TMI Blog2015 (1) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... also not in dispute that J M Baxi., was the authorized agents for the shipping line and were therefore entitled to make corrections. We fail to see how an inference of ‘forgery’ or manipulation of document can be reached when undisputedly the corrections were made by the shipping agency itself and not by the importer or any unauthorized third party. It is not as if every act of putting white ink is an act of manipulation or forgery, if the white ink is put to correct a mistake and is done by the author of the document or by a person duly authorized by that person, the same can only be construed as a ‘correction’ and not as a ‘manipulation’ or ‘forgery’. - application for additional evidence cannot be entertained in terms of the provisions of Rule 23 of the CESTAT Procedure Rules and that even otherwise the additional evidence does not further the case of the Revenue. Appellant had declared the imported goods as ‘Acid Oil’ while according to the Revenue the same were PFAD. In support of its contention the Revenue has primarily placed reliance on the test report of the Chemical Examiner, Visakhapatnam; his technical opinion; report of the Chemical Examiner, Kandla; as also statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clear that FFA content in oil is measured in terms of ‘Palmetic’ or ‘Steeric’. The technical literature produced do not state that the measurement of FFA in terms of ‘Palmetic’ is confirmatory of the oil being palm based. The show cause notice in the very first paragraph records and accepts that PFA and Acid oil fall under the same tariff classification and attract then same rate of duty. This being the accepted position, the conclusion in the opinion of the chemical examiner that the goods in question were ‘other than palm acid oil’ and that they had the characteristic of PFAD are both irrelevant and both insufficient for drawing an inference that the goods were other than ‘Acid oil’ as declared on the bill of entry and as covered by the advance licence. The finding of mis-declaration and the further finding that the goods imported were not covered by the description of the licence are therefore unsustainable. Merchant exporter who gets his goods manufactured from a supporting manufacturer is barred from using the duty free material for purposes other than discharge of the export obligation while for a manufacturer-exporter there is no such stipulation. The only stipulation q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RAVINDRAN AND MR. H.K. THAKUR, JJ. For the Appellant : Shri V.K. Jain, Shri Krishna Kumar, Ms.Dimple Gohil- Advocates For the Respondent : Shri Raju, Commissioner (AR) JUDGEMENT Per: M.V. Ravindran; These two appeals are directed against Order-in-Original No.KDL/COMMR/23/2011-12, dt.31.03.2012. 2. The relevant facts that arise for consideration are that the appellant (hereinafter referred to as VVF) is having manufacturing facility and had applied for and granted advance licence for import of duty free raw material for consumption thereof for manufacturing of final product for export purposes. In pursuance such advance licences issued, the appellant imported consignment of Acid Oil declaring the same as acid oil. On an intelligence gathered, the Revenue Department were of an impression that the appellant had actually imported Palm Fatty Acid Distillate (PFAD) which attracts duty and is not covered under the licences granted to the appellant and were also of the view that PFAD and acid oil are technically and commercially different products. The Revenue authorities visited the premises of the appellant herein and drew the samples of imported goods lyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional documents which were not part of original investigation. It is his submission that the departmental authorities did not recover these documents at the time of investigation and these documents were surfaced after the matter was listed for final disposal on an application made by the appellant. He would submit that the said additional documents, on which reliance is placed being not a part of the record, should not be admitted. 4. In our considered view, on perusal of the applications made by the departmental representative and on a specific query raised from the Bench, were informed by the Commissioner (A.R.) that these documents were not the part of the investigation and were collected by the department subsequently after the adjudication took place and more specifically when the matter was listed before the Tribunal. We deprecate the kind of applications made by the Department for adducing additional evidences which were not the part of the original investigation. On the face of it, these two applications need to be dismissed. Be that as it may, we consider the documents which were filed by the Revenue and will address to the applications in this order subsequently. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as relevant differentiating factors, 5 of these factors are supporting of the product being acid oil rather than PFAD; they being IV, PV, Aldehyde, colour and high FFA contents. It is his submission that the product imported by them conform to the specification of these 5 additional criteria. It is his submission that the only factor to which the appellants products which are imported do not conform is regarding kerotenoid contents; it is his submission that the parameters of kerotenoid value are not appearing in any authoratitive technical book; in the absence of such parameters, the conclusion reached by the chemical examiner needs to be rejected which has been amply demonstrated by the appellant by producing opinion of two independent technical experts i.e. UDCT Mumbai and Hard Court Butler Technological Institute Kanpur It is further submission that the chemical examiner s report is incorrect for the reason that the chemical examiner had analysed the product imported by the appellant with reference to the samples of PFAD procured from the market and also with the samples of acid oil prepared in his own laboratory. It is his submission that the samples which are