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TMI Blog2024 (10) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (7) of Section 3 of the Customs Tariff Act, 1975, on such input materials at the time of import. However, such exemption was extended subject to condition that the person willing to avail such benefit should comply with pre import condition and the finished goods should be subjected to physical exports only. It was found by revenue that appellant failed to comply with the pre- import condition as required under said Notification No. 79/2017-Cus dtd. 13.10.2017. Pre-import condition means that the goods should be imported prior to commencement of export to enable the exporter to manufacture finished goods, which could be subsequently exported under the same Advance Authorization for discharge of Export Obligation. Accordingly, investigation was initiated by the Officers of ICD, Customs Khodiyar against the Appellant and it appears that the importer have violated such pre-import condition, leading to non-payment of IGST in 122 Bills of Entry under cover of which imports were made involving IGST amount of Rs. 9,77,71,269/- against the 5 advance authorization. Out of these 122 Bills of Entry, 114 Bills of Entry pertain to ICD Khodiyar, Ahmedabad involving IGST of Rs. 8,84,29,279 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially, the Customs Notification was amended to grant exemption from payment of BCD only for goods governed by GST Scheme. The said Notification did not grant exemption from payment of IGST as well as compensation cess. Vide Notification No. 79/2017-Cus. dtd. 13.10.2017, the exemption Notification was amended to grant exemption from IGST as well as Compensation Cess subject to pre-import condition and physical exports. The taxable goods manufactured by the Appellant are "Aluminium Alloys Ingots" and "Aluminium Cast Granulates". It is most significant to note that there was no provision which insisted use of post -export inputs in dutiable goods only for GST products, since IGST exemption was subject of pre- import condition. This was a departure from condition (v) to (vi) which had continued similar stipulation for non-GST goods. The Central Government vide Notification No. 01/2019-Cus. dtd. 10.01.2019, amended the Advance Authorisation exemption notification to remove the Pre-import condition. However, it simultaneously inserted Condition No. (vi)(a) and (vi)(b) vide Notification No. 01/2019-Cus. dtd. 10.01.2019 in AA exemption notification. Condition (vi)(a) provided non-exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal exports only and such exemption is subjected to a „Pre-import Condition‟. Initially, the IGST exemption was available upto 31.03.2018. Thereafter, it was extended till 01.10.2018 vide Notification No. 35/2018-Cus dtd. 28.03.2018. The same has now been extended upto Notification No. 8/2019-Cus. dtd. 25.03.2019. 2.4 He also submits that apart from the Customs Notification, provisions pertaining to AAs are contained in Chapter 4 of the FTP and Handbook of Procedures 2015-20. The objective of duty exemption/remission schemes under Chapter 4, in terms of para 4.0 is to "enable duty free import of inputs for export production, including replenishment of inputs or duty remission." Further para 4.03 of FTP provides that AA is issued to allow duty free import of inputs, which are physically incorporated in the export products. The list of duties exempted is provided under para 4.14 of the FTP. Para 4.14 was amended vide Notification No. 33(RE-2015-2020) dtd. 13.10.2017, to state that exemption from payment of IGST on imports against AAs would be subject to „pre-import condition‟. Further para 4.13 of the FTP provides for pre-import condition in certain cases. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue neutral there is no loss to the government exchequer in this scenario. The courts has consistently held that where the demand raised by the Revenue is equal to the credit available to the Assessee, then the demand is not maintainable. He placed reliance on the following judgments. (i) CCE Vs. Narayan Polyplast 2005(179)ELT 20 (SC) (ii) CCE Vs. Narmada Chematur 2005(179)ELT 276 (SC) (iii) CCE Vs. Coca-Cola India -2007(213)ELT 490 (SC) 2.9 He also submits that there is no dispute that appellant have exported goods and fulfilled export obligation. IGST paid on imports is available as ITC and the same is refunded to Appellants while exporting goods in terms of Rule 89(4) of CGST Rules. In the present matter if appellant had paid the IGST at the time of imports by not availing the exemption under Notification No. 79/2017-Cus dtd. 13.10.2017, they would have been entitled to avail the ITC of the same by way of refund of unutilized ITC under Rule 89(4) while exporting the finished goods. Therefore, to that extent the situation is revenue neutral. 