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2023 (2) TMI 954 - GUJARAT HIGH COURT
Validity of SCN - recovery of excess of the duty drawback - time limitation - SCN issued by the respondent Authority after a period of about more than six/ten years, which are not permissible as per the settled legal position - HELD THAT:- This Court had an occasion to deal with the identical issue in the case of M/S SJS INTERNATIONAL VERSUS UNION OF INDIA [2021 (12) TMI 1339 - GUJARAT HIGH COURT] and held that the authority cannot be issue show-cause notice after a period of three years for assessment / export.
When the issue is covered as per the decision of this Court in the case of M/s. S J S International, these petitions are allowed accordingly, quashing and setting aside the impugned showcause notices issued by the respondent authorities, which are admittedly beyond the period of three years. Since the impugned show-cause notices are quashed by this Court, the consequent action of the respondent authorities qua those show-cause notices are also quashed.
Petition allowed.
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2023 (2) TMI 953 - DELHI HIGH COURT
Smuggling - export of foreign currency and import of anabolic drugs - Two adjudication orders-in-original in respect of the same goods - orders are pursuant to the show cause notice proposing to impose penalties on the petitioners (and one other noticee) on the same set of facts - HELD THAT:- It is seen that although there is a single show cause notice, it specifically called upon the petitioners to submit their respective replies in regard to allegations pertaining to seized currency to respondent no.1. and regarding issue of illegal import of anabolic steroids to respondent no.2.
There are no fault in the impugned order passed by respondent no. 2 only on account of that it has been adjudicated on the basis of a single show cause notice dated 22.05.2019.
The impugned order dated 14.02.2022 is set aside. The matter is remanded to respondent no. 1 to decide afresh.
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2023 (2) TMI 902 - MADRAS HIGH COURT
DFIA (Duty Free Import Authorisation) scheme - revalidation of the DFIA licences - whether actual user of the licence can use the licence for import of goods mentioned in the licence or not? - whether the Public Notice No.84/2009-14, dated 23.07.2010 and the Policy Circular No.13, dated 31.01.2011, issued by the first respondent are prospective or retrospective in operation?
HELD THAT:- Admittedly, no stay of the judgment, passed by the Division Bench of the Punjab and Haryana High Court in the matter of Pushpanjali Floriculture Pvt. Ltd. vs. Union of India, [2016 (7) TMI 628 - PUNJAB & HARYANA HIGH COURT], has been granted by the Hon'ble Supreme Court. It is also not in dispute that the decision rendered by a learned Single Judge of this Court in the case of Hoewitzer Organic Chemical Co. vs. D.G.F.T., New Delhi [2013 (6) TMI 303 - MADRAS HIGH COURT], which is relied upon by the learned counsel for the petitioner, has attained finality as the department has not filed any Appeal as against the said order. In the said decision, the learned Single Judge, after following the judgments of the Hon'ble Supreme Court in the case of S.B.International Ltd. vs. Assistant Director General of F.T. [1996 (1) TMI 125 - SUPREME COURT] as well as the Jain Exports (P) Ltd. vs. Union of India [1988 (5) TMI 50 - SUPREME COURT], has held that the import policy prevalent at the time of issuance of the licence would apply to goods covered by imports made under that licence and the subsequent change in policy will be of no consequence.
In the instant case also, only based on the Public Notice No.84/2009-14 dated 23.07.2010, the clarification dated 23.09.2010 and the Policy Circular No.13 dated 31.01.2011, the petitioner's request for revalidation of the DFIA licences, which are the subject matter of the writ petition, have been rejected under the impugned order. Though the petitioner's DFIA licence came into effect on 15.04.2010 itself, the petitioner has been able to utilise the DFIA licence only for few months and thereafter, due to the aforementioned Public Notice dated 23.07.2010, Clarification dated 23.09.2010 and Policy Circular No.13 dated 31.01.2011, they have been unable to get the benefit of DFIA licences - Admittedly, no stay has been obtained from the Hon'ble Supreme Court and only a S.L.P. is pending as against the Division Bench judgment of the Punjab and Haryana High Court in Pushpanjali Floriculture Pvt. Ltd. case. Further the order of the learned Single Judge of this Court in Hoewitzer case, has also attained finality and therefore, the petitioner must be given the benefit in accordance with the said decision.
In view of the fact that the respondents have arbitrarily and by total non application of mind has rejected the petitioner's request for revalidation of the subject DFIA licences, the impugned order has to be quashed and the writ petition has to be allowed - Petition allowed.
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2023 (2) TMI 901 - CESTAT CHENNAI
Debonding of 100% EOU - Levy of interest on raw materials, lying in stock beyond the warehousing period - department was of the view that the duty paid on raw materials warehoused beyond the period of three years was liable to interest under Section 61 (2) (i) of Customs Act, 1962 at the rate of 15% per annum as per Notification No. 28/2002- Cus. (NT) dated 13.05.2002 - SCN is time barred or not.
HELD THAT:- The SCN has been issued under Section 28 of the Customs Act,1962.
