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TMI Blog2018 (3) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue an order, directing opposite party no.3 to extend the validity of EPCG Licenses, which remained unutilized due to inaction of Customs Authorities." 2. The essence of the contentions made by the petitioner- company through Mr. Asok Mohanty, learned Senior Counsel is that the petitioner-company sought to import three Grab Type Ship Unloaders (GTSU) from Shanghai Zhenhua Heavy Industries Co. Ltd., China for installation at its port located at the mouth of river Dhamra in the State of Odisha. It is averred that the intent behind import was to provide import facility for import of lime stone and thermal coal and various other cargo which require deep draught berths, equipped with mechanized handling and for such purpose, the essential sophisticated handling equipments like ship loaders, unloaders were required for the purpose. Accordingly, the petitioner sought for authorization under the Export Promotion Capital Goods (EPCG) Scheme and the Foreign Trade Policy (FTP) 2015-20. Necessary certification/ authorization for import of capital goods and spares were issued in terms of the Foreign Trade Policy (FTP) 2015-20. The said Export Promotion Capital Goods (EPCG) Scheme was introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INANCE (DEPARTMENT OF REVENUE) Notification No.16/2015-Customs New Delhi, the 1st April, 2015 G.S.R. 252(E)-In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table 1 annexed hereto, from (i) xxx xxx xxx (ii) xxx xxx xxx 2. The exemption under the notification shall be subject to the following conditions, namely - xxx xxx xxx (10) that the imports and exports are undertaken through the seaports, airports or through the inland container depots or through the land customs stations as mentioned in the Table 2 annexed hereto or a Special Economic Zone notified under section 4 of the Special Economic Zones Act, 2005(28 of 2005); Provided that the Commissioner of Customs may, by special order or a public notice and subject to such conditions as may be specified by him, permit import and export through any other sea-port, airport, inland container depot or through a land customs station within his jurisdiction. xxx xxx xxx" 6. It appears from the records produced at the time of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eep Port on 07.06.2016. 8. While the situation stood thus, it appears that the Commissioner of Customs, before whom petitioner had applied for exercise of power under the Proviso to Paragraph-10 of notification No.16/2015 of Central Board of Excise and Customs dated 01.04.2015, ultimately rejected such a prayer after a period of 1 year 3 months vide the impugned order vide letter dated 11.08.2017 under Annexure-1. The relevant portion thereof is quoted herein below: "GOVERNMENT OF INDIA COMMISSIONERATE OF CUSTOMS (PREVENTIVE), BHUBABNESWAR, CENTRAL REVENUE BUILDING, RAJASWA VIHAR, BHUBANESWAR-751007 Phone No.0674-2589082, Fax No. 0674-2589612, Email [email protected] C. No. VIII(48)53/CUS(P)/BBSR/2016 Dated 11.08.2017 To M/s. Dhamra Port Company Limited At-Dosinga, P.O. Dhamra District: Bhadrak Odisha-756171 Sub: Import of Capital Goods under EPCG Scheme in terms of Chapter-5 of the Foreign Trade Policy (2015- 20), import of Goods at Zero Customs Duty at Dhamra Port Company Ltd (DPCL)-Regarding. xxx xxx xxx DISCUSSION & FINDINGS 5. I have gone through the records of the following two files-(i) Current importation File No.VIII(48)53/CUS(P)/ BBSR/2016 and (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Department requesting for issue of Public Notice/Special Order in anticipation of getting the EPCG License. The vessel, MV ZHEN HUA 8, arrived in Dhamra on 5/5/2016, but the Customs Department was informed only on 9/5/2016, even though 5th & 6th May, 2016 were working days in Commissionerate Headquarters. I also find that the EPCG license (issued by DGFT on 13.05.2016) was registered in Paradeep Customs House on 06.06.2016, which is a notified port under Notification No.16/2015-Cus dated 01.04.2015. However, the action of Assistant Commissioner, Paradeep Customs House in issuing RA for entire consignment in favour of Dhamra Customs (a non-specified port for EPCG Scheme) on 07.06.2016 is entirely wrong, as the Commissioner had not accorded the Special Order declaring Dhamra to be eligible for EPCG Scheme till such time and the RA should be cancelled forthwith. 8. In terms of Para 2.13 of the Foreign Trade Policy (2015- 20), the DGFT can issue EPCG License in respect of goods which have been imported/shipped/arrived in advance, but not cleared from Customs. It implies that EPCG License can be issued with retrospective effect. However, the same aspect of retrospective nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2012. Therefore, the present importation of goods without prior permission by the Customs authority is irregular and illegal. Photocopy of Notification No.16/2012-Customs (N.T.) is annexed herewith and marked as Annexure-B/2 for kind perusal of this Hon'ble Court. The petitioner's company is aware of the facts that their port has not been notified by the Government for exemption of Customs Duty under EPCG Scheme. In the year 2009, in a similar situation the Customs authority had allowed the goods to be imported under the EPCG Scheme as the petitioner's company had filed application for special Notification and got the order for clearance before entering the goods in the territorial jurisdiction of India. xxx xxx xxx 4. That the averments made in paragraph-1 of the writ application, it is humbly submitted that the petitioner submitted a letter on 09.05.2016 to the Commissionerate of Customs (Preventive), Central Revenue Building, Rajaswa Vihar, Bhubaneswar with the request to issue Public Notice/ Special Order under Proviso to Para 10 of Notification No.16/2015 Cus. dated 01.04.2015 to notify Dhamra port as the notified EPCG port with retrospective effect in respect of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CG Scheme. 