2.10 Without prejudice, he also submits that if the appellant would have paid the IGST at the time of exports, they would have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to find out the correct legal position and to allow or disallow the same. He placed reliance on the following judgments. (i) Shri Charnajit Singh Vs. Commissioner of Customs (Port), Kolkata, 2022(12) TMI 897 -CESTAT Kolkata (ii) Sands Hotels Pvt. Ltd. Vs. CST, 2009 (16)STR 329 (iii) CCE, Kanpur Vs. Ganges Soap Works (P)Ltd. 2002 (146)ELT 470 (Tri. Del.) 2.14 He also submits that extended period of limitation cannot be invoked since there is no „wilful‟ suppression in the present case. Further extended period of limitation cannot be invoked since the situation is revenue neutral to the extent of levy of IGST. Further the present matter involved the interpretation of complex provision of the Customs Act, FTP and exemption Notification. He also submits that no redemption fine can be imposed in the present matter under Section 125 of the Customs Act, 1962 as the goods were not liable for confiscation and were not available for confiscation. 2.15 He further submits that even if IGST is payable, the demand of interest, penalty and fine is not sustainable as there was no levy of such of amount in terms of Section 3(12) of Customs Tariff Act. He also submits that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illed. 4.1 However, in the present case since it is the appellant claim that they have fulfilled the condition and if it is found correct no duty is required to be paid by the appellant. If at all there is violation of pre import condition, the appellant is required to pay IGST which has held by the Hon'ble Supreme Court and as per law the appellant shall be eligible for ITC and/or the refund of IGST in case of export of goods. Therefore, in principle the appellant is liable to pay IGST in case the pre import condition is not fulfilled. 4.2 We have further observed that that the department has issued SCN only based on date of the Bill of Entry and the date of Shipping Bills in the particular advance authorization. The department has not investigated the fact that appellants have used imported inputs for exports only. Thus, it is not the case of diversion of imported inputs. It is submitted that in the absence of any evidence of diversion of inputs, the demand is not sustainable. In other words, the SCN is issued on assumption and presumption. 4.3 We have further seen that Condition (xii) provides that the exemption from IGST shall be subject to the pre-import condition, making i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first before imports were made, which appears to be factually incorrect, as clearly revealed from below table : Sr. No. AA No. AA Date First BE No. BE Date First SB No. SB Date Remarks 1 0810143679 10- 10- 2018 8466631 15- 10- 2018 8399865 22- 10- 2018 Applied for EODC. 2 0810141977 12- 02- 2018 5548344 12- 03- 2018 3577926 19- 03- 2018 EODC received. 3 0810140486 13- 06- 2017 3737972 24- 10- 2017 96555077 02- 11- 2017 Applied for EODC. 4.7 In case of first Advance Authorization No. 0810143679 dated 10-10- 2018, department has wrongly taken 1stBill of Entry No.8551446 dated 22.10.2018, instead of taking first Bill of Entry No.8466631 dated 15-10- 2018. In fact, in this case, first import was made vide Bill of Entry No. 8466631 dated 15-10-2018, which was prior to the date of first export made vide Shipping Bill No. 8399865 dated 22-10-2018. Thus, the duty-free raw materials imported under said AA were used in the manufacture of goods exported against under said AA. After completion of export obligation, the appellant had applied for Export Obligation Discharge Certificate (in short "EODC"). Thus, the appellant has complied with the pre-import condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed along with interest on 03.07.2024.Further, DGFT has already issued EODC for the same. As such, demand for this AA is required to be dropped. It is observed that appellants are not challenging the IGST already paid by them as they are eligible for the ITC under GST. 4.11 As regards the last Advance Authorization No.810141768 dated 12-01- 2018, it is found that the appellant has completed the export obligation and post exports, the appellant imported raw materials duty-free and used in the manufacture of finished goods exported. No demand can be raised until and unless it is proved that such imported materials are not used in the manufacture of finished goods exported. In the instant case, there was no allegation of diversion of such materials as such or sale of resultant finished goods in the domestic market in the SCN itself. After completion of the export obligation, the appellant has also applied for EODC. Thus, in this regard also, the appellant has complied with the law. As such, demand for this AA is also not sustainable. 4.12 From the above factual position it is clear that in almost all the cases, the appellant have fulfilled the pre-import condition, in some cases the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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