It is clear from the above provision that the SCN has to be issued within a period of six months. The impugned raw materials were imported between 1995 and 2003. The SCN is dated 13.10.2008. The duty having been paid on the date of De-Bonding the relevant date to compute the demand would therefore be the date of debonding ie., 31.03.2007. The Ld. AR has submitted that as the appellant had filed a request for waiver, and also an undertaking; the date of rejection of the request for waiver has to be considered as the relevant date - The section does not speak of any extension of time based on a request for waiver. Further the request for waiver is filed as per the Board Circular. Circulars, though binding on the Department, is not so on the Tribunal. Thus, the SCN is time barred.
The Tribunal in the case of Commissioner of Customs, Madras Vs Electronic Research Ltd. [[1999 (1) TMI 294 - CEGAT, MADRAS]] held that in absence of any limitation period for demanding interest in respect of Customs duty payable in term of Section 61(3) of Customs Act, in the case of warehoused goods, the limitation period would be the period prescribed in Section 28 of the Act ibid.
Appeal allowed.
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2023 (2) TMI 836 - CALCUTTA HIGH COURT
Release of imported goods - seizure of goods - demand of differential duty - failure to issue show cause notice under Section 124(a) of the Customs Act, 1962 (the Act) for adjudication of the purported seizure for the imported consignment.
Whether the goods should be any longer detained? - HELD THAT:- In the order of provisional release dated 29.3.2022 the respondent department has accepted the fact that the appellant has paid the entire differential duty of Rs.46,48,200/-. After taking note of the said payment in the order the appellant has been directed to execute a bond for the estimated value of the goods namely Rs.81,95,532/- and to submit a bank guarantee for a sum of Rs.90 lakh. So far as the full estimation of the goods is concerned, since the differential duty has already been estimated it may not be necessary for the appellant to execute a bond for the fully estimated value of the goods as estimated in the order dated 29.3.2022. So far as the submission of bank guarantee of Rs. 90 lakhs the order of provisional release does not state as to how the said quantification has been made.
Even after giving credit to the sum of Rs.46,48,200/-, it is not clear from the order of provisional release or the communication dated 12th February, 2023 as to how the balance amount has been computed. In any event, the goods are lying with the Customs from 10th September, 2021 and the goods are stated to be readymade garments/apparels. Thus, the differential duty having been paid, the department does not gain in keeping the goods detained any longer - thus, a workable order should be passed so that the interest of revenue is protected, at the same time, the appellant importer is also able to clear the goods.
Issuance of the show cause notice - HELD THAT:- If in the opinion of the respondent department, the case of the appellant can be split up from that of Vineet Goel, then nothing prevents the respondent department from issuing a show cause notice under Section 124(a) of the Act. However, this is left to the discretion of the department with a note of caution that issuance of show cause notice should not be unduly delayed, especially when the allegation of the department against the appellant is that earlier consignments might also have been grossly misdeclared.
The appeal is disposed of by directing the respondents to release the subject goods subject to the appellant furnishing a bond for a sum of Rs.90,00,000/-. The goods shall be released within a period of seven days from the date on which such bond is furnished.
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2023 (2) TMI 835 - KERALA HIGH COURT
Request for amendment of the Shipping Bill - request was rejected on the ground that the Shipping Bill incorporated a declaration of no export incentive being claimed by the Exporter - whether the Tribunal examined the correctness or otherwise of the reasoning recorded by the Tribunal or considered the new circumstances for allowing the appeal?
HELD THAT:- The amendment is ordered on the analogy that the proposed amendment changes numbers, and the procedure must be applied to further the cause of the adjudication. The view pursued by the Tribunal cannot be agreed upon because Section 149 no doubt gives ample discretion/power to consider the request for an amendment of shipping documents. In the case on hand, the reasons for refusing the request are Circular No.4/2004 dated 16.01.2004 and the unilateral declaration while exporting the commodity as free duty export. The Tribunal would have done better by testing the grounds resulting in the order of rejection. The grounds now stated by the Tribunal are not examining the validity of the reasoning of the Commissioner. Hence, we are convinced that ground is made for setting aside the order under appeal. To subject the controversy to adjudication, the matter is remitted to the Tribunal for disposal afresh in accordance with law.
Appeal allowed.
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2023 (2) TMI 834 - CESTAT AHMEDABAD
Refund of Cost recovery charges paid - revenue submits that though the department has challenged the order of this Tribunal but no stay has been granted by the Hon’ble High Court - HELD THAT:- The Learned Commissioner (appeals) has granted the refund in pursuance to this Tribunal’s order in GOODEARTH MARITIME LIMITED VERSUS COMMISSIONER OF CUSTOMS, KANDLA [2020 (3) TMI 494 - CESTAT AHMEDABAD], whereby on merit the demand of cost recovery charges was set aside. Hence this refund is consequential relief to the afore said Tribunal’s order. Though the revenue has challenged the order of this tribunal before the High Court but, since there is no stay, the order of the Commissioner (Appeals) cannot be disturbed. Therefore, in view of this Tribunal’s order, since the demand of cost recovery charges has been set aside, the appellant was rightly granted the refund by the learned commissioner (appeals).
The Central Board of Excise and Custom has repeatedly clarified that when any refund arises out of any order of adjudication/Commissioner (Appeals)/ CESTAT unless a stay order is obtained refund must be granted after 3 months from the date of the order.
