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2015 (3) TMI 1213 - CESTAT MUMBAI

2015 (3) TMI 1213 - CESTAT, MUMBAI - TMI - Denial of benefit of notification No. 98/2009-Cus dt. 11.9.2009 - demand of duty - imposition of penalty under section 114A and under Section 114AA of the Customs Act, 1962 - import of Saffron - assorted confectionary and biscuits - DFIA license - actual user condition - whether the import of Saffron under the subject DFIAs was eligible for exemption? - whether the DFIAs on the basis of which exemption was availed were subject to the condition that : (i .....

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uty free import is permissible on the basis of the DFIAs presented to the Customs when there is no allegation that the DFIAs were obtained on account of fraud committed by the importer. The importer is not responsible for the transfer conditions imposed by the DGFT on the licenses when they are transferred to the importers by the original license holder. If at all, the actual user condition on the body of the DFIA was mandatory for the licensing authority. - No evidence whatsoever, of fraud .....

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nts such as bill of entry properly and file the same along with supporting documents such as licenses wherever required. The document namely the DFIA presented to the Customs is not a document prepared by the CHA. This document is a license issued by the DGFT. CHA cannot be faulted for submitting documents issued by DGFT. The Customs also assessed the goods as per the DFIA issued by the DGFT. Therefore the CHA cannot be held responsible for mistakes, if any, in the document i.e. DFIA issued by t .....

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cided against Revenue. - Appeal No. C/90203 & 90204/14 & C/85353/15 - 1134 to 1136/15-CB - Dated:- 1-5-2015 - Anil Choudhary (Judicial Member) And P. S. Pruthi (Technical Member) For the Appellant : Anil Balani, Advocate For the Respondent : S. J. Sahu, Asst. Comm. (AR) ORDER P. S. Pruthi (Technical Member) 1. Appeal has been filed by first Appellant USMS Saffron Co, against Order-in-Original No.CAO/CC/AKG/02/2014 ADGN (X)/ACC dated 28/10/2014 passed by Commissioner of Customs (Export), Mumbai, .....

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higher penalty against the first Appellant. 2. The appellant M/s. USMS Saffron Co. imported Saffron under 10 Bills of Entry and availed nil rate of duty benefit under Notification No. 98/2009. They submitted transferable DFIAs Licenses for grant of benefit under the said notification. The DFIAs are transferable after redemption. The DFIAs were issued against the export of assorted confectionary and biscuits covered under standard input output norms (SION) E.1 & E.5 respectively. The import .....

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Handbook of Procedure Volume II (2009-2014). This SION E.5 was amended vide DGFT Public Notice No. 84/2009-14 dt.23.7.2010 by inclusion of a Note which reads as import item at Sr. No. 1,2,3,4 &5 shall be allowed with actual user condition and with accountability of actual use on the export side. The item Saffron is covered under the product Food Flavour against S.No 5 (d) of the SION E-5.According to Revenue, in respect of imports against the DFIAs covering assorted confectionary as export .....

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gn Trade Policy. It was noticed that the import product food flavours appeared at Sr. No. 8 of the DFIA authorization presented by the appellant whereas it should have been appearing at SrNo. 5 (d) as per SION E.5 norms. The allegation against the appellant is that they are not the exporter of goods, have not accounted for actual use of saffron in the export product, thus violating the SION Norm E.5. Similarly, they did not produce evidence regarding actual use of saffron in the export product i .....

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the DFIAs. The matter was adjudicated by the Commissioner as mentioned in para 1 above. 3. Heard both sides. Both sides gave written submissions also. 4. The main contention of the appellant is that the DFIAs issued against SION E.1 did not mandate the requirement of actual use of Saffron in the export products and its mention in the Shipping Bill. Further, that the licensing authorities also did not endorse the requirement of Public Notice No. 84/2009-14dt.23.7.2010 on the body of DFIAs. Furth .....

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ndition in the DFIA. 4.1. The Ld. Counsel emphasized that the six DFIAs under consideration relating to the 10 Bills of Entry were duly examined by the assessing authorities and duty free import was allowed without any post-import actual user condition. The adjudicating authority confirmed the demand under Section 28 of the Customs Act, holding that a fraud had been committed but the demand notice dt. 30.11.2013 did not allege any fraud and was issued within one year of the clearance of goods. T .....

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ed to the DGFT who have not cancelled or amended any of the DFIAs. Therefore the Commissioner has pre-judged the issue in coming to the conclusion that the DFIAs were not valid for duty free import of saffron. In their written submissions submitted on 30th March, the appellant presented evidence to claim that the practice of issuing similar DFIAs with endorsement of transferability is universally followed by DGFT at Rajkot, Hyderabad, Mumbai, Bangalore, Ludhiyana, Kolkata, Bhopal, New Delhi, Pun .....

