TMI Blog1990 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... d July, 1982 thepetitioner company started carrying on business as merchant exporter under Duty Exemption Entitlement Certificate Scheme (referred to as DEEC). Under the said DEEC scheme the petitioner company was entitled to import raw materials under valid Import licence issued by the Chief Controller of Imports and Exports without payment of any Customs Duty thereon upon the undertaking given by the petitioner, to have the goods mentioned in the advance licence, manufactured and to export the said goods of the value mentioned in the said import licence within the time specified in the said licence or within the extended time. 4. On the application made by the petitioner company on 31st October, 1984, an advance licence bearing No. P/K/3039982/C/XX/93/D/84 dated 7th December, 1984 was issued by the Assistant Chief Controller of Imports Exports, New Delhi enabling the petitioner to import as merchant exporter 8,23,530 OTS Cans A½ size made from quality plates, 8,00,000 OTS Cans No. 1 tall size, 2,800 Kgs. Pectin Food Grade and 50 metric tons of Pulp Food Grade of the total C.I.F. value of Rs. 32,64,754/-. Under the said licence the petitioner company was required to export 400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r scheme, the petitioner would have to pay the customs duty on the goods imported which was allowed to be imported without licence. 5. The petitioner company thereafter had Strawberry Jam manufactured out of Strawberry Pulp imported by the petitioner company through authorised manufacturers. The petitionercompany also had the other products namely Pineapple Juice, Mango Juice and Pineapple Titbits manufactured through authorised manufacturers. On diverse dates between 31st March, 1985 and 30th December, 1985 the petitioner company duly fulfilled the export obligation undertaken by the petitioner company under the said advance licence. The said exports were made through Calcutta, Haldia, Bombay and Kakinada, Andhra Pradesh Ports. The said exports were duly recorded by the Customs authorities in Part For the DEEC Book No. 008000 (Cal.) dated 20th December, 1984. It also appears that the goods which were exported as mentioned above, were duly checked and attested by the Customs authorities on 28th April, 1986 and the balance of the export were checked and attested by the said authorities on 14th May, 1986. According to the petitioner, the petitioner had fulfilled its obligation by m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87 the Assistant Collector of Customs requested the petitioner company to furnish DEEC declaration for utilisation. The petitioner company duly complied with the said requisition contained in the letter dated llth March, 1987. 7. Thereafter all of a sudden on 15th June, 1987 the petitioner company received a letter dated 10th June, 1987 issued by the Assistant Collector of Customs, DEEC Cell whereby it was alleged that the pulp does not appear in the list of items specified in Annexure I to Appendix 19. By the said letter it has been alleged that DEEC benefit cannot be extended to the petitioner company ufregard to pulp which is not covered by the Notification No. 117/78-Cus., dated 9th June, 1978. On the basis of the said allegation the petitioner company was called upon to pay the duty of pulp amounting to Rs. 8,22,610.89 p. within 15 days. The petitioner company was also called upon to pay the interest at the rate of 18% on the said duty from the date of clearance of the said pulp imported on the basis of the import licence to the date on which the amount would be actually paid. The petitioner company by the letter dated 16th June, 1987 informed the Assistant Collector of Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the duty leviable but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with; (c) The goods corresponding to the resultant products in respect of value, quantity, description, quality or technical characteristics, as specified in the said certificate are exported within the time specified therein or such extended period as may be granted by the Committee; (d) The exempt materials shall be used for the purpose specified in this notification and to such factories as are specified in the said Certificate; (e) The exempt materials or any portion thereof shall not be sold or otherwise transferred to any other person, or utilized or permitted to be utilized or disposed of in any other manner, without the. previous permission of the committee." 10.Item 2 of the First Schedule to the said Exemption Notification provides "Fruits - peel of melons or citrus fruit - fresh or preserved." Column 3 of the First Schedule to the said Exemption Notification gives the heading number of the First Schedule to the Customs Tariff Act, 1975 - 08.01/13 or 20.01/07. Under Chapter 8, Heading 08.01/13, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in general terms and no name of any particular fruit appeared. (b) In 1986-87 it will appear that the First Schedule to the exemption Notification refers to Chapter 