In the above circular the board has reiterated its earlier circular No. 572/9/2001-cx dated 22.02.01 which clarified that against the order from which the refund arises is not stayed by the higher authority within 3 months the refund must be granted - In the present case the Department has withheld the refund merely for the reason that this Tribunal’s order GOODEARTH MARITIME LIMITED, has been appealed against before the Hon’ble High Court of Gujarat under tax Appeal No: 299 of 2020. However, even after 2 years of filing tax appeal no stay could be obtained by the revenue.
The revenue has no option except to grant the refund to the respondent. Accordingly, neither the stay application nor the appeal against the order of the Commissioner (Appeals) granting refund are not maintainable - there are no infirmity in the orders of the Commissioner (Appeals), hence, the same are upheld Revenue’s appeals are dismissed.
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2023 (2) TMI 788 - MADRAS HIGH COURT
Import of betel nuts - fixation of price - Constitutional Validity of Notification dated 4-6-2008 issued by the Director General of Foreign Trade - delegation of power - specific bar under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 - applicability of principle of lex specialis derogat legi generali.
HELD THAT:- The import of betel nut/areca nut was permissible freely, provided the c.i.f. value (cost, insurance and freight) is Rs. 35 per kg. and above and subject to payment of customs duty prescribed by the Central Government. The reason for the Central Government for taking such a policy decision has also been explained by the appellants.
Whether the impugned Notification issued by the DGFT is without jurisdiction in view of the specific bar under Section 6(3) of the Foreign Trade Act? - HELD THAT:- The Gujarat High Court had an occasion to deal with a similar Notification issued by the DGFT by prescribing a minimum c.i.f. value for cashew kernels and while dealing with the issue, the authentication order issued by the President of India in favour of the DGFT was considered in M/S. PAM AGRO INDUSTRIES A PARTNERSHIP FIRM & 1 OTHERS VERSUS UNION OF INDIA & 1 OTHERS [2021 (3) TMI 910 - GUJARAT HIGH COURT] has held that DGFT has not exercised powers under section 3 of the Foreign Trade Act but has merely authenticated an order which relates to the DGFT in accordance with the authentication rules. Therefore, the contention raised by the petitioners that DGFT has no authority to issue such notification is not sustainable.
Insofar as the Central Government authenticating the DGFT to issue the Notification, it must be deemed to be a notification issued only by the Central Government. Stricto sensu, the bar under Section 6(3) of the Foreign Trade Act would have applied only if the DGFT had exercised a statutory power - In the present case, the authentication at the best can only be held as an executive exercise of a power by the President of India through the DGFT. Hence, the impugned notification published in the Gazette under Section 5 of the Foreign Trade Act cannot be held to be ultra vires as was contended by the Learned Counsel for the Writ Petitioners.
Even if the notification is taken to have been issued by the DGFT by virtue of authentication by the Central Government, whether such authentication can be made, in view of the specific manner/procedure provided under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992, and where the Foreign Trade (Development and Regulation) Act, 1992, prescribes a procedure to be done in a particular manner? - HELD THAT:- Since the notification has been issued in line with Section 5 of the Foreign Trade Act and there are no illegality or diversion in the procedure since the notification was technically issued by the Central Government by authenticating the DGFT to issue the same. Thus, there was no delegation of power by the Central Government to DGFT and the Notification was issued in accordance with Section 5 of the Foreign Trade Act and the findings of the Learned Single Judge to the contrary are hereby set aside.
Even if the impugned notification is taken to have been issued by the DGFT by way of authentication by the Central Government, whether the Central Government is entitled to place restriction on the import of areca nuts and fix the value under the Foreign Trade (Development and Regulation) Act, 1992 or such restriction of imports and fixation of tariff can be carried out only in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975? - HELD THAT:- The Central Government has been given very wide powers under Section 3(2) of the Foreign Trade Act which includes the power to prohibit, restrict or otherwise regulate in all cases or in specified classes of cases, import or export of goods. When any order is passed by the Central Government under Section 3(2) of the Foreign Trade Act, it shall be deemed to have been prohibited or restricted or regulated under Section 11 of the Customs Act. The Customs Tariff Act is nothing but an Act which provides for rates at which duties of customs shall be levied under the Customs Act as specified in the First and Second Schedules. This Act is not a stand-alone enactment and it goes along with the Customs Act. Hence, any order passed by the Central Government under Section 3(2) of the Foreign Trade Act must be considered to be an exercise of a wide power conferred on the Central Government and the provisions of the Customs Act and the Customs Tariff Act mutatis mutandis will automatically apply - the principle of lex specialis derogat legi generali will not have any application to the case in hand.
There are no illegality in the issuance of the impugned notification dated 4-6-2008. The notification is only an expression of a policy decision taken by the Central Government and the DGFT was authenticated to issue the notification - petition dismissed.
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2023 (2) TMI 741 - CESTAT AHMEDABAD
Valuation of imported goods - Non-calcined petroleum coke - rejection of declared value - case of the department is that due to similarity in various factors, the import price of BGH Exim Limited needs to be followed and the price declared by the appellant should be rejected.
Whether the value declared by the appellant in respect of import of Non-calcined petroleum coke as Rs. 2871.15 is correct or price of comparable import made by BGH Exim Limited @ Indian Rs. 3701.20 is correct? - whether the enhancement of value should be made taking the price of comparable imports?
