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M/s. Kothari Food & Fragrance Pvt. Ltd., Shri Vikram Kothari, Director Versus C.C.E., New Delhi

2017 (9) TMI 1144 - CESTAT NEW DELHI

Redemption fine - penalty - transfer of DFIA license - clearance of pan masala, pan masala gutkha in domestic market as well as are exporting the same - N/N. 40/2006-Cus dated 01.05.2006 - Held that: - N/N. 40/2006 ibid clause 1 provisio provides that in respect of resultant products specified in para 4.55.3 of the handbook of procedures, the material permitted in the said authorization or the duty free authorization or the intermediate supply shall be for technical characteristic and specificat .....

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icable if DFIA has been endorsed as transferrable after 01.08.2013. Admittedly, there is no dispute in this case that DFIA has already been transferred. Therefore, the provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not applicable to the facts of this case. - As appellant has exported the goods availing the benefit of N/N. 40/2006-Cus dated 01.05.2006 and complied with conditions thereof. Therefore, the proceedings are not sustainable against the appellant - as the DIFA .....

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e appellant Present Shri K. Poddar, DR for the respondent ORDER Per: Ashok Jindal The appellants are in appeal against the impugned order imposing redemption fine and penalty. 2. The facts of the case are that the appellants are clearing the goods namely pan masala, pan masala gutkha in domestic market as well as are exporting the same. The appellant made the export under DFIA license scheme and importing natural essential oil at nil rate of duty under notification no. 40/2006Cus dated 01.05.200 .....

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rfume was also recorded. As per the chapter 4 of HBP related to DFIA, the policy circular no.57/2009-14 dated 06.03.2012 was issued in relation to para 4.32.2 of HBP (2009-14) which clarified that 22 items mentioned in said para are inputs. During the period 2004-09 para 4.55.3 HBP was equivalent to 4.32.2. The CBEC issued a circular no.46/2007-Cus dated 20.12.2007 clarifying the notification no.40/2006-Cus. 3. As per the proviso of clause (i) of the condition of notification no. 40/2006 read wi .....

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item mentioned in 22 items, therefore, the appellant has not fulfilled the said condition. 4. In view of these facts, the show cause notice was issued to the appellant alleging that they have contravened the provisions of para 4.55.3 and suppressed the facts from the customs authorities as well as DGFT. Therefore, it was proposed that why the goods already exported should not be confiscated under section 113(d) and penalty should not be imposed under section 114 of the customs act on both the a .....

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n masala gutkha and these items are not specified in the said para. Therefore, the proceedings against the appellant are not sustainable in the light of the decision of this Tribunal in the case of CC Vs. Sicpa India Ltd. 2012 (279) ELT 113 (Tri) in the case of and Global Exim Vs. CC (Export) 2010 (253) ELT 417 (Tri.) which has been affirmed by the Hon ble Bombay High Court reported as 2010 (259) ELT A139 (Bom.). 6. He further submitted that neither the customs authorities nor the DGFT raised an .....

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para 4.1.15 in which it is written that RA shall allow only those inputs which has been specifically indicated in shipping bill . It is specifically mentioned that where both export and import have been completed prior to 01.08.2003, such cases will not be covered under notification no.31(RE-2013)2009-14 dated 01.08.2013 irrespective of whether the concerned authorization has been redeemed or not. He further submitted that if it is presumed that items specified are inputs, however policy circul .....

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nch of this Tribunal in the case of Shiv Kripa Ispat (P) Ltd. Vs. CCE - 2009 (235) ELT 623 (Tri-LB) which has been affirmed by the Hon ble High Court of Punjab and Haryana in the case of Raja Impex (P) Ltd. - 2008 (229) ELT 185 (P&H). He also submitted that penalties on the appellant are not imposable as no case has been made out of suppression of facts against the appellant. 8. On the other hand, Ld. AR relied on the policy circular no.57/2009-14 (RE-2011) dated 06.03.2012 to say that techn .....

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for the resultant product of the appellant. Therefore, they have contravened the provisions of the import export policy and the authorities have rightly held the goods liable for confiscation and imposed redemption fine and penalty. 9. Heard both the sides and considered the submissions. 10. For better appreciation of the facts of the case and to arrive at correct decision, the relevant provisions are extracted below: Notification no.40/2006-Cus dated 01.05.2006 - (i) that the description, valu .....

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l characteristics and specifications as the materials used in the said resultant product. Provided further that in respect of the said resultant product the exporter shall give declaration with regard to the quality, technical characteristic and specifications of materials used in the shipping bill. Para 4.55.3 of handbook to procedure of import and export :- However in respect of the following items, the exporter shall be required to give declaration with regard to technical characteristics, qu .....