produced in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted duty free material for manufacturing of final products which were cleared into DTA. He would then take us through the condition (viii) in the said notification and submit that the said condition specifically prohibits the sale or transfer of imported material as such or converting the same. He would further add that the said condition (viii) is in respect of merchant exporter and not applicable to a situation like manufacture of exporter as is appellants case. It is his submission the reading condition (vii) (viii) of the notification, the legislative intent seems to be clear which indicate that the Condition (vii) does not the imported material to be used only in export production and the said distinction has been ignored by the adjudicating authority in the impugned order. It is his submission that the requirement of using the imported raw material only in export production was a stipulation which existed in pre-decisor notifications like 149/95-Cus, 37/97-Cus, and 50/2000-Cus, and has been expressly removed while issuing Notification No.93/2004-Cus. It is his submission that the notification has to be read and interpreted on its plain term, is the law which has been settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould submit that the co-ordinate bench of the Tribunal in the case of Unimark Remedies Ltd in Final Order No.A/1258-1262/2014, dt.21.07.2014 has interpreted the said Notification No. 93/2004-Cus in a manner which is in favour of the Revenue. He would then take us through the findings recorded by the Bench in Para 14, 15 and 16 of the said order and submit that the findings are based upon various arguments put forth before the Bench. He submits that the arguments as to notification being issued for relaxing the condition of rigoruous policy was never made before the Bench in the case of Unimark Remedies hence on this question of law itself, the said order is distinguishable and the ratio laid down in that case would be based upon the facts and circumstances of that case. 6. Ld. Commissioner (AR) appearing on behalf of the Revenue, would submit that in order to promote export, Government of India comes out with various export promotion schemes to facilitate exporters. It is his submission that the main purpose of the scheme is to make the export competitive internationally and to ensure that the taxes and duties are not exported. In pursuance of such an export incentive, appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here any evidence that there was Behemic / Euricic acid in the goods imported. After taking us through the various technical literatures as to the contents of the goods, he would submit that content of C20 or C22 is indicator of non-existence in the palm oil in the goods which were imported by the appellant and Behemic / Euricic acid being C20/C22, could not have been manufactured by them from the goods which were imported. He would further submit that as per the ullage report dt.10.06.2006, the material loaded in tanks of PFAD; when the goods arrived at Kandla on 23.06.2006, the master of MV Chemrod Wing made a arrival notice where he declared arrival of PFAD which was subsequently changed and forged and the description of PFAD was removed and replaced by description PAO and there is no signature of either of the parties on the corrections. It is his further submission that the reliance placed on the expert opinion by the appellant is not correct as the said expert opinion does not say eurisic / behenic acid can be made out of fatty acid not containing any traces of eurisic / behenic acid. It is his submission that the appellants have deliberately with an intention to deceive, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph for the purpose. 6.2 It is further submission that at all stages viz. from application of licence to availment of benefit of notification, the appellant has accepted the condition of EXIM Policy and hence he has violated the provision of Condition (vii) of Notification No.93/2004-Cus. It is his further submission that the claim of the appellant that the colour test is irrelevant which is incorrect as colour test is one of the tests which indicate that the quality of the product and the source from where it has been obtained and kreiss test has been considered as most valid test to come to a conclusion. It is his submission that kreiss test is always a valid test for coming to a conclusion as to the impurities. For this purposes, he would rely upon the technical literature of Protocol for Testing of Ayurveda Siddha Unani Medicines, manual of methods of analysis of foods. It is his submission that the appeal deserves to be rejected. 7. In rejoinder, ld.Counsel would draw our attention to the applications made by the appellant to DGFT authorities. He would submit that the advance licence which is in question in this case has not been cancelled and the said application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined which reads as under: RULE 23. Production of additional evidence.- (1) The parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal, but if the Tribunal is of opinion that any documents should be produced or any witness should be examined or any affidavit should be filed to enable it to pass orders or for any sufficient cause, or if adjudicating authority or the appellate or revisional authority has decided the case without giving sufficient opportunity to any party to adduce evidence on the points specified by them or not specified by them, the Tribunal may, for reasons to be recorded, allow such documents to be produced or witnesses to be examined or affidavits to be filed or such evidence to be adduced. (2) The production of any document or the examination of any witness or the adducing of any evidence under sub-rule (1) may be done either before the Tribunal or before such departmental authority as the Tribunal may direct. (3) Where any direction has been made by the Tribunal to produce any documents or to examine any witnesses or to adduce any evidence before any departmental authority, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein and not on the basis of fresh reasons or evidence produced in an appellate proceedings, as held by the Supreme Court in the case of Mohinder Singh Gill Anr vs Chief Election Commissioner reported in (1978) 1 SCC 405. It was held by the Apex Court that the validity of an order is not to be judged by supplementing it with fresh reasons as otherwise, an order which is bad in the beginning may, by the time it comes to court on account of a challenge get validated by additional grounds later brought out. 9.4 It is not the Revenues case that they were not given sufficient opportunity at the stage of investigation or adjudication to produce such evidence or that such evidence could not be produced as it was a part of some privileged communication or record which could not have been produced. It is settled law that additional evidence cannot be brought on record to fill up, lacuna or gap, if any, in the investigation as also that the Revenue cannot undertake investigation in a piecemeal manner. The application for additional evidence filed by the Revenue is therefore devoid of any merits and therefore cannot be allowed. However, since both sides have taken a lot of effort and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. We find these suggestion and allegations to be totally baseless and presumptuous. 9.7 In the application for additional evidence filed by the Revenue it has been contended that the vessel arrival declaration which have been annexed as Exhibit A-1 and A-2, show manipulation as in one of the arrival reports. It is stated in the application that 2000 metric tonnes of PFAD was declared as arrived through vessel MT Chemrod, and in the said arrival report the description was corrected by hand and instead PAO was mentioned therein. While this change in description could only have been explained by the Shipping Agents, it is very likely that an incorrect description of the product had been corrected by the shipping agent, by applying white ink and writing the description PAO in hand. The fact that such a change was done by the Shipping Agent is not disputed. It is also not in dispute that J M Baxi., was the authorized agents for the shipping line and were therefore entitled to make corrections. We fail to see how an inference of forgery or manipulation of document can be reached when undisputedly the corrections were made by the shipping agency itself and not by the importer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atsoever for holding that the goods imported had been mis-declared as Acid Oil . 10.2 The entire evidence which has been relied upon in the notice in the form of the test results of the Chemical Examiner and the opinion of the Chemical Examiner, Visakhapatnam proceed on the presumption that the goods were declared by the Appellant as Palm Acid Oil and that they were required to examine as to whether what was imported was Palm Acid Oil or not. None of the Chemical Examiners have in their test reports examined and opined on the issue whether what had been imported was Acid Oil or not. 10.3 It is not in dispute that, Acid Oil is a by-product that arises in the process of chemical refining of any oil. On the other hand, Palm Acid Oil is specie in the genus of Acid Oil and covers only such Acid Oil which arises in the chemical refining of palm oil. As such the test results and the opinion of the Chemical Examiner are totally irrelevant to the dispute in hand as the same have been issued on the mistaken presumption that what was required to be examined was whether the goods imported were Palm Acid Oil or not. The adjudicating authority has in the impugned order refused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is baseless and incorrect in as much as from the technical literature produced, it is very clear that FFA content in oil is measured in terms of Palmetic or Steeric . The technical literature produced do not state that the measurement of FFA in terms of Palmetic is confirmatory of the oil being palm based. The show cause notice in the very first paragraph records and accepts that PFA and Acid oil fall under the same tariff classification and attract then same rate of duty. This being the accepted position, the conclusion in the opinion of the chemical examiner that the goods in question were other than palm acid oil and that they had the characteristic of PFAD are both irrelevant and both insufficient for drawing an inference that the goods were other than Acid oil as declared on the bill of entry and as covered by the advance licence. The finding of mis-declaration and the further finding that the goods imported were not covered by the description of the licence are therefore unsustainable. 10.4 The Learned Commissioner AR appearing for the Revenue has contended that the purchase order placed by the Appellant did not refer to the very same specification which was spel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of which an application for licence was made. In our view this submission is totally irrelevant, as whatever may been the description of the inputs in the application, the licence as issued to the importer described the inputs as acid oil and also prescribed certain technical specification, all of which are admittedly met. It is significant that the licence that was issued to the Appellant was not containing the same description as claimed in the application for issue of licence. What was requried to be seen was the description on the licence and not the description on the application. If the Customs authorities felt that the licensing authorities had been mis-lead and the licence had been obtained through mis-representation as is now being suggested by the learned AR, the only course of action open to Revenue was to have brought this fact to the notice of the licencing authority, whereupon the licensing authority would examine whether or not there was any mis-representation in obtaining the licence. It is significant that in this case such reference was indeed made to the licensing authority as recorded in the Show Cause Notice. The Licensing authority apparently did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported consignment did not exceed 20%, it cannot be argued that the licence did not cover the goods. 