HELD THAT:- The learned Commissioner (Appeals) has considered the entire issue in detail not only on the facts but also on the law point. There is an important difference between the facts of the present import and the import made by BGH Exim Limited in which there is only one consignment whereas in the respondent’s case the contract was for a quantity of minimum 8 lakh Tonnes Per Annum for the period of 5 years and the respondent had imported 89249 MT of Non-calcined petroleum coke compared to the import quantity of 9400 MT of M/s BGH Exim Limited. On this difference itself, it can be construed that when there is a long term contract for lifting of a minimum 8 Lakh Tonnes Per Annum, obviously there will be substantial discount in the price. On this basis, it cannot be said that the comparable price of BGH Exim Limited should be taken for assessment of import of the appellant.
It is observed that the learned Commissioner (Appeals) has examined each and every aspect of the case and came to the conclusion that there is a vast difference between the nature of supplies made by BGH Exim Limited and the appellant in as much as there is a long term contract of the appellant with the suppliers and for the huge quantity of 9000 MT Per Annum.
There is no infirmity in the findings of the impugned order - Appeal of Revenue dismissed.
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2023 (2) TMI 740 - CESTAT NEW DELHI
100% EOU - SION - Benefit of exemption - Extended period of limitation - Waiver of penalty levied u/s 117 of the Customs Act, 1962 - reduction in the quantum of penalties imposed under section 112(a) of the Act - It appeared to the revenue that the appellant used or consumed steel grits/ gangs saw blades at a rate higher than the Standard Input Output Norms [SION] - liability to pay duty on the steel grits and saw blades consumed in excess of the SION - CENVAT Credit on additional duties of customs.
Whether the appellant is liable to pay duty on the steel grits and saw blades consumed in excess of the SION? - HELD THAT:- Undisputedly, the exemption Notification 22/2003-CUS, as applicable during the relevant period, was subject to various conditions including the condition that the appellant shall use consumables as per the SION norms. It is also undisputed that SION A1833 was applicable to the goods in question. Therefore, the quantity of grits and saw blades which the appellant could have used for manufacture of granite slabs for exports has to be, as per the SION prescribed for the purpose. If it exceeds these norms to the extent they are consumed in excess, they contravene the condition of the Notification. The appellant had executed a bond before the Assistant Commissioner at the time of import, undertaking to pay the duty along with interest if all the conditions are not fulfilled.
The steel grits and gang of blades in dispute are consumables in this case and are neither capital goods nor inputs. The appellant claimed the benefit of the exemption Notification No. 52/2003 which must be strictly interpreted because it is available subject to some conditions which will be applicable to all those who claim its benefit. The appellant cannot claim any special waiver from these conditions. One of the conditions is that the appellant gives a bond or legal undertaking to pay the duty along with interest, if any, condition is violated.
It needs to be pointed out that in exemption Notifications there may be conditions which must be fulfilled prior to the clearance of the goods and conditions which must be fulfilled after their clearance. In this case the standard input output norm (SION) have to be calculated as 5% of the FOB value of exports. The fulfilment of this condition can, therefore, be ascertained only after the exports have been made.
There are no force in the submissions made by learned counsel for the appellant that the demand is time barred because the course of action arose only after the appellant completed its export and the value of such exports was known. The appellant should have, on own its own, paid the duty in fulfilment of its obligation under the bond or under undertaking but has failed to do so and, therefore, the show cause notice was issued in terms of section 28 read with the bond and legal undertaking - the appellant is, therefore, liable to pay the duty. Consequently, the appellant is also liable to pay interest as applicable under section 28AB of the Act.
Imposition of penalty under section 112 - HELD THAT:- While the show cause notice proposed that the imported goods were liable for confiscation under section 111(o), the Order-in-Original as well as the impugned order have not held that the imported goods were liable for confiscation - the confiscation or liability of confiscation of the goods under section 111 is a necessary pre-condition for imposition of penalty under section 112 (a). Since there was no order of confiscation of the goods in the order, no penalty could have been imposed under section 112. The penalty under section 112 needs to be set aside.
It is contended that if it had paid the customs duty it would have been entitled to CENVAT credit to the extent of additional duty of customs - HELD THAT:- Availability of CENVAT Credit does not take away the taxability. Otherwise, no manufacturer ever has to pay additional duty of customs because he would eligible for CENVAT credit of the amount so paid but such is not the scheme of the law. If appellant is entitled to take CENVAT credit as per the CENVAT Credit Rules, it may take such credit.
Calculation of duty was done wrongly as it had to be done reckoning a three year period - HELD THAT:- It is found fit to remit the matter to the original authority for the limited purpose of calculating the amount of duty payable as per the SION norms read with the DGFT Circular No. 10-2009/14 dated 12.10.2009.
The penalties imposed under section 112(a) are set aside - The confirmation of duty and interest in the impugned order is upheld and the matter is remanded to the original authority for the limited purpose as calculation of the duty in terms of DGFT Circular read with SION norms - appeal disposed off.
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2023 (2) TMI 739 - CESTAT AHMEDABAD
Refund claim - rejection on the ground of unjust enrichment - Revenue contended that the learned Commissioner (Appeals) merely followed the order of Mundra Custom, however he has not independently examined the aspect of unjust enrichment - HELD THAT:- The learned Commissioner (Appeals) simply followed the order of Mundra (Custom) and no independent finding was given as regard the unjust enrichment. Despite that the Revenue has raised the ground of unjust enrichment in their appeal.
