2) TMI 681 - DELHI HIGH COURT]. The case is of no help to the respondent as in the aforesaid case, the goods were seized and detained and at the time of confiscating the goods, time was granted to pay the dues but the same was not paid thereafter order was passed by the Settlement Commissioner imposing the penalty of Rs. 2 lakh and fine of Rs. 1 lakh in lieu of confiscation of imported goods. On the said premise, it was held that Settlement Commissioner is not the Court and the order was passed holding that the waiver cannot be granted to the parties therein.
However in the case in hand, the appellate court specifically passed the order in favour of the petitioner holding that the disclosed value was correct - the respondent authority cannot charge the demurrage charges, therefore, no demurrage charges can be charged or demanded from the petitioner.
The petitioner is granted relief to the extent that it would be open for the petitioner to clear off the goods without payment of demurrage charges subject to payment of other charges subsequent to the period of 17.9.2020 till the date of actual clearing off the goods in question - Petition disposed off.
Nature of transaction - classification of goods or refund of excess maount - Liability to pay court fees on all the 4191 appeals in terms of section 129A (6) of the Customs Act, 1962 - aggrieved by reassessment, the appellant filed 4191 appeals before Commissioner of Customs (Appeals) who confirmed the assessments in respect of the said bills of entry.
Whether the present appeal relates to the classification of the goods in question or is a simple case of refund of the excess amount? - HELD THAT:- On perusing, the statement of facts in the appeal memorandum, it is found from paragraph 4 that the order of assessment on the bill of entry were challenged in an appeal before Commissioner of Customs (Appeals) challenging the classification concluded by the respondent - Further, in the memo of appeal, the appellant explained the manufacturing process and the use or purpose of the back covers, front cover and the middle cover. Had it been a simple case of refund, there was no scope for urging these facts - Considering the statement of facts as well as the grounds of appeal, the only logical conclusion is that the challenge in the present appeals relates to the issue of classification only and there is not a whisper of the refund claim. The present appeals have not arisen out of the rejection of any refund claim applications. In fact as appears, no such application for refund has been filed by the appellant.
Liability to pay Court fees - HELD THAT:- The provisions of section 129A (6) makes it mandatory for the appellant to deposit the court fees where the demand has been disputed or challenged arising out of assessment or reassessment. The only exception as per the Proviso is where under subsection (2) the Committee of Commissioners decides to file an appeal against the order of the Commissioner (Appeals) or a memorandum of cross objections as provided in subsection (4) is filed. Needless to mention that section 129A (7) even where an application for rectification of mistake (ROM) and restoration of an appeal (ROA) is filed the party has to deposit Rs 500/- as court fees and the only exception is where an application has been filed by or on behalf of the Principal Commissioner of Customs or Commissioner of Customs no such fee shall be payable.
Reliance placed on the decision of this Tribunal in the case of E-BIZ. COM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [2008 (9) TMI 55 - CESTAT NEW DELHI], where the controversy related to the provisions of Section 86(6) of the Finance Act, 1994 which are pari-materia to the provisions of section 129A (6) of the Act and hence it squarely applies to the present case.
Once the duty is paid ‘under protest’ and the party challenges the same by filing an appeal, it necessarily implies that demand of duty is disputed and consequently the case would fall under section 129A (6) of the Act and the party would be liable to pay the court fees on such appeal being filed.
The reasoning adopted by the appellant that it is not a case of demand of duty is basically frivolous as had it not been so there was no scope to file the present appeals challenging the impugned order. The objection raised by the Registry of the deficit court fees in filing the present appeals is justified. The appellant is, accordingly directed to deposit the requisite court fees in terms of section 129A (6) of the Act within a period of two weeks from the date of the order.
Benefit of concessional rate of CVD as per Notification No. 12/2012 dated 17.03.2012 - Polyester Staple Fibre (PSF) recycle - HELD THAT:- The appellant has declared the goods as Polyester Staple Fibre recycled which indicate that the goods are manufactured from waste. However, the plea of the appellant whether they are eligible for Notification No. 12/2012-CE dated 17.03.2012 has to be verified.
It is opined that the matter can be remanded to the original authority who is directed to verify whether the appellant is eligible for the benefit of Notification No. 12/2012 dated 17.03.2012. The original authority shall also consider the decisions relied upon by the appellant which have considered the very same issue and noted the retrospective application of Notification No. 12/2012.
The impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority.
Valuation of imported goods - glass chatons - rejection of value in terms of Rule 12 of the Customs Valuation Rules, 2007 - enhancement of value - contemporaneous imports as well as NIDP data not considered - HELD THAT:- First of all, the Appellant has not been put to notice as to why the transaction value cited by him is not acceptable to the Department. After this, Rule 4 to Rule 12 of CVR, 2007 have to be followed sequentially to arrive at the value of the imported consignment. In this case, this procedure also was not followed. The NIDP data gathered by the Appellant for such identical/similar goods shows that the price adopted by the Appellant is actually more than the price at which the other importer has imported the goods.
It is not found that the value arrived at by the Revenue is a realistic and legally sustainable value - impugned order set aside - appeal allowed.
100% EOU - Recovery of Customs Duty, Central Excise Duty alongwith interest and penalty - standard input output norms (SION) - Diversion of polyvinyl chloride (PVC) resin, procured from abroad and sourced indigenously, without payment of duty in terms of notification no. 52/2003-Cus dated 31st March 2003 and notification no. 22/2003-CE dated 31st March 2003.
HELD THAT:- The question that begs answer is the extent to which the ‘norms’, borrowed for its empirical acceptability and contextual validity, can be stretched to presume inclination to misuse exemption intended for fulfillment of ‘net foreign exchange (NFE)’ earning. As it is noticed, ‘standard input output norms (SION)’, designed for another and later scheme in the Foreign Trade Policy (FTP), was grafted into the already existing ‘export oriented unit (EOU)’ scheme in the same policy without any alterations in structuring. Again, the grafting narrowed down the existing latitude in empowering of customs authorities to track usage of ‘duty exempt’ materials and even to the extent of prescribing ‘tolerance’ for ‘waste’ arising in the production process. Once again, as we have noticed supra, the distinction lay in employing of the ‘norms’ to limit import of ‘raw materials’ physically at the threshold for the purpose of export promotion scheme while employing it as a template for determining deviations when ‘raw materials’ are not physically available any longer and, consequently, cannot be accorded the rigour, by subsequent adoption, for presumption of diversion with penal consequence in the case of ‘export oriented units (EOU)’ in the Foreign Trade Policy (FTP).
A case of diversion cannot be made out without reference to the movement of the goods alleged to have been diverted.
Recovery, intended by the impugned notifications, of duty liability, for non-conformity with the ‘standard input output norms (SION)’, on post-procurement evaluation - HELD THAT:- The ‘norms’ are an estimate of most commonly used ‘raw materials’ for a specific product; its utility did not lie in ‘mathematical precision’ which was not sine qua non for authorization of quantity limits for ‘duty exempt’ imports. Such precision, therefore, is not to be presumed for monitorial oversight and, concomitantly, such ‘intra mural’ correlation, between enumerations on one side of the ’norms’, cannot also be insinuated for any purpose whatsoever - recovery of duty in the event of excessive usage in comparison with actual production is also limited to each of the ‘raw materials’ on the logical premise of non-optimal deployment which the exchequer is not obliged to subsidize. The ascertaining of compliance with the second limb, of condition 3(d) of first paragraph of notification no. 52/2003-Cus dated 31st March 2003, as well as in condition 4(a) of first paragraph in notification no. 22/2003-CE dated 31st March 2003 is limited to each of the ‘raw materials’ in isolation from the rest of the mix. That, then, should be the test for allowing the relief sought by appellant-Commissioner.
The adjudicating-Commissioner has, on the other hand, noted that ‘plasticizer’ imparts flexibility to products of resinous origin and that the manifold variations of goods, within the product groupings, manufactured by the appellant does not lend itself to acceptance of the proposition in the show cause notice that consumption of ‘plasticizer’ should govern restrictions on use of ‘polyvinyl chloride (PVC) resin’ for determining recovery of ‘duty foregone’ at the time of procurement. The grounds enumerated for relief sought by appellant-Commissioner have not put forth any contention to override this conclusion. Mere reproduction of extracts from the notification coupled with reiteration of the proposition in the notice is not tenable surrogate either - there are no valid ground to hold that any part of ‘duty foregone’ is recoverable for the reasons offered in the appeal of jurisdictional Commissioner of Customs.
