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M/s. BDB Exports Pvt. Ltd., Shri Nirmal Kumar Bhura Versus Commissioner of Customs (Prev.) , West Bengal, Kolkata

2016 (9) TMI 1087 - CESTAT KOLKATA

Denial of benefit of Notification No.105/99-CUS dated 10.08.1999, as amended - imposition of penalty under Section 112(a) of the Customs Act, 1962 - confiscation of imported goods - classification - processed cloves - Notification No.73/95-CUS(NT) dated 07.12.2005 - The Customs Tariff (Determination of Origin of Goods under Agreement on SAARC Preferential Trading Arrangements) Rules, 1995 (SAPTA Rules) - Bangladesh origin - valuation of cloves - whether the main appellant is eligible to avail pa .....

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ts processed in the member countries are eligible for concessions under SAPTA Rules when the base goods are not produced/manufactured in the contracting countries. The only requirement under these Rules is that a certification of origin has to be produced for availing concessions as issued by the designated authority of Govt. of exporting contracting state and notified to the other contracting states in accordance with the certification procedures mentioned in the form annexed to SAPTA Rules. .....

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- Certificates of origin produced by the Appellant cannot be discounted. There is no evidence on record that designated authority of Bangladesh under SAPTA Rules was maliciously involved with the supplier of cloves and the Appellant. - Processing of cloves - Held that: - minor activities done by the supplier will not make the goods as processed cloves and that such processed cloves come into existence only when oil is extracted from natural cloves. - Only an appropriate authority of Ban .....

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he only requirement for the satisfaction of the Customs department under Notification No.105/99-Cus dated 10.08.1999 - confiscation of goods and imposition of penalties fails - appeal allowed - decided in favor of appellant. - Appeal Nos. C/69 & 70/07 - ORDER NO.FO/A/76027-76028/2016 - Dated:- 15-9-2016 - Shri H.K.Thakur, Member(Technical) And Shri P.K.Choudhary, Member(Judicial) Shri Dr.Samir Chakraborty, Sr.Advocate, Hasmukh Kundalia & Arnab Chakraborty, Advocates for the Appellant Shri K. .....

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sed upon the Director under Section 112(a) of the Customs Act, 1962. 2. Dr.Samir Chakraborty (Sr.Advocate), Shri Hasmukh Kundalia (Advocate) and Shri Arnab Chakraborty (Advocate) appeared on behalf of the Appellants. Dr.Samir Chakraborty submitted that main Appellant imported three consignments of processed cloves as detailed in para-2 of the Order-in-Original dated 28.02.2007 and claimed the benefit of Notification No.73/95-CUS(NT) dated 07.12.2005 prescribing The Customs Tariff (Determination .....

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s from prescribed authority in Bangladesh as per SAPTA Rules and that Revenue has not alleged that the said certificates of origin are forged. That so long as the certificate of origin continue to remain in force department cannot deny the benefit of Notification No.105/99-Cus. Learned Sr.Advocate made the Bench go through the certificates of origin issued by the appropriate authority in Bangladesh. Learned Sr.Advocate also relied upon the following case laws in support of his arguments:- (i) Zu .....

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is to examine as to what amounts to processing of cloves. That it now well settled by the superior courts, including Apex Court, as to what can constitute processing and manufacture. That every activity undertaken from Handling, Cleaning, sorting and upto packing will amount to process. He relied upon the following case laws:- (i) Servo-Med Industries Pvt.Ltd. v. CCE [2015 (319) ELT 578 (SC)] (ii) Chandeswar Singh v. State of Assam [1978 (42) STC 424(Gau)] 2.2 That show cause notice also proceed .....

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een duly certified by the appropriate authority as required under SAPTA Rules. That neither Notification No.73/75-CUS(NT) dated 07.12.1995 nor Notification No.105/99-CUS dated 10.08.1999 authorize any officer/agency in India to question the genuineness of the certificates of origin except as provided in para-9 of the Schedule to Notification No.73/75-CUS(NT) 2.4 That various statements and evidences of authorities in India by the department is a futile exercise as neither any such authority nor .....

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ning, grading, packing etc. does not amount to processing of cloves. That processed cloves will be only these cloves from which oil has been extracted. That even the Appellant has accepted activities of drying, grading and packing cannot lead to value addition of 69%. He made the Bench go through Q.No.22 of the statement dated 01.06.2005 of Shri Nirmal Kumar Bhura, Director of the main appellant. That Chairman of Spices Board of India vide letter dated 12.07.2005 has opined that processes carrie .....

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when read with SAPTA Rules. As per the first Proviso to this Notification, the Assistant Commissioner/Deputy Commissioner/Joint Commissioner has to be satisfied that imported goods are in accordance with the Customs Tariff (Determination of Origin of Goods under the Agreement on SAARC Preferential Trading Arrangement) Rules, 1955- [SAPTA Rules]. As per Rule 4 of the SAPTA Rules read with its Schedule even products processed in the member countries are eligible for concessions under SAPTA Rules w .....

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pellant where percentage of value addition as per SAPTA Rules was also indicated. Adjudicating authority has not accepted the value addition indicated in the certificate of origin but has gone with the investigation indigenously to allege that value addition cannot be to the extent claimed by the Appellant and also that activities undertaken by the supplier of cloves does not amount to processing of cloves. It is observed from various provisions of SAPTA Rules and Notification No.105/99-Cus date .....