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ass fibre reinforcement (glass fibre, chopped / stranded mat, roving woven surfacing mat), relevant synthetic resin (unsaturated polyster resin, epoxy resin, vinyl ester resin, hydroxyl ethyl cellulose), Lining Material. CBEC Circular no.46/2007-Cus dated 20.12.2007 :- The matter has been examined by the Board. In terms of paragraph 4.55.3 of the Handbook of Procedures, Vol.I 2004-09, in respect of some 22 items specified therein, the exporters are required to give a declaration with regard to t .....

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tant product, the exporter shall give declaration with regard to the quality, technical characteristics and specification of materials used in the Shipping Bill. The position is thus clear that only in respect of products specified in paragraph 4.55.3 of the Handbook a correlation of technical characteristics, quality and specification of the inputs with the export product is required to be established under the DFIA Scheme. Such correlation is not required to be established in other cases unles .....

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characteristics, quality and specifications of such items in the DFIA. Notification no.31(RE-2013)2009-14 dated 01.08.2013 :- In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) read with paragraph 1.2 of the Foreign Trade Policy, 2009-2014, the Central Government hereby notifies the following amendments in the Foreign Trade Policy (FTP) 2009-2014. 2. After para 4.1.14 of FTP a new para 4.1.15 is inserted. 4.1.15 Wherever SIO .....

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ndorsed in the shipping bill. At the time of discharge of export obligation (EODC) or at the time of redemption, RA shall allow only those inputs which have been specifically indicated in the shipping bill. 3. Para 4.2.3 of FTP is being amended by adding the phrase 4.1.14 and 4.1.15 in place of and 4.1.14 . The amended para would be as under: Provisions of paragraphs 4.1.11, 4.1.12, 4.1.13, 4.1.14 and 4.1.15 of FTP shall be applicable for DFIA holder. 4. Effect of this Notification: Inputs actua .....

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under Paragraph 2.4 of the Foreign Trade Policy, 2009-2014, the Director General of Foreign Trade hereby specifies the applicability of para 4.1.15 of the Foreign Trade Policy 2009-2014, as follows: 1. Where both export and import have been completed prior to 1.8.2013, such cases will not be covered under Notification No. 31 dated 1.8.2013 (as amended), irrespective of whether the concerned authorization (AA/DFIA) has been redeemed or not. 2. If only export has been fully completed / partly comp .....

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all apply. It is immaterial whether for such export, corresponding import has already been made (fully or partly) or import has not been made. Effect of this Public Notice: Applicability of provisions of para 4.1.15 of FTP have been further elaborated. 11. On going through the said provisions of notification no.40/2006 ibid clause 1 provisio provides that in respect of resultant products specified in para 4.55.3 of the handbook of procedures, the material permitted in the said authorization or t .....

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he resultant product manufactured by the appellant is pan masala, pan masala gutkha have no mentioned therein. The dispute has been arose between appellant and the Revenue is that as perfumes / essential oil are mentioned as an item (out of 22 items mentioned) in para 4.55.3 in respect of those items the appellant is required to give technical characteristics, quality and specification. As perfume / essential oil is one of the item, therefore, it is to be seen that as per notification no.40/2006 .....

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al in the case of Global Exim (Supra) wherein this Tribunal has observed as under: 5. According to the proviso, in respect of resultant product specified in paragraph 4.55.3 of the handbook of procedures of the Foreign Trade Policy, (FTP), the materials promoted in the authorization shall be of the same quality, technical characteristics and specifications as the materials used in the said resultant product. It is also provided that in respect of these resultant products, the exporter is require .....

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ts with the following paragraph before listing the resultant products however in respect of the following items, the exporter shall be required to give declaration with regard to technical characteristics, quality and specification in the shipping bill. The Regional Authority while issuing DFIA shall mention the technical characteristics, quality and specification in respect of such inputs. 14. The said order has been affirmed by the Hon ble High Court of Bombay. 15. Further, I find that in the .....

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graph 4.55.3 of the Handbook of Procedures (Vol. 1) of the Foreign Trade Policy, the materials permitted in a duty free import authorization need be of the same quality, technical characteristics and specifications as the materials used in the resultant product. In Board Circular No.16/2006 dated 9-5-2006 also clarified that only for the items specified in paragraph 4.55.3 of the Handbook of Procedures correlation is required and M/s. SRHI is the exporter of rice which are packed in printed poly .....

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