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2015 (3) TMI 1213

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..... egation 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 committed by the importer has been brought on record. The assessing authorities also verified the license at the time of Customs clearance and found nothing wrong with the licenses - duty not demandable from the appellant and the benefit of notification No. 98/2009 admissible - the confiscation as well as penalties not sustainable. Imposition of penalty on CHA under Sections 112(b) and Section 114AA of the Customs Act, 1962 - Held that: - the job of the clearing agent is to prepare documents 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 .....

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..... against export of 100 kg of assorted confectionary subject to the condition that the quantity of saffron is actually used in the export product is mentioned in the Shipping Bills. This shall be applicable on the exports made w.e.f. 25.4.2007. Similarly the export product biscuit is covered under SION E.5 in the 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 product under SION E.1, it was mandatory for the importer to produce evidence that the S/B mentioned that Saffron was actually used in the export product. Similarly, in respect of imports against DFIAs relating to export of biscuits covered by SION E.5 , the import of food flavour under Sr. No. 5(d) was subject to actual user condition with accountability of actual use. Further, the DFIA i .....

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..... med 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. The Commissioner denied duty free benefit to the appellant on account of alleged fraud committed by the original license holder even though the transferee importer i.e. the appellant, is not connected with any fraud. As the order has travelled beyond the show cause notice by alleging fraud, it is not sustainable. He relied on CCE Vs. Ballarpur Industries Ltd. 2007 (215) ELT 489 (SC) and CCE Vs. Toyo Engineering India Ltd. 2006 (201) ELT 513. 4.2 According to the Ld. Counsel, the DFIAs were referred 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 .....

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..... ional condition sheet attached to DFIA No. 0910049059 dt.27.9.2011 which states that the DFIA holder shall abide by other licensing 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 which is not otherwise permitted under statutory rules. He also relied on the Apex Court judgment in the case of Union of India Vs. Jain Shudh Vanaspati Ltd. 1996 (86) ELT 460 (S.C.) which held that show cause notice can be issued under Section 28 of the Customs Act without revising under Section 130, the order of clearance passed under Section 47 of the Customs Act. He relied on the case of East West Freight Carriers Pvt. Ltd. Vs. Commissioner of Customs (Export) 2014 (303) ELT 454 (Tri. Mum.) to state that Transfer of license in violation of Exim Policy is void ab .....

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..... ile endorsing transferability. Even in the case of license issued to M/s Laxmi, the transferee cannot be held responsible. It was held by the Honble Supreme Court in the case of Collector Vs. Sneha Sales Corporation - 2000(121) ELT 577 (S.C. ) that In the aforementioned decision of this Court it has been clearly laid down that in a case where the license is obtained by misrepresentation or fraud it is not rendered nonest as a result of its cancellation. In the present case the licenses were cancelled by order dt. December 18, 1986 after 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 conditions or the specifications provided therein. The view taken by the Tribunal is in accordance with the law laid down by this Court in the case of AV Industrie .....

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..... r 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 the duty free import cannot be attributed to any mistake on the part of the importer. The case of Air Travel Bureau Ltd- Delhi High Court- referred by the adjudicating authority does not apply in the present circumstances as no fraud or misrepresentation by the importer is proved. Rather in the case of Sampat Raj Dugar 1992 (58) ELT 163 (SC) it was held by the Honble Supreme Court that an import license cannot be cancelled retrospectively. Therefore, the benefit exists till the DFIAs are cancelled 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 .....

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..... ar as saffron is concerned indicates a conscious action or inaction on the part of the DGFT for which the blame cannot be put on the importer. As a matter of record we find that the duty demand in the case of DFIA issued to M/s. Laxmi International works out to only ₹ 19,98,891/- as against the total duty demand of ₹ 1,59,89,118/-. The reliance 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 a long period of time. The Supreme Court decision in the case of Jain Shudh Vanaspati (supra) was not a decision on merits but only disagreed with the decision of the High Court exercising power of writ under Article 226 to stultify investigations at the show cause stage. 7.6 The allegation against the appellant is that they are not eligi .....

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..... redit 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 factory or in the factory of his supporting manufacturer for the manufacture of dutiable goods and to submit a certificate, from the jurisdictional Central Excise officer within six months from the date of clearance of the said materials, that the imported materials have been so used: Provided that, in case, (a) materials are imported against an authorisation transferred by the Regional Authority, or (b) the imported materials are transferred with the permission of Regional Authority, then the importer 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 als .....

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..... ay be, the unutilized material may be transferred to any other manufacturer except to the unit availing the benefit of notifications, Nos. 49/03-CE and 50/03-CE both dated 10thJune,2003, 32/99-CE and 33/99-CE both dated 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 the said authorization and the bond required to be executed by the importer in terms of condition numbers (iii) or (iv) as the case may be 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 utilized in the factory of such supporting manufacturer for discharge of export obligation and the same shall not be tra .....

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..... r both. Condition No. (vii) alone governs the import made by a transferee licencee which is not disputed by Revenue to have been satisfied. Therefore, the appellant cannot be made to suffer in the present case. Therefore, we hold the view that duty is not demandable from the appellant and the benefit of notification No. 98/2009 is admissible. Consequently the confiscation as well as penalties are not sustainable. 8. Revenue is in appeal against the impugned order of Commissioner of Customs on the ground that the penalty under Section 114A imposed on the appellant is not adequate and the same needs to be enhanced to the extent of penalty equivalent to duty and interest. As we have already held that duty is not demandable and penalty is not required to be imposed, the question of enhancement in penalty does not arise. 9. Coming to the role of the clearing agent, we find that the job of the clearing agent is to prepare documents such as bill of entry properly and file the same along with supporting documents such as licenses wherever required. In this case the document namely the DFIA presented to the Customs is not a document prepared by the CHA. This document is a license i .....

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