10.6 The Learned Commissioner AR has also contended that the goods imported may not be of the specified description, as FFA% in the goods imported on testing were found to be between 81.48 to 91.23 % whereas it should have been between 70 to 80%. This contention is also untenable inasmuch as while in the application for grant of the licence the Appellant had stated that Acid oil would be such which had FFA 70-80%, however the licence which was issued to it as appearing on Page 229 Paper Book-I merely specifies that the item for import is Acid oil , without there being any specification as to the quality and the amendment sheet thereto which is at Page 228 states that the item to be imported under the licence is Acid Oil; Contents: TFM 94%, M/V 4%; Euricic Acid 20% max. The licence issued to the Appellant did not specify FFA as a limiting factor, unlike what has been argued by the Learned Commissioner AR. 10.7 The Learned Commissioner AR has also contended that Appellant could not have used any product of Palm origin for manufacture of Euricic Acid as oils of Palm Origin do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 4.1.5 of the FTP regarding the utilisation of the imported duty free material for manufacture of goods to be cleared in the Domestic Tariff Area only after fulfillment of export obligation. This position clearly emerges if one compares condition (vii) and (viii) of Notification No.93/2004-Cus dated 10.9.2004, the notification with which we are concerned in the present proceedings. The said two conditions are being reproduced herein below for ease of reference. (vii) that the said licence and the materials shall not be transferred or sold; (viii) that in relation to the said licence issued to a merchant exporter, - (a) the name and address of the supporting manufacturer is specified in the said licence and the bond required to be executed by the importer in terms of condition (iii) shall be executed jointly by the merchant exporter and the supporting manufacturer binding themselves jointly and severally to comply with the conditions specified in this notification; and (b) exempt materials are utilised in the factory of such supporting manufacturer for discharge of export obligation and the same shall not be transferred or sold or used for any other purpose by the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Subsequently the Central Government has consciously and deliberately relaxed this condition with respect to advance license for a manufacturer- exporter. It is settled law as laid down by the Apex Court in the case of Commissioner of Trade Tax vs Kajaria Ceramics Ltd that were Notification are issued under the same section and for the same purpose and are a part of a chain of progress without there being any overlap, then for the purpose of resolving the ambiguity the contents of the previous or subsequent notification can be looked into. The ratio laid down by the Apex Court applies in all fours to the facts of the present case as the Advance Licence Notifications are also a part of a chain of notification issued from time to time without any overlap, and accordingly the difference in the language of the Notification over a period of time has to be taken note of and given effect to. 11.3 A long line of decisions of this Tribunal have been cited by the Learned Counsel for the Appellants to contend that a prohibition against transfer or sale of duty free imports does not prohibit an importer from using the duty free material for domestic production. The decisions of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government under Section 25 of the customs Act, 1962, it is always open to the Central Government to relax any obligation or condition of the Policy. To illustrate, a statutory document such as the Customs Tariff Act, 1985 may provide a rate of duty of 20% for a particular product but the Exemption Notification may exempt the same product from entire duty. Even though the Schedule to the Customs Tariff is a statute enacted by the Parliament, the Central Government is empowered by statute to grant exemption from duty by issuing a notification. In other words, any statutory obligation can be relaxed by the Central Government while exercising the powers conferred upon it by the statute to grant exemption under Section 25 of the Customs Act. It is therefore natural for an Exemption Notification to contain provisions which are less onerous compared to the original Policy. The difference between the provisions of the Exemption Notification and the Policy (or the statute for that matter) cannot be regarded as a situation of conflict between the Policy and the Notification. Coming to the facts of the present case, it can be seen that insofar as a manufacturer-exporter is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese vs CC 2006 (202) ELT 7 (SC). Such an order is to be considered as rendered sub silentio and is therefore not a binding precedent. 11.4 For the aforesaid reasons we hold that the benefit of duty exemption under Notification No.93/2004 was wrongly denied to the subject goods and the finding that there was a contravention of condition No.(vii) of the said Notification is totally incorrect. 12. We accordingly hold that the goods imported by the Appellant were covered by the description of the licence produced by the Appellant and there was no contravention of condition (vii) of the Notification No.93/2004-Cus in using the goods for domestic production. The alternative contentions of the Appellant that the material was imported as replenishment material in respect of another license held by it where under it had already fulfilled the export obligation is not being examined as the Appellants are entitled to succeed on its first entitlement itself as also on various issues. The demand for duty, interest and penalties as also the order of confiscation are consequently set aside. The Appeal of the Appellant company is allowed. Consequently the Appeal filed by its Managing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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