As regard, the issue of unjust enrichment, it is purely based on the fact on the basis and the same can be established on the basis of books of accounts along with CA Certificate. The issue of unjust enrichment depends on fact of each case, however, the learned Commissioner (Appeals) except following the order of Mundra (Customs), neither examined the fact of unjust enrichment of the present case, nor given any independent finding. Therefore, the matter related to issue of unjust enrichment needs to be reconsidered by the learned Commissioner (Appeals). Accordingly, the impugned order is set aside and matter remanded to the learned Commissioner (Appeals) only for the purpose of examining the issue of unjust enrichment on the basis of records such as CA Certificate, books of accounts etc.
Appeal allowed by way of remand.
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2023 (2) TMI 738 - CESTAT MUMBAI
Levy of penalty u/s 114(iii) and Section 114AA of the Customs Act, 1962 - freight forwarder - fraudulent availment of Special Focus Market Scheme (SFMS) benefits, by producing forged House BL and landing certificate, wherein consignee country was deliberately mis-declared by them for the purpose of availing undue benefit under SFMS - HELD THAT:- The Commissioner (Appeals) in para 16.2 of the impugned order has observed, in respect of the order of the Settlement Commission. Undisputedly there is no denial vis-à-vis the role of the appellant in the acts undertaken leading to loss of revenue. However, taking note of the fact that the appellant is not the actual beneficiary but is only the freight forwarder arranging for container, taking the consignment to shipping lines etc. as per the directions of Shri Ramesh Singh, it is found that the penalty imposed on the appellant is excessive.
The interest of justice will be met if the penalties are reduced to Rs.2.5 lakhs under Section 114(iii) and Rs.2.5 lakhs under Section 114AA of the Customs Act, 1962.
Appeal disposed off.
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2023 (2) TMI 683 - SUPREME COURT
Levy of Customs duty - importer of vessel "M.V. Vishwa Yash" or not - deemed importer - whether the respondent can be said to be an importer of the vessel in question which the respondent purchased for the purpose of breaking and, therefore, not liable to pay the custom duty? - HELD THAT:- The decision of this Court in the case of M/s. Jalyan Udyog [1993 (9) TMI 108 - SUPREME COURT] is required be referred to. In the said decision, it is observed and held by this Court that the day on which the permission is granted by the Department for the purpose of breaking, can be said to be the relevant date for the purpose of the levy of duty. Meaning thereby, as observed and held by this Court, the said date can be said to be the “deemed import” and the person in whose favour the permission is granted can be said to be “deemed importer” - In the present case, the permission in favour of the SCI was granted on 4-4-1997. In that view of the matter, the respondent cannot be said to be an “importer” and at the best, SCI can be said to be the “importer”.
The submission on behalf of the Revenue that under MOA dated 22-3-1997, the liability to pay the custom duty was fasten upon the respondent and, therefore, the respondent is liable to pay the custom duty is concerned, has no substance. The MOA is between the two individual parties. What is mentioned in the MOA is between the two individual parties and on the basis of that the respondent cannot be held to be importer and liable to pay the custom duty under the Customs Act. The liability to pay the custom duty would be upon the importer under the provisions of the Customs Act only - If ultimately the SCI is held to be the importer and liable to pay the custom duty as per the terms and conditions of the MOA, the SCI can recover the same from the respondent.
However, so far as the liability of the respondent to pay the custom duty under the Customs Act is concerned, the same shall be governed by the provisions of the Customs Act only.
It cannot be said that the CESTAT and/or the High Court have committed any error in holding that the respondent cannot be said to be the importer and, therefore, not liable to pay the custom duty - Appeal dismissed.
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2023 (2) TMI 682 - DELHI HIGH COURT
Jurisdiction - power to issue SCN - CIRP proceedings - Approval of resolution plan - sustainability of the show-cause notice - DRI’s stand is, that prior to the amendment brought about in Regulation 12 of the 2016 Regulations, it was only required to file “proof of claim”, and the proof of claim not filed - stand taken vis-à-vis non-filing of proof of claim is, that SML had acknowledged the debt due, and accordingly sought an extension of time to fulfilits export obligations - waterfall claim for distribution of proceeds from sale of Liquidation of assets - applicability of doctrine of forum non-conveniens.
Whether Section 53 of the Code, which provides for a waterfall mechanism for the distribution of proceeds, obtained from the sale of liquidation of assets, would override Section 48 of the GVAT Act?
HELD THAT:- In the instant case, the DRI/DGFT neither submitted a proof of claim nor responded to a specific communication via e-mail dated 17.05.2017, addressed to respondent no.3.
Section 48 of the GVAT Act is not pari materia with Section 142A of the 1962 Act. Section 142A of the 1962 Act plainly states that any amount payable by way of duty, penalty, interest or any other sum payable by an assessee or any other person under the Act shall have the first charge on the property of the assessee or the person, as the case may be, save as otherwise provided inter alia under the Code. Section 48 of the GVAT Act does not contain any such exception and/or carve out - the fact that extensions were sought to fulfil export obligations would not help the cause of the respondents. As a matter of fact, respondent nos. 2, 3 and 7 have, in their counter-affidavit, admitted that since the amounts due had not been crystallized, they could not respond to the Public Announcement made by the IRP.
