TMI Blog2023 (1) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... as the purchase of the Urea from the foreign supplier is effected by STC, MMTC or Indian Potash and payment to foreign supplier is made by STC, MMTC or Indian Potash, who in turn sell the same to a party in India whether on High Seas or otherwise, the import is clearly through STC, MMTC or Indian Potash. Since the import was made through MMTC/Indian Potash Ltd and was in accordance with Heading No.3102 1000 of the ITC (HS) Policy and the letters of the Government of India, Ministry of Chemical and Fertilizers, the import was in accordance with law and therefore the goods cannot be held to be liable to confiscation under Section 111(d) of the Customs Act 1962. Consequently, no penalty is imposable on the Appellants under Section 112 of the said Act. The authorities below have mis-read the Conditions Nos. (v) and (xiv) of the Permission letter dated 15th May 2013 of the Government of India, Ministry of Chemical and Fertilizers and in inferring therefrom that High Seas purchase by Appellant from STE was not permitted as per the said conditions. The said conditions are not related to the Appellant s purchase from STE but are related to the purchases by the end users/ distributors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical and Fertilizers had permitted the Appellant to import Technical Grade Urea through any STEs (i.e. MMTC, IPL, STC). The Appellant, accordingly, in the year 2013 purchased on High Seas, consignments of Urea imported by the STE viz. MMTC and sought clearance thereof with customs by filing Bills of Entry and proper officer of customs granted clearance to the said goods. 2.1 In April 2018, the customs department initiated investigations into the question of validity of the said imports. The Additional Commissioner of Customs (SIIB) Mundra thereafter issued to the Appellant a Show Cause Notice dated 30-5-2018 proposing imposition of penalty on the ground that prior to 28-4-2015, Urea whether or not in aqueous solution was allowed to be imported only by STEs under Heading No. 3102 1000 of the ITC (HS) Policy 2009 - 2015 and that since the Bills of Entry were filed by the Appellant after purchasing Urea on High Seas from STE, such an import cannot be said to be by the STE but by the High Seas Buyer who files the Bill of Entry, and further that permission dated 15-5-2013 granted by Government of India was only for domestic purchase of Urea from STE and hence Urea so imported is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en import of Manganese Ore was canalized through MMTC and in this case the Manganese Ore was sold on High Seas by MMTC to Union Carbide India Ltd, (b) Hyderabad Industries Ltd v UOI-2000 (115) ELT 593 (SC): In this case before the Supreme Court, asbestos was canalized through MMTC who sold the same on High Seas to Hyderabad Industries and the Supreme Court held that duty was payable on the price charged by MMTC to Hyderabad Industries, (c) CC v Coromondal Fertilizers LTd 1988 (33) ELT 451: In this case rock phosphate and sulphur were canalized through MMTC who sold the same on High Seas to Coromondal Fertilizers Ltd. (d) Godavari Fertilizers Chemicals Ltd v CC-1986 (81) ELT 535: In this case Phosphoric Acid was canalized through MMTC who sold the same on High Seas to Godavari Fertilizers Chemicals Ltd. (e) Indian Farmers Fertilizers Co-op Ltd v PCC-2020 (373) ELT 530: In this case, Urea of Fertilizer grade, which is canalised through STE, was sold on High Seas first by STE to Government of India and then again on High Seas by Government of India to IFFCO (f) Board s Circular No.49/89-CX. 8 dated 2-11-1989 in which the procedure for taking Modvat Credit h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale cannot be permitted on High Seas before clearance of the Urea from customs and that by virtue of purchase of the Urea on High Seas from STE and by filing the Bill of Entry, the Appellants became the importer is irrelevant because there is no bar against the Appellants being the importer so long as the import is through STE. There is no restriction in the Policy against State Trading Enterprise making High Seas Sale of Urea which during the relevant period was permitted to be imported through State Trading Enterprise. 5.2 Since the import was made through MMTC/Indian Potash Ltd and was in accordance with Heading No.3102 1000 of the ITC (HS) Policy and the letters of the Government of India, Ministry of Chemical and Fertilizers, the import was in accordance with law and therefore the goods cannot be held to be liable to confiscation under Section 111(d) of the Customs Act 1962. Consequently, no penalty is imposable on the Appellants under Section 112 of the said Act 5.3 The Commissioner (Appeals) has erred in not appreciating the permission granted by the Ministry of Chemical Fertilizers to the Appellant. The very opening sentence of the said letters/ Permission of the Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of imports which are canalized through STEs, the STEs place the order on the foreign supplier and thereafter effect High Seas sale of the same to the Indian Buyers. This is evident from the judgments and Board Circular supra. As laid down in the following judgments, where the import is in accordance with a consistent past practice, the question of confiscation under Section 111(d) and imposition of penalty under Section 112 of the Customs Act 1962 does not arise: Gujarat State Export Corporation Ltd v UOI 1984 (17) ELT 50 Memon Associates v CC 1988 (34) ELT 367 Trident Agencies v CC 1989 (45) ELT 116 Varson Chemicals P. Ltd v CC 1987 (27) ELT 55 The judgment in the case of Marico Industries Ltd v CC 2007 (209) ELT 403 relied upon by the Commissioner (Appeals) has no application to the facts of the present case. In that case the importer had directly established the Letter of Credit on the foreign supplier as result of which the import could not even be said to be through STE. Further, the import in that case was against Advance Release Order which is issued for sourcing inputs indigenously instead of importing against Advance License. The provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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