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t. In that report they had indicated that for the expansion of the fertilizer project they needed an extra item of capital goods, namely, 6MW Captive Power Plant. In their application, the assessee had made it clear that the fertilizer project was dependant on continuous flow of electricity, which could be provided by such Captive Power Plant. Therefore, it was not open to the Revenue to reject the assessee s case for nil rate of duty on the said item, particularly when the certificate says so. .....

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a project is to be installed in an area where there is shortage of electricity supply and if the project needs continuous flow of electricity and if that project is approved by the Sponsoring Ministry saying that such supply is needed then the Revenue cannot go behind such certificate and deny the benefit of exemption from payment of duty or deny nil rate of duty. To the said effect is the judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra) in which it was held that t .....

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d and the said certificate, even as on date, has not been withdrawn or cancelled for any alleged violation of the condition by the appellant. Unless the said certificate is cancelled, the Customs Authorities cannot impose customs duty. The seizure of the equipment is only a consequential act that would follow the cancellation of the certificate issued in favour of the appellant. So long as the certificate is not cancelled, the respondents could not, in our opinion, have initiated seizure proceed .....

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ted by the respondents is not in accordance with law. The impugned order of the learned Single Judge, in these circumstances, requires to be set aside and accordingly the same is set aside. 4.3 CESTAT, Delhi in the case of Dhar Cement Ltd. vs.- CCE Indore(Supra) after relying upon case laws of Supreme Court and Karnataka High Court, held as follows:- 7. We have heard both sides and examined the appeal records. This is the third round of litigation in the present case. The issue involved is the i .....

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ces such a certificate is to be acted upon. The Hon ble Supreme Court directed this Tribunal to examine the various material relied on by the Revenue to contest the appellant s claim for exemption. We perused of the impugned order which was passed after the specific direction of this Tribunal to approach the competent authority for re-examining all the facts, material, evidence, furnished by both the sides to certify the installed capacity. As per the direction of this Tribunal the Director of I .....

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s submitted by the Revenue his office is in agreement with the clarification given by the appellant that their annual installed capacity was 1,98,000 M.T. and they were capable to produce 25% extra, which comes to 2,47,500 T.P.A., for which there was no restriction from the Government end. We have noted that all the evidences available with the Department have been submitted to the Commissioner of Industries who reiterated the certificate already issued. In spite of such confirmation by Commissi .....

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s themselves suggest that installed capacity of their plant was much more than 1,98,000 T.P.A. Accordingly, he held the appellant is not eligible for the concession. We find that while coming to such conclusion he has acted apparently, as appellate authority with reference to certificate issued by the competent authority in terms of the notification. We find the original authority has no such legal powers to sit on judgment on the certificate issued by the competent authority designated by the G .....

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o be considered. 4.4 In view of the above observations and the ratios laid down by the Courts certificates of origin produced by the Appellant cannot be discounted. There is no evidence on record that designated authority of Bangladesh under SAPTA Rules was maliciously involved with the supplier of cloves and the Appellant. 5. Adjudicating Authority has relied upon some indigenous sources to conclude that neither the imported goods are processed cloves nor the value addition to extent claimed is .....

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given as to why request of the appellant for cross-examination is not acceptable. In the absence of cross examination the evidentiary value of the relied upon witnesses is lost. Secondly, Shri Doletram T.Chhabria is also an exporter and importer of spices whose business is threatened by concessional rate on cloves under SAPTA Rules. Being an interested party his statement otherwise also can also not be relied upon and used against the Appellants. It is observed from the SAPTA Rules that the conc .....

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tigation creating confusion in extending the exemption benefits. As already observed a certificate of origin issued by the designated authority cannot be dishonoured unless cancelled by the same authority. 5.1. On the issue of processing of cloves it is the case of the department that minor activities done by the supplier will not make the goods as processed cloves and that such processed cloves come into existence only when oil is extracted from natural cloves. It is correctly argued by the Sen .....

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i High Court vide Order dated 30.08.1978, in the case of Chandreswar Singh v. State of Assam [1978 (42) STC 424 (Gau.)], held that when leaves and roots are removed from the onions then such onions become processed onions. Following observations were made by Hon ble Gauhati High Court :- To put the argument of the learned counsel in nutshell, his contention is that a person who sells onion produced in Assam is not a dealer inasmuch as onion is neither manufactured nor made nor processed. On this .....

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ds manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced. In support of this contention, the learned counsel has relied on State of Madhya Pradesh v. Bhailal Bhai, Firm A.T.B. Mehtab Majid and Company v. State of Madras and State of Rajasthan v. Ghasiram Mangilal. On the other hand, Mr.Goswami, learned counsel for the State of Assam, contends that there is no discrimination between onion imported fr .....

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to treatment or process . In Nilgri Ceylon Tea Co. v. State of Bombay, Shah, J. as he then was, observed as follows: The expression process has not been defined in the Act. According to Webster s Dictionary process means to subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development or preparation for the market, etc., to convert into marketable form, as livestock by slaughtering, grain by milling, cotton by spinning, milk by pasteu .....

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cess . In Webster s New International Dictionary, Vol.II, besides other things, process has been defined to mean a course of procedure, something that occurs in the series of actions . Now, it is common knowledge that the onion has its roots under the earth with coats of bulbs also and its leaves sprout on the surface of the earth. It is removed a long with the root, the leaves are dried up, and the main part which may be called bulb is exposed in the sunshine and after the leaves have dried up .....

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