If the law, as enunciated by the Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT] is applied, then the dues, if any owed to the respondents would have to be declared as having extinguished, and if such is the position, the adjudication of the impugned show-cause notice would be an exercise in futility.
The doctrine of forum non-conveniens assumes, that although the Court has jurisdiction, in certain cases, it takes the view, that the action filed before it could be agitated conveniently before another forum. Therefore, in such an eventuality, the writ action is not entertained by the Court for the reasons of convenience, and not on the ground that it does not have the jurisdiction to try and adjudicate the action lodged before it.
This writ petition was filed in March 2021, and the objection concerning the Court's power to entertain the writ action was taken much later, it would be unfair to return the writ petition, on the ground that this Court is not a convenient forum for adjudicating the dispute arising between the parties.
The impugned show-cause notice seeks to do, what is, in fact, an exercise in futility, given the law laid down by the Supreme Court in Ghanashyam Mishra. The Supreme Court has enunciated, in no uncertain terms, the clean slate principle; it cannot be set at naught by entertaining claims that concern the period obtaining before the approval of the Resolution Plan.
The impugned SCN is quashed.
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2023 (2) TMI 681 - DELHI HIGH COURT
Seeking immediate release of goods without charging demurrage/detention charges or rent - policy of CONCOR - direction to pay appropriate compensation for their negligence and apathy leading to perishing/deterioration of goods - seeking initiation of appropriate action against respondent no. 2 for suspension/revocation of approval as Customs Cargo Service Provider for the violation of provisions of Handling of Cargo In Customs Area Regulations, 2009 in as much, the demurrage/detention charge has been imposed in respect of goods in respect of which detention certificate has duly been issued by the Customs.
If a penalty is imposed by the Settlement Commission and not by any custom authority, then will it entitle the Petitioner for waiver of TSC?
HELD THAT:- The Regulation 6(1)(l) of HCCAR, 2009 provides that no rent, demurrage on the goods seized or detained or confiscated shall be charged subject to any other law in force at the time being. Therefore, this regulation is subject to Section 63 of Customs Act which provides for the right of warehouse keeper to levy rent and warehouse charges and Section 63 was in force when CONCOR denied the waiver of TSC to the Petitioner.
On perusal of Section 127F of the Customs Act, it is clear that the Settlement Commission is provided the power to impose any penalty or fine under the Customs Act only. Further, Section 127F of the Customs Act explicitly states that in addition to powers conferred on the Settlement Commission under Central Excise Act, 1944, the Settlement Commission also have all the powers which are vested in an officer of the customs under the Customs Act or the rules made thereunder. Therefore, the Settlement Commission is acting as a custom authority only while settling the cases under the Customs Act as it has all the powers that are vested in officer of the customs.
This Court does not agree with the contention of the learned counsel for the Petitioner that when the penalty is imposed by the Settlement Commission which is an independent body constituted under the Section 32 of Central Excise Act, 1944, then the policy of CONCOR would not apply to the Petitioner. It is held that even if the penalty is imposed by the Settlement Commission then the same has been imposed by the Settlement Commission by exercising the power vested in it of the officer of the customs and thus, penalty imposed by the Settlement Commission would be treated as a penalty imposed by a custom authority.
Further, it is to be noted that CONCOR was established in 1988 under the Ministry of Railways to profitably satisfy customer’s needs for high-quality, cost-effective logistics services. CONCOR spent huge expenditure in developing of ICD infrastructure to provide container/ cargo handling and storage services to the importers and exporters. CONCOR also ensures safety and security of the cargo while it is lying at ICDs. Concor incurs huge expenditure while performing its functions and its main source of revenue is container/ cargo handling and storage services rendered to customers - If the contention raised by the learned counsel for the Petitioner would be accepted then it will cause huge losses to CONCOR which has been formed from public exchequers.
The contention of the learned counsel for the Petitioner that if the penalty has been imposed by the Settlement Commission then the policy of CONCOR for not entertaining the request of waiver of demurrage/ detention charges would not be applicable, is not acceptable.
Petition dismissed.
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2023 (2) TMI 680 - DELHI HIGH COURT
Non-issuance of Advance Authorization - import of Gold bars and export of manufactured Gold Jewellery and Gold Medallions by the Petitioner - party to the writ petition or not - rejection to issue Advance Authorization License on the ground that Advance Authorization would not be issued where the items for export were ‘Gold Medallions and Coins’ or ‘Any other jewellery/articles manufactured by a fully mechanized process.
Rejection on the ground that the Petitioner was not a party to the writ petition which led to the decision of the Ld. Division Bench in M.D. OVERSEAS LIMITED VERSUS UNION OF INDIA AND ORS. [2020 (6) TMI 140 - DELHI HIGH COURT] - HELD THAT:- This ground would be completely untenable inasmuch as the public notice which was under challenge was the identical public notice which was the basis of the Petitioner’s rejection. The said public notice upon being quashed, any action taken consequential to the said public notice, would also not stand in the eyes of law. The ld. Division Bench’s judgment would squarely apply to the facts of the Petitioner’s case as well. A quashed public notice cannot be relied upon by the department to refuse the Advance Authorization.