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on 28 unless the assessment orders are reopened. He relied on the Supreme Court judgement in the case of Priya Blue Industries Ltd. Vs. Commissioner of Customs (Preventive) 2004 (172) ELT 145 (S.C.) which was followed by CESTAT in the case of Wipro Ltd. Vs. Commissioner of Customs, Chennai 2005 (189) E.L.T. 289 (Tri.Bang.). 5. The CHA M/s. Jani through their counsel represented that although show cause notice was issued for imposing penalty under Sections 112(a) (para 12 of SCN) & 114 AA, th .....

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DFIAs does not arise. 6. The Ld. AR appearing for Revenue reiterated the findings of the Commissioner. On a query from the Bench as to how endorsement of transferability was made on the license by the DGFT authorities, the Ld. AR informed that the matter had been taken up with the licensing authority by the Commissioner of Customs. The licensing authority vide their letter dt. 16.10.2014 replied to the Commissioner that the benefit of transferability must be denied, due recovery may be made and .....

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censing conditions appearing in the Handbook of Procedures. Therefore, the importer cannot plead ignorance about the conditions attached to the DFIA. 6.2. Ld. AR relied on the case of Polyplex Corporation Ltd. Vs. Joint Secretary, Finance 2014 (306) E.L.T. 24 (All.) in which it was held that an executive order laying down something otherwise than what is prescribed in the notification is not permissible in law and mere executive decision cannot authorize the authorities concerned to do something .....

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to state that Transfer of license in violation of Exim Policy is void abinito. 7. We have carefully gone through the facts of the case and the submissions made by both sides. The issue to be decided is whether the import of Saffron under the subject DFIAs was eligible for exemption. To decide this a view has to be taken whether the DFIAs on the basis of which exemption was availed were subject to the condition that : (i) In respect of import against export of assorted confectionery, the quantit .....

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e Customs when there is no allegation that the DFIAs were obtained on account of fraud committed by the importer. The importer is not responsible for the transfer conditions imposed by the DGFT on the licenses when they are transferred to the importers by the original license holder. If at all, the actual user condition on the body of the DFIA was mandatory for the licensing authority. In the present case, no evidence whatsoever, of fraud committed by the importer has been brought on record. The .....

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d, which is not so in the present case. Similarly in the case of Nippon Bearings 2014(304) ELT 688 (Bom) the Honble High Court held that there was no valid license at the time of importation. In the present case no deliberate or even unintentional omission or commission by the importer is noticed by us. The DFIAs are purchased by the transferee in the open market and they cannot be held responsible for omissions, if any, made by the Licensing authorities while endorsing transferability. Even in .....

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ter the goods had been cleared. The Tribunal was, therefore, right in holding that the import of the goods was not in contravention of the provisions of import and export order.Further the Honble Bombay High Court held in the case of Global Exim Vs. Commissioner 2010 (259) ELT A139 (Bom.) that ..even during the course of hearing the Ld. Counsel appearing for the Revenue was unable to point out from any of the documents available on record that the import was not in accordance with the license co .....

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by canceling licenses. Instead of taking action to cancel the licenses if it was of the view that the same have been obtained through misrepresentation, they simply asked Customs to recover the duty in one case (Laxmi). The decision of Bombay High court in the case of AV Industries (supra) supports the view that . when the import is in accordance with the import license issued to the petitioner, the respondents cannot take shelter under the import policy and purport to take action against the pe .....

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to cancel the license we do not appreciate its impact on the importer whose action is bona fide in terms of the High Court judgment in the case of A.V. Industries (supra). 7.3. We have seen the additional condition sheet which requires the DFIA holder to abide by the other licensing conditions appearing in the Handbook of Procedures. However, the same sheet also states that the Customs shall thoroughly verify the imports allowed as per SION SLNO. E.1 of HBP (Vol.II) as amended from time to time .....

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lowing clearance of imports. In the present case, neither the Customs reverted to the licensing authority nor the licensing authority rectified the license before allowing clearance. 7.4 The appellant have submitted copies of several DFIAs which are similarly placed and issued against SION E-1 and SION E-5. These DFIAs also do not bear the note under SION E-1 or the condition of Public Notice No. 84/2009-14 under SION E-5. A widespread issue of such authorizations indicates a practice. Therefore .....

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led retrospectively. 7.5. We note that even in the case of the DFIA issued to M/s. Laxmi International, the allegation that the DFIA applicant had manipulated the Sr. Nos. of import list by indicating items at Sr. No. 5 a, b, c, and d of the relevant SION as sr. No. 5,6,7& 8 in the application to escape the restrictions given by the footnote of SION E-5 is unsustainable as far as the appellant is concerned. Note 2 at the bottom of the License allows transferability for items at 6 to 9 and th .....