15. On perusal of the counter affidavits and stand of the Customs Authorities, it appears that the Commissioner, Customs had sought for clarification from the Central Board of Excise and Customs but, "the Board did not clarify the issue in as many words and instead directed the Commissioner to pass a reasoned order" and accordingly, the impugned order which has been passed by the Commissioner dated 11.08.2017 is subject matter of challenge here. 16. In the said order, (i) the Commissioner has proceeded on his understanding that when an application is made under the Proviso to Para-10 of Notification No.16/2015-Cus dated 01.04.2015 seeking a "Special Order" for declaring any other port, other than those listed in the Notification as eligible Port for EPCG Scheme, it is noted in the impugned order that such a Public Notice can be issued under the Proviso to Para-10 only on a "prospective basis". (ii) He has felt that it is not possible for the "Special Order" to be retrospective, when the Public Notice is prospective in nature. (iii) Although, the import vessel arrived at Dhamra on 05.05.2016, the Customs Department was informed only on 09.05.2016. (iv) The EPCG licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Order" that he would issue would have to be retrospective to cover the date of unloading. This in our considered view is not consistent with the requirements of the Customs Act, 1962 nor with the relevant Notification No.16/2015- Cus dated 01.04.2015. The Notification No.16/2015-Cus dated 01.04.2015 has been issued by the Government of India in the Ministry of Finance (Department of Revenue) and the Central Board of Excise and Customs. It would be very important to take note of the fact that the said notification was issued by the CBEC in exercise of powers conferred by sub-Section (1) of Section 25 of the Customs Act, 1962 and the relevant Section is quoted hereunder: "Section 25. Power to grant exemption from duty.- (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon." It is exercising such power vested in the CBEC under Section 25(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import journey cannot be stated to have been completed. In view of the aforesaid facts, even though the petitioner's imported goods have been unloaded at Dhamra port, any "special order" by the Commissioner of Customs would obviously be effective from the date of such grant of permission, since it is only after the Commissioner grants such "special order", that the petitioner can seek customs clearance of the goods and until such clearance is sought for and granted, the goods remain "in course of import" though physically located at Dhamra port but without obtaining the necessary clearances from the Customs Authorities as mandated under the Customs Act. In this context, we refer to the case of Indian Tourist Development Corporation Ltd. Vrs. Assistant Commissioner of Commercial Taxes & Another, (2012) 3 SCC 204 as rendered by the Hon'ble Supreme Court on the issue of "Customs frontier". In the said case, the appellant was selling foreign goods through its duty-free shops at various international airports directly to customers before clearing customs frontier in international airports. Since the revenue imposed VAT on such sales, the appellant sought to challenge the said levy as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective in operation. We reiterate that this fundamental basis is wholly erroneous and not in consonance with law. No doubt, the goods have been unloaded and that too after necessary permission was granted by the Dhamra Customs Authorities for berthing of the vessel. Further permission was granted by the Dhamra Customs Authorities for unloading of the cargo and it would be relevant also to take note of the fact that the Customs Authorities of Paradeep Port (port of registration) have also granted the petitioner with the necessary TRA requiring the petitioner and the Customs Authorities at Dhamra port to ensure due compliance of all terms and conditions under the EPCG Scheme and to report compliance thereof to the Customs Authorities at Paradeep. 20. In the case at hand, the Commissioner of Customs has also referred to, in the impugned order dated 11.08.2017 under Annexure-1, to the fact that the petitioner-company had earlier made similar import in the year 2009 and the Customs Department had permitted such import, but, such a prior example was distinguished by the Commissioner of Customs on a factual basis by noting that in the said transaction the petitioner-company had kept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect, that the vessel had arrived in the territorial waters and had been berthed at Dhamra port and goods have been unloaded, without necessary lawful sanction by the Customs Authorities, is factually wholly incorrect. Even if the date of 09.05.2016 is accepted as the date on which the petitioner's application for issue of "special order" by the Commissioner was received at its office, all that had happened by the date of receiving such an application was that, the vessel had been permitted to berth at Dhamra port, the import manifest of the goods sought to be unloaded