Retrospective application of the notification dated 10th August, 2020 - HELD THAT:- The Advance Authorization of the Petitioner was applied for on 26th June, 2019 and the same would have to therefore, be considered in terms of the legal position prevalent on the said date. The subsequent notification cannot be applied retrospectively to reject the said Advance Authorisation.
The rejection of the Advance Authorization accordingly stands quashed and set aside - petition allowed.
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2023 (2) TMI 679 - DELHI HIGH COURT
Violation of principles of natural justice - relied upon documents had not been provided to respondent - non-grant of opportunity to cross-examine the persons whose statements were relied upon - whether in fact the respondent had used the portal itself as has been stated by the respondent in its letter dated 09.11.2018 sent in response to the Show Cause Notice dated 30.08.2018? - HELD THAT:- After some arguments, learned counsel for the parties state that there are several aspects of the matter which have not been considered by the learned CESTAT as the same had possibly not been advanced before the learned Tribunal.
The impugned order is set aside and the respondent’s appeal is restored with the learned CESTAT to decide afresh.
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2023 (2) TMI 678 - MADRAS HIGH COURT
Absolute Confiscation - gold - packing material - prohibited goods or not - discretion vested with the appropriate authority to grant/extend the option of payment of fine in lieu of confiscation under Section 125 of Customs Act, in case of prohibited goods - HELD THAT:- This Court finds that the language of Section 125 of the Act confers discretion on the adjudicating authority. The adjudicating authority is obliged to address the question as to whether the discretion should be exercised in favour of the assessee having regard to the facts and circumstances of the case. In HARGOVIND DAS K. JOSHI VERSUS COLLECTOR OF CUSTOMS [1987 (1) TMI 107 - SUPREME COURT] the Supreme Court held that the adjudicating authority, before ordering confiscation, must first address itself on the question of exercising its discretion to give an option of redemption to the assessee. The twin tests for exercise of discretion under Section 125 are “relevance” and “reason” - The discretion has to be exercised in conformity with the purpose for which it has been conferred and the object which it seeks to achieve. Reasons must be recorded in support of it. In the exercise of discretion, non-consideration or non-application of the mind to the relevant factors would not only render the exercise manifestly erroneous, but would also warrant judicial interference. The power to give an option to the importer to redeem the prohibited goods upon payment of fine is a power coupled with the duty and in any event it should be exercised fairly and reasonably and not arbitrarily and capriciously, there must be at least an application of mind to the discretion in terms of Section 125 of the Act.
There is no reference whatsoever to any of orders which according to the petitioner was passed by the Respondents herein under similar circumstances wherein the benefit of the option under Section 125 of the Act was extended to similarly placed importers. While it is true that the Appellate Authorities may or may not agree with the submissions of the petitioner, it is rudimentary that quasi-judicial authorities ought to apply their mind to the issues raised and material on record before arriving at a conclusion - The 1st and the 2nd Respondents by not dealing with the submission as to the nature of gold imported viz., non-compliance would result in the same being treated as prohibited and not restricted goods, for it has a direct impact on the nature of right available under Section 125 of the Act. The 1st and 2nd Respondents have not dealt with the orders passed under similar circumstances nor the case laws relied upon, thereby vitiating the order.
The impugned order is set aside and the matter is remanded back to the 1st Respondent to re-adjudicate the revision application filed by the petitioner as expeditiously as possible, after affording an opportunity of hearing to the petitioner - Petition allowed by way of remand.
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2023 (2) TMI 677 - CESTAT NEW DELHI
Revocation of Customs Broker License - Non-grant of opportunity of cross examination - retraction of statements - SCN is beyond the period of limitation under CBLR, 2013 or not? - applicability of principle of double jeopardy on issuance of second suspension order - violation of provisions of Regulation 11 (a), (d), (m), (n) (o) and 17 (9) of CBLR, 2013.
Whether show cause notice is beyond the period of limitation under CBLR, 2013? - HELD THAT:- In the present case, it is evident that after further investigation in accordance with the provisions of Regulation 20 of CBLR 2013, the Commissioner of Customs, Noida, vide letter dated 25.01.18 sent the Offence Report dated 19.01 .2018 which was received by the Commissioner of Customs, New Delhi on 09.02.2018. The subject of the said report, specifically stated, “Role of Customs Broker, Swastik Cargo Agency in fraudulent exports and investigations against M/s Shagun overseas, M/s Fine Art Traders and M/s S. K. Exports.” After the receipt of the Offence Report on 09.02.2018, the show cause notice issued on 07.05.2018, was issued within the time limit of 90 days as prescribed under Regulation 20(1) and hence there is no delay and the show cause notice is not barred by limitation.
Whether the present case is hit by the principle of double jeopardy on issuance of second suspension order? - HELD THAT:- The plea of issuing two SCNs or that the license cannot be suspended or revoked twice on same issues does not survive as the action under Regulation 19 has to be taken immediately to restrain the CB from functioning. On receipt of the information on 27.09.2017, the order of suspension was passed immediately on 05.10.2017. Following the provisions of Regulation 19(2), CBLR, 2013 after granting an opportunity of hearing to the CB, further order with regard to revocation of suspension was passed, however specific liberty was granted to initiate action under CBLR, 2013 if new facts are established. On receipt of the offence report on 09.02.2018, immediate action was required to restrain the CB from indulging in any further activity which could be detrimental to the interest of the Revenue and therefore an order of suspension of license was passed on 15.02.2018 which was then confirmed on 12.03.2018 under Regulation 19(2) CBLR, 2013.