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us of the DFIA from AU to Transferable. In the amendment Sheet No.3 there is no change for Flavours. The AU restrictions are mentioned only against items other than Sr. No. 5(iii) which remains as Flavourswithout restricting the quantity or seeking the end use or the data of shipping bills. (b) In the case of DFIA No.0910049059 dated 27.09.2011 issued to Shoubhagya Confectionary, Amendment Sheet-1 refers to entry Flavours at Sr. No. 06 of list of import items and mentions the quantity of 238.20 .....

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rsappears at Sr. No. 06 of list of import items and in the amendments Sheet No.1 dated 14.10.2011 there is no restriction in respect of this entry whereas the restrictions are specifically mentioned against item No. 1 & 2 viz. Sugar and Liquid Glucose etc. The above shows that the restrictions appearing in the PN/SION norms relating to the individual items are invariably mentioned by the LA in the License at the time of issue or on transfer. If a particular DFIA does not contain an entry for .....

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ance placed by the Ld. AR on the case of Polyplex Corporation is not appropriate in the circumstances of the present case. In that case it was held by the Honble High Court that rebate cannot be denied on the basis of a Board Circular when it is permissible under the Rules. The present situation is different because Customs have to allow the import on the basis of the DFIA presented to them. It is for the DGFT authorities to amend the license which they have chosen not to do even after lapse of .....

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i) that the description, value and quantity of materials imported are covered by the said authorization and the said authorization is produced before the proper officer of customs at the time of clearance for debit: Provided that in respect of resultant product specified in paragraph 4.32.3 of the Hand Book of Procedures (Vol.I) of the Foreign Trade Policy, the materials permitted in the said authorisation or a duty free import authorisation for intermediate supply, as the case may be, shall be .....

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roduct are endorsed on the said authorization: Provided that where import takes place before fulfillment of export obligation, the quantity and Free on Board value of the resultant product to be exported are endorsed on the said authorization; (iii) that in respect of imports made before the discharge of export obligation in full, the importer at the time of clearance of the imported materials executes a bond with such surety or security and in such form and for such sum as may be specified by t .....

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obligation in full, if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or CENVAT Credit under CENVAT Credit Rules, 2004 has been availed, then the importer shall, at the time of clearance of the imported materials furnish a bond to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, binding himself, to use the imported materials in his fact .....

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ter shall pay an amount equal to the additional duty of customs leviable on the materials so imported or transferred, but for the exemption contained herein, together with interest at the rate of fifteen per cent. per annum from the date of clearance of the said materials: Provided further that no such amount shall be payable in respect of Authorizations issued from 1.5.2006 to 31.3.2007: Provided also that if the importer pays additional duty of customs leviable on the imported materials but fo .....

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ules, 2002 or CENVAT credit under CENVAT Credit Rules, 2004 has not been availed and the importer furnishes proof to this effect to the satisfaction of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs as the case may be, then the imported materials may be cleared without furnishing a bond specified in condition (iv); (vi) ..... (vii) that the export obligation as specified in the said authorization (both in value and quantity terms) is discharged within the period spec .....

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satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within a period of sixty days of the expiry of period allowed for fulfillment of export obligation, or within such extended period as the said Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may allow; (ix) that exempt materials shall not be disposed of or utilized in any manner, except for utilization in discharge of export obligation, before the .....

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ed 8thJuly, 1999 , 8/04-CE dated 21stJanuary,.2004, 20/07-CE dated 25thApril,.2007, 56/02-CE and 57/02-CE both dated 14thNovember, 2002, , 71/03-CE dated 9thSeptember,.2003, 56/03-CE dated 25thJune,.2003 and 39/01-CE dated 31stJuly,.2001, for processing under actual user condition after complying the central excise procedure relating to Job work; (x) that in relation to the said authorization issued to a merchant exporter,- (a) the name and address of the supporting manufacturer is specified in .....

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or any other purpose by the said merchant exporter until the export obligation specified in condition (vii) has been discharged in full. 2B. After discharge of export obligation as specified in condition (vii) of paragraph 1, the Regional Authority shall permit transfer of the said authorisation and/or the goods imported under it subject to such conditions as may be specified Para 2B lays down the condition under which the regional licensing authority shall permit transfer of the said authorizat .....

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es Vs. Commissioner 1999 (108) ELT 818 (Tri.) which held that Bond/Le-gal undertaking or the declaration has to be executed by the person (importer) who is to discharge the export obligation i.e. it has to be a person in whose name the licence stands i.e. before the licence is made transferable to another person. In other words, condition No. (ii) of the Notification does not concern a transferee i.e. the appellant herein. Condition Nos. (iii) & (iv) are purely procedural and not in controve .....

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he burden of proof cast on him to claim the benefit of the notification. Here in this exemption notification the expression importer applies to two persons - One is a licencee in whose name the VBAL has been originally issued and the other is a transferee of the licence. Various conditions of the notification may be required to be fulfilled by one, or other person or both. Condition No. (vii) alone governs the import made by a transferee licencee which is not disputed by Revenue to have been sat .....

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