TMI Blog2018 (11) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... , (and accepted by the Tribunal) is that the declaration requirement of the exemption notification is applicable only if the exported goods are included in the list of items enumerated in paragraph 4.55.3. This contention cannot be accepted - The consequence of the assessee s interpretation would render it impossible to correlate the duty-free imports made under the DFIA, with the inputs used in the exported products. Further, if the resultant products are those enumerated in paragraph 4.55.3, then this interpretation would require a declaration of the quality, technical characteristics and specification of the materials used in those items. Such a construction, in this court s opinion, is unreasonable as the DFIA is intended to exempt inputs used in production of other goods in India, and is not concerned with the materials that have been used in the production of those inputs. The questions of law framed are answered in the affirmative, i.e. in favour of the revenue and against the assessee - Appeal allowed. - CUSAA 147/2018 & CM APPL. 23960/2018 - - - Dated:- 26-11-2018 - MR. S. RAVINDRA BHAT AND MR. PRATEEK JALAN JJ. Petitioner Through: Mr. Amit Bansal, Senior Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teristics, quality and specifications of the perfumes/essential oils/ aromatic chemicals used by it in its shipping bills. The assessee resisted the show cause notice and contested the proceedings. 4. In the Order-in-Original dated 04.06.2015, the Commissioner of Customs (Exports) considered exports made by the the assessee at New Delhi and Kanpur and imposed, in sum, fines of ₹ 18,00,000 (in lieu of confiscation of the goods in question, under Section 125 (1) of the Act), and penalty of ₹ 8,00,000/- (under Section 114 of the Act). The Order-in-Original recorded inter alia as follows:- 3. In terms of Exim Policy 2004-09, Chapter 4 of Foreign Trade Policy (FTP) 2004-09, Duty Free Import Authorization (DFIA) is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. This scheme is in force from 1st May, 2006. These Authorizations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified. A minimum 20% value addition shall be required for issuances of such authorization except for items in germs and jewelry sector. Once export obligation has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the essential oil on the shipping bill were not followed at the time of export neither it was declared at the time of transferability of said DFIA Licenses to the jurisdiction DGFT Authorities as the same was not brought to his notice by the Custom Authorities or DGFT Authorities. 6. The Commissioner noticed that statements of some of the assessee s suppliers, recorded under Section 108 of the Act, which stated that the products supplied to the assessee were not natural essential oils , but manufactured by mixing the aroma of natural flowers on base oils. As the documents recovered from the Respondent included applications filed by it for DFIA Licenses in which it had declared that its products contained natural essential oils as inputs and the use of synthetic aromatic chemicals was not declared, the Commissioner was of the view that the DFIA Licenses were obtained by suppression and distortion of facts. 7. The Commissioner recorded the following findings: 32.3 Thus, as per the above paras, the exporter shall give a declaration with regard to technical characteristics, quality and its specification of the Perfumes/Essential Oil/ Aromatic Chemicals used in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme, in contravention or the provisions contained in Para 4.55.3 handbook of procedure 2004/09 (Earlier Para 21) and Customs Notfn. No. 40/2006 and had made the impugned exports in violation of prohibitions stipulated under Section 11 of FTD R Act, 1992. Therefore, the impugned export consignments as per Annexure-INDEL/KNP (having FOB ₹ 89,51,655/-) and Annexure-INDEL/KNP (having FOB ₹ 79.87,437/-) held liable to confiscation under Section 113(d) of Customs Act, 1962. [The reference in the quoted paragraph is to the Foreign Trade (Development Regulation) Act, 1993]. 8. The assessee s appeal before the Tribunal succeeded on an interpretation of paragraph 4.55.3 of the HBP and the exemption notification, holding that the requirement was that the technical specifications of the resultant product, and not the inputs, are required to be mentioned on the shipping documents. The Tribunal relied on its earlier orders in the case of Global Exim vs. Commissioner 2010 (253) ELT 417 (affirmed by the Bombay High Court in 2010 (259) ELT A139), and Commissioner vs. Sicpa India Ltd. (2012) 279 ELT 113 . The reasoning of the Tribunal was as follows: 11. On going t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty free import authorization for intermediate supply, as the case may be, shall be of the same quality, technical 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. 10. The said condition specifically refers to Clause 4.55.3 of the HBP which is reproduced below:- 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. Alloys steel including stainless steel, copper alloys, synthetic rubber, bearings, solvent, perfumes/essential oil, aromatic chemicals, surfactants, relevant fabrics, marble, articles made of poly-propylene, articles made of paper and paper board, insecticides, lead ingots, zinc ingots, citric acid, relevant glass fibre reinforcement (glas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion requirement of the exemption notification is applicable only if the exported goods are included in the list of items enumerated in paragraph 4.55.3. This contention cannot be accepted. 15. The consequence of the assessee s interpretation would render it impossible to correlate the duty-free imports made under the DFIA, with the inputs used in the exported products. Further, if the resultant products are those enumerated in paragraph 4.55.3, then this interpretation would require a declaration of the quality, technical characteristics and specification of the materials used in those items. Such a construction, in this court s opinion, is unreasonable as the DFIA is intended to exempt inputs used in production of other goods in India, and is not concerned with the materials that have been used in the production of those inputs. 16. Learned counsel for the revenue had cited Global Exim and Sicpa India (Supra). In Global Exim, the Tribunal has taken the view that there is contradiction between the exemption notification and paragraph 4.55.3. On such a view, the Tribunal applied the provisions of the notification rather than that of the HBP. Although the matter was carried t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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