The order of suspension under Regulation 19 of CBLR, 2013 is required to be issued immediately to restrain him from functioning on the basis of that license and is in the nature of an interim measure. The dictionary meaning of the word “suspension‟ as per the Cambridge Dictionary is the act of stopping something happening, operating etc. for a period of time, meaning thereby that it is a temporary stoppage. In the present case, the matter was pending under enquiry and liberty was granted to proceed once additional facts emerge. So, it is not a case of double jeopardy. The final order revoking the license was passed only after following due process of law in terms of Regulation 20 of CBLR, 2013.
Whether the Custom Broker has violated the provisions of Regulation 11 (a), (d), (m), (n) (o) and 17 (9) of CBLR, 2013? - HELD THAT:- It stands proved that the CB has not discharged the obligations cast on him under the Regulation as the CB fully connived with the freight forwarder and therefore never verified the existence of the exporters or the documents submitted in this regard. The facts of the present case reflects that it is virtually a case of subletting the license as practically the entire transaction of export was controlled & managed by the Proprietor of the freight forwarder. Thus, any contravention of the obligations on the CB under the Regulations even without any intent would be sufficient to proceed for imposition of punishment as provided in the Regulations.
This being a case of facilitating the fraudulent exports carried out and it being duly proved during the inquiry proceedings that the exporters were non-existent, CB has failed to verify the correctness of the documents, violated the obligation as a custom broker under CBLR, 2013. Therefore, the Adjudicating Authority had rightly directed for forfeiture of the security deposit of Rs. 5 lakhs submitted by CB.
The facts of the present case clearly show the fraudulent manner in which the exports have been made where 90% of the goods were short and nearly 70 lakhs of rupees were taken as duty drawback thereby defrauding the revenue. The entire transaction was fraudulently conducted. The exporters were found to be fictitious, non-existent who were actually farmers and had no knowledge about their being exporters and therefore the CB could not bring them before the Customs Authorities. Neither the partners nor the G-Card holder of CB met the exporters. It has to be concluded that CB had put himself into the shoes of fraudsters who were using forged documents of fictitious persons who were actually not involved with the said fraudulent exports to claim duty drawbacks - Thus, the CB has violated the obligations cast on him under the Regulations as discussed above and hence the revocation of the license and the forfeiture of security deposit is justified.
Appeal dismissed.
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2023 (2) TMI 676 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS, NEW DELHI
Classification of imported goods - Electric Vehicle Kits - classifiable under Tariff Entry No. 8703 of the First Schedule to Customs Tariff Act, 1975 or not - eligibility of the import for S. No. 526A(1)(a) of the mega exemption notification, qualifying for 15% BCD rate for the kits or not.
Classification of the Electric Vehicle Kits of Volvo brand passenger vehicles - HELD THAT:- For determining the appropriate classification of goods being imported as kit comprising the items mentioned in the packing list referred to above, reliance needs to be placed on Rule 2(a) of the General Rules for Interpretation of Import Tariff (GIR in short), which provides that, “any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.”
In the instant case, the applicant has stated that they will be importing kits of passenger cars and it is also settled, if all the parts are presented in knocked down condition and they have the essential character of a complete article, they have to be assessed as complete article, in terms of said Rule 2(a) of GIR. In the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, then disassembled and imported in form of a kit. Therefore, notwithstanding the fact that at the initial assembling stage, they have not acquired the completeness of a car to be roadworthy, these kits have acquired the essential characteristics of motor vehicle to merit classification under Heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons.
Reliance placed in the case of M/S VOLVO AUTO INDIA PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS, BANGALURU AND COMMISSIONER OF CUSTOMS, CHENNAI [2022 (3) TMI 560 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS- NEW DELHI]. In this regard, it is also noted that the question relating to classification of the EV vehicle kits posed for advance ruling is sufficiently answered holding that they are classifiable under Heading 8703 at four-digit level.
The additional submission made by the applicant is referred wherein it has been mentioned that in exceptional cases, due to logistics and business considerations, one or more parts of the kit may have to be imported in a separate consignment through the same port, while majority of the parts of the said electric vehicle kit would still be imported in one consignment, and even in such case, all imports pertaining to one vehicle would be made in close proximity to each other and the relevant electric vehicle kit, to which it pertains would be clearly identified - the submission of the applicant that even in such exceptional cases, the classification of the electric vehicle kit would not be impacted and would Heading 8703, agreed upon.
Effective rate of duty applicable on the EV vehicle kits under Notification No. 12/2012-Customs, dated 17-3-2012, which has since been replaced by the Notification No. 50/2017-Customs, dated 30-6-2017, as amended - HELD THAT:- The applicant has clearly stated that the Electric Vehicle CKD kits to be imported by the applicant consist of approximately 105 parts/sub-assemblies, which are standalone and not attached to each other or any other parts, components or assembly. They have also added that going forward, the number of parts in which the vehicle is broken down could increase. Further, these components and parts are not mounted on a chassis or a body assembly - these CKD kits, as described in the application submitted before this Authority will fall under sub-category 1(a) and attract effective rate of BCD of 15%.
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