had been processed by the Customs Authorities at Dhamra port, the petitioner had take a necessary steps for registering the imported goods with the port of registration i.e. port of Paradeep (as required by the EPCG License) and Paradeep Port Customs Authority had granted TRA on 07.06.2016 to the petitioner-company with a further direction to its counter-parts at Dhamra port to ensure compliance by the petitioner of all conditions imposed in the EPCG License. Consequently, we have no hesitation in coming to hold that the mere factum of the vessel arriving at Dhamra port or unloading of the imported cargo a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider including Dhamra port (petitioner) in Table-2. In the said communication, the Commissioner has noted as follows in para-4 that "xxx xxx xxx In the present case, it is seen that technically the import has already taken place xxx xxx xxx." He also refers to the definition of the term "import" contained in Section 2(23) of the Customs Act, 1962 which is quoted hereunder: "Section 2(23)- "import", with its grammatical variations and cognate expressions, means bringing into India from a place outside India." But clearly he has omitted to take into consideration the definition of the term "customs area" as contemplated under Section 2(11) and "customs port" as defined under Section 2(12). The "import" as contemplated under Section 2(23) meaning bringing into India from a place outside India cannot be said to be even "technically complete" bereft of there being "clearance" by the Customs Authorities. Merely unloading of the imported goods at a port does not complete an act of import, without the Customs Authorities granting the necessary statutory clearances for bringing the goods beyond the customs area and/or permission for utilizing the same by the petitioner. Consequently, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f registration i.e. Paradeep had granted the necessary TRA for the imported cargo and the cargo commenced unloading on 09.05.2016 (evening) i.e. admittedly, the very same day the Commissioner of Customs claims to have received the petitioner's application for grant of "special order" as contemplated under Proviso to Para-10 of the notification No.16/2015-Cus dated 01.04.2015. 28. It appears from the impugned order that in similar circumstances, the petitioner had imported goods in the year 2009 and has sought to distinguish the fact situation then by merely recording the fact that, whereas in 2009 the Customs had been informed before the goods been unloaded, in the present case, on the selfsame day the goods, in fact, have been unloaded. We are of the considered view that this fact is of no legal consequence, since irrespective of the fact whether a vessel carrying the goods either had not unloaded its cargo or unloaded its cargo, the fact remains that such cargo was unloaded with the necessary permission of the Customs Authorities at the customs port i.e. Dhamra port and irrespective of this fact also even though the goods were unloaded at Dhamra port the goods remained within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although, the application for issue of "special order" was received by the Commissioner of Customs on 09.05.2016, the goods remain at the port, without any order being passed for more than a year and four months until the impugned order dated 11.08.2017 under Annexure-1 came to be passed. 31. It would be relevant herein to note that the Government of India has prepared the EPCG Scheme with the avowed objective of encouraging creation of infrastructural needs of the nation and while allowing exemption of "zero percent" customs duty at the time of import, requiring such importer to ensure revenue generation of six (6) times of the customs duty concession given within the coming six (6) years. In other words, the importer has to not only guarantee but also give an undertaking/bond to the Customs Authorities that the importer would comply with the export obligations and export obligations which would be equal to six (6) times the value of customs duty exempted at the time of import. In this regard, it is most relevant to note Para-2.13 of the Foreign Trade Policy issued by the Government of India in the Ministry of Commerce and Industry which is as follows: "2.13 Clearance of Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses in the present case and pass necessary instructions/guidelines either through the Ministry or the CBEC as it may deem appropriate, in order to ensure that such large scale wastage of time and public money does not occur in future cases. 34. At the closure of hearing, Mr. Bose, learned Assistant Solicitor General was asked by the Court to enquire from the Director General of Foreign Trade as to whether the necessary licenses granted by then required to be revalidated. But on instruction, he submitted before this Court that since the goods had already arrived at Dharma Port, within the period specified in the license, there possibly would be no requirement of any further extension of time of the EPCG Licenses. In any event, he submitted that the DGFT have no objections to the prayer made by the petitioner and, in the event, any formal correction/extension is required in the licenses, the DGFT would grant any such extension, if any required, to comply with the directions of this Court. 35. Accordingly, the impugned order dated 11.08.2017 under Annexure-1 stands quashed with a further direction to the Commissioner of Customs to issue the necessary "special order" in favour of the ..... 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