There is no evidence available, even remotely proximate, to suggest that ‘polyvinyl chloride (PVC) resin’ procured by the appellant-assessee had reached any user/trader. There is no ground to infer that ‘polyvinyl chloride (PVC) resin’ has been used in excess of that indicated in the ‘norms’, as adopted, for monitorial oversight of ‘actual user’ access to ‘duty exempt’ privilege.
The pleas of appellant-Commissioner fail - appeal of M/s Responsive Industries Ltd is allowed.
The Supreme Court dismissed a Civil Appeal due to a gross delay of 444 days in filing it. The delay was not satisfactorily explained. Questions of law can be raised in another case.
Interpretation of statute (policy circular) - whether the Policy Circular Notice No. 22/2015-20 dated 29.03.2019 issued by the respondent No. 3 is applicable to the EPCG Authorisation issued prior to 5.12.2017 or not?
HELD THAT:- In terms of paragraph no. 1.03 of the FTP, power of DGFT is restricted only to lay down the procedure which is to be followed by the exporter or the importer. DGFT while exercising such powers, notifies the procedure to be followed by the exporter or the importer but there is no power to amend/update the FTP.
By the impugned policy circular, respondent No. 2 has in effect amended the FTP with retrospective effect to the EPCG Authorisation issued prior to 5.12.2017 under the guise of mere procedural changes for third-party exports. By amendment in paragraph no. 5.10(c), respondent No. 2 has taken away the benefit which was available to the petitioners under FTP 2009-14 and original FTP 2015-20 prior to 5.12.2017 inasmuch as prior to revision even in case of third party exports, full realised value of shipping bill was to be taken into consideration for the fulfillment of export obligation which was restricted to actual payment from third party exporter after 5.12.2017.
In facts of the case, under the guise of amendment in HBP with policy circular dated 29.03.2019, respondents nos.2 and 3 have tried to make changes in FTP so far as the application of such amendment in para 5.10 (c) of the HPB to the EPCG Authorisation issued prior to 05.12.2017- the date of amendment which is the exclusive domain of the Central Government.
The amendment in para 5.10(c) from 05.12.2017 can be made applicable to the EPCG Authorisation issued from the said date only and the date of issuance EPCG Authorisation under FTP cannot be ignored under guise of policy decision by applying the same to all third-party exports made after 05.12.2017. The respondents have jurisdiction to amend the HBP for availing the benefit under the EPCG Scheme in view of the revised FTP 2015-20 (mid term review) but such amendment cannot affect the conditions stipulated in the EPCG Authoristion already issued for the benefit under the EPCG Scheme framed under the provisions of FTDR Act and FTP 201520. Revised FTP 2015-20 would be applicable only from 05.12.2017 and hence any amendment made in 5.10 (c) of the revised HBP 2015-20 can apply to the EPCG Authorisation issued under the revised FTP 2015-20 only - The respondents were therefore not justified in the issuance of the circular dated 29.03.2019 to apply the amendment in para 5.10(c ) of the revised HBP to all exports made after 05.12.2017 ignoring the date of issuance of the EPCG Authorisation prior to 05.12.2017.
The impugned policy circular dated 29.03.2019 is therefore, beyond the jurisdiction of respondent no. 3 as respondents nos.2 and 3 have no power to deny the benefit under the EPCG Scheme under the original FTP 2015-20 in respect of the EPCG Authorisation issued prior to 5.12.2017 and such benefit of availing full value of shipping bill under the EPCG Authorisation issued prior to 5.12.2017 could not have been curtailed by respondent nos.2 and 3 by applying revised HBP 2015-20 either under the FTDR Act or FTP - amendment made in paragraph no. 5.10(c) of the revised HBP2015-20 read with policy circular dated 29.03.2019 is invalid so far as the same is made applicable to the Authorisation under the EPCG scheme issued prior to 5.12.2017.
Jurisdiction - power of designated offcer to issue SCN - HELD THAT:- The Petitioner needs to canvas such legal position as asserted in the present proceedings before the adjudicating officer, who as fairly pointed out on behalf of the respondents would certainly take into consideration all such contentions including the issues on the law as laid down by the Supreme Court in the case of Canon India Pvt. Ltd. vs. Commissioner of Customs [2021 (3) TMI 384 - SUPREME COURT] and pass appropriate orders on the show cause notice.
The petition is accordingly disposed of directing the Respondents to adjudicate the show cause notice as expeditiously as possible and in any event within a period of six months from today. As the show cause notice is issued about four years back, there cannot be any further delay on such adjudication.
Smuggling - Absolute confiscation of the seized gold of foreign marking - penalty under Section 112(b ) of the Customs Act, 1962 - prohibited item or not - denial of proper opportunity to present his case and no opportunity was granted to cross examine the witnesses - violation of principles of natural justice - HELD THAT:- The Act does not define the expression ‘restricted goods’, but the decisions referred to above, have interpreted the expression ‘prohibited goods’ under Section 2(33) so as to include restricted goods. In terms of the definition of ‘prohibited goods’ in Section 2(33) even prohibited goods could be imported or exported, subject to compliance with the terms and conditions as prescribed but if import is not done lawfully as per the procedure prescribed under the Customs Act or any other law for the time being in force, in that event the said goods would fall under the definition of ‘prohibited goods’. The necessary corollary is that goods being imported if not subjected to check up at the customs on their arrival and are cleared without payment of customs duty are treated as ‘smuggled goods’.
Since the conditions for import of gold as per the notification issued by DGFT and the restrictions imposed by RBI have been violated, the gold in question has to be treated as ‘prohibited goods’ under Section 2(33). Consequently, it would fall within the definition of ‘smuggling ‘ under Section 2(39) which will render such goods liable to confiscation under Section 111 or Section 113 of the Act.
Having come to the conclusion that the gold seized of which the appellant claimed to be the owner without any valid documents of purchase, has to be treated as ‘prohibited goods’ and gold falls under the category of ‘dutiable goods’ but the appellant failed to prove that the liability to pay the customs duty was discharged and by necessary implication the seized gold are ‘smuggled goods’, it is held that the seized goods are liable for confiscation under Section 111(d) whereby goods which are imported or attempted to be imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force, would be liable for confiscation. Also absolute confiscation is justified in the facts of the present case where the trail of events show that the appellant is engaged in procuring gold of foreign origin in illegal manner and the multiple stands taken by him on the face of it were false as the alleged supplier M/s. Sai Buillion had denied having supplied any gold to the appellant after 08.12.2014 and also stated that on 29.01.2015, Shri Rahul son of the appellant approached his father for providing a bill for one Kg. gold, but they declined as they had not supplied any gold.
The submission of the learned counsel that there was no proposal for absolute confiscation in the show cause notice stands nullified - it is the discretion of the adjudicating authority to decide with reference to the facts and circumstances and based on relevant considerations - the authorities below have rightly exercised the discretion in not granting provisional release of the seized goods in terms of Section 110 A read with Section 125 of the Act.
Violation of principles of natural justice - denial of proper opportunity to present his case and no opportunity was granted to cross examine the witnesses - HELD THAT:- Despite repeated summons the appellant did not appear before the Investigating Agency and merely sent a letter admitting his statement recorded under section 108, which during his life time (as he expired on 18.08.2018 during the pendency of the appeal) he never retracted the said statement. As per the settled law, the said statement is admissible in evidence and is binding on the appellant. The appellant during his life time had never asked for cross examination and hence no such plea can be raised at this stage.
Reliance is placed on the decision of the Supreme Court in COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS & COMPONENTS PVT. LTD. [2004 (2) TMI 65 - SUPREME COURT], where it has been held that it is a basic and settled law that what has been admitted need not be proved. We therefore reject the contention as raised on behalf of the appellant as frivolous and baseless.
Lastly, the learned Counsel for the appellant submitted that request was made for retesting of the seized gold by melting purity because the contents of the Panchnama was not recorded correctly and the purity certificate was also issued without any basis but the same was not allowed - It is found from the records that on 29.01.2015, on the date of search itself, a Certified Jewellery Appraiser was called on spot who tested the recovered gold by touchstone method in the presence of two independent witnesses and certified the recovered gold - reliance placed on the decision of the High Court of Kerala in the case of MAMMU AND ANOTHER VERSUS ASSTT. COLLECTOR OF CENTRAL EXCISE [1981 (1) TMI 79 - HIGH COURT OF KERALA AT ERNAKULAM], where it has been held that, since no definite tests have been prescribed under law, whether an article is gold of particular quality and purity, it has to be borne in mind that the opinion of an expert on this point is relevant under Section 45 of the Evidence Act. The plea is of no significance but an attempt and tactics to delay the adjudication proceedings, particularly in view of the marking on the gold biscuits “AL Etihad, Dubai) and the statements recorded under Section 108 of the Act.
The issue of confiscation of seized gold under Section 11 upheld - the appellant for his acts of omission and commission have rendered himself liable to penal action under Section 112(b) of the Act - appeal dismissed.
Classification of imported goods - various parts and sub-parts or accessories of cellular mobile phones - to be classified under CTH 85177090 or under CTH 39209999? - demand of differential duty alongwith interest and penalty.
Can an exemption notification issued by the Government under Section 25 of the Customs Act determine the classification of the goods? - Can a scheme notified by the MeiTY determine the classification of the goods? - Is the differential duty recoverable from the appellant? - Is interest recoverable from the appellant? - Were the imported goods liable to confiscation under Section 111(m) (although they were not actually confiscated) because the classification of the imported goods in the Bill of Entry is, according to the Revenue, incorrect? Consequently, was the penalty under Section 112 imposed correctly? - HELD THAT:- As per Section 17 the importer or exporter has to self-assess duty and the proper officer can re-assess the duty. Both the self-assessment by the importer (or, as the case may be, the exporter) and the re-assessment by the proper officer fall under the definition of assessment as per Section 2(2). If the proper officer re-assesses the goods, unless the importer accepts the re-assessment in writing, he has to give a speaking order. Thus, the importer (or exporter) and the proper officer are competent to classify the goods and assess the duty payable on them - After the duty is assessed on the imported goods and the duty is paid, the proper officer clears the goods for home consumption under Section 46. Once this action is completed, they cease to be imported goods, they cease to be dutiable goods and the importer ceases to be the importer.
Assessment concludes the determination of the liability of the importer to pay duty and is similar to a decree under the Civil Procedure Code, 1908 - The Commissioner (Appeals) does not assess but either affirms, modifies or annuls the assessment order. In this process, the Commissioner (Appeals) may also decide the issue of classification of the goods.
A question which arises is if a Bill of Entry which is only self-assessed by the importer without any re-assessment can it also be appealed against to the Commissioner (Appeals) under Section 128. The larger bench of the Supreme Court held in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT]in the affirmative.
Demands under Section 28 - HELD THAT:- The power to assess duty lies with the importer and the proper officer. Classification, valuation and applying an exemption notification, are all part of the process of this assessment. Hence, the power to decide the classification lies with the importer during self- assessment, with the proper officer during re-assessment and while issuing an SCN under Section 28 and while adjudicating, with the Adjudicating Authority and with any appellate authority in the judicial hierarchy who deals with the appeals. Classification cannot be decided by anybody else (such as a MeITY in this case) for two reasons. First, they do not have the authority to assess under Section 17 nor have any appellate powers to modify the assessment. Second, their orders, letters, notifications, etc. are executive actions performed at the discretion of the government and are not quasi-judicial or appealable decisions. Therefore, any HSN code indicated against any goods in any policy of MeITY or any other Ministry cannot determine the classification of the goods under the Customs Tariff. Of the three grounds on which the classification is proposed to be changed in the SCN, the policy of MeITY as a ground cannot, therefore, be sustained.
Exemption notifications - HELD THAT:- The goods cannot be reclassified based on the exemption notification issued under Section 25 or on the basis of any policy of the Ministry. Notifications or policies can be issued, modified or withdrawn but the classification of the goods under the tariff will remain the same. Only if the tariff itself is amended can the classification change.
Confiscation of goods under Section 111(m) and consequent penalty under Section 112 - HELD THAT:- The case of the Revenue in this appeal is that the classification of the goods by the importer was not correct. Even if the classification is not correct, it does not render them liable to confiscation under Section 111(m). Similarly, there could be cases where, according to the Revenue, the exemption notification claimed during self assessment will not be available to the imported goods. The importer self-assessing the goods must apply his mind when classifying the goods. Classification of the goods by the importer, even if it is not in conformity with the re-assessment by the proper officer or even if it is held to be not correct in any appellate proceedings does not render the goods liable to confiscation under Section 111(m) - no penalty can be imposed under Section 112 on the appellant for the alleged wrong classification. The appellant cannot be penalized for holding a different view than the proper officer.
Are the front cover, middle cover and back cover of cellular mobile phones imported by the appellant classifiable under CTH 85177090 (as claimed by the appellant) or under CTH 39209999(as held in the impugned order)? - HELD THAT:- Applying the first Rule of Interpretation, the front cover, middle cover and back cover cannot be classified under CTH 3920- the vapor deposition (lamination) takes it out of the description of CTH 3920 and thermoforming and CNC milling, being processes beyond printing and surface working take them out of the scope of chapter note 2(s). It is also found that a specific entry (parts of mobile phones) prevails over a general entry (articles of plastic) as per Rule 3(a) of Interpretation and the later entry (Chapter 85) in the tariff prevails over the earlier entry (Chapter 39) as per Rule 3(c). However, it is well settled legal principle that the Interpretative Rules must be applied sequentially. Once Rule 1 decides the classification, it is not necessary to go through the other Rules of Interpretation such as Rule 3(a) and 3(c).
The case of PR. PACKAGINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX., NEW DELHI-II [2001 (10) TMI 142 - CEGAT, COURT NO. II, NEW DELHI]was based on Trade Notice No. 67/86 dated 30-9-1986 issued by the Bombay Collectorate which was in favour of the assessee and was binding on the officers. The question in HARIRAM GOVINDRAM VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [1997 (6) TMI 98 - CEGAT, NEW DELHI]was related to classification of the covers of the outer covers of the cassettes. Relying on Board‘s order dated 29-7-1994 issued under Section 37B of the then Central Excises and Salt Act, 1944, the classification was decided in favour of the assessee.
Thus, the rejection of the appellant’s classification of the front cover, middle cover and back cover of mobile phones under CTH 85177090 in the impugned order and their re-classification under CTH 39209999 cannot be sustained and needs to be set aside.
Revocation of Customs Broker License - forfeiture of security deposit - Violation of Advance Authorisation scheme - duty free import which were diverted in the local market illegally instead of using the same imported goods for manufacture of export goods - contravention of Regulations 10(d) and 10(n) of CBLR, 2018 - HELD THAT:- Sufficient and reasonable opportunity was given to the appellants before passing an order, in respect of charges framed against them and there is no infirmity of the impugned order in not following the principles of natural justice in this regard.
The appellants have duly filed the ex-bond bills of entry as per the documents given by the importers and they were not aware of the purported diversion of the imported goods. In the instant case, the violations was found by the department only on the basis of specific intelligence developed by DRI, KZU and communicated in their offence report dated 30.06.2021, much later after the clearance of ex-bond warehoused goods, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, as the purported diversion of imported goods was not known to the appellants, the non-compliance by the importer of license/Advance Authorisation conditions in respect of imported goods could not have been brought to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) by the appellants CB - violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable.
Violation under Regulation 10(n) - HELD THAT:- Circular No. 9/2010-Customs dated 08.04.2010 clearly explains the provision of CBLR/CHA Regulations which require the Customs Brokers to verify the antecedents, correctness of Import Export Court (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data and information. The said guidelines provide for the list of documents that is required to be verified and that are to be obtained from the client importer/exporter. it is also provided that any two documents of among such specified documents is sufficient for fulfilling the obligation prescribed under Regulation 13(o)/10(n) of CHALR, 2004/CBLR, 2018. In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department - there are no legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order.
In the instant case, the suspension was continued during the inquiry proceedings for about 12 months till the completion of inquiry proceedings and revocation of CB license by the impugned order - the order of revocation of appellant’s CB license has been passed on 23.09.2022 i.e., about 14 months and 23 days from the date of offence report. Though the time lines indicated in the CBLR, 2018 provide for completion of the inquiry proceedings, if calculated from the date of receipt of offence report, would require such an order under Regulation 17(7) ibid to be issued within 270 days, we find that there is no case for inordinate delay as the adjudication was done within a reasonable period of time.
The appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine, the KYC documents given by the importer are also genuine and that these are not fake or fabricated. Thus, to this extent the appellants CB are found to have not complied with the requirement of sub-regulation 10(n) and thus imposition of penalty in not being proactive for fulfilling of regulation 10(n) of CBLR, 2013 alone, is appropriate and justifiable.
There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the CB license of the appellants; and for forfeiture of entire security deposit, inasmuch as there is no violation of Regulation 10(d) of the CBLR, 2018, and the findings in the impugned order is contrary to the facts on record - in view of the failure of the appellants to have acted in a proactive manner in fulfilment of the obligation under Regulation 10(n) ibid, particularly when they had received the documents from importer through intermediary, it is justifiable to impose a penalty of Rs.10,000/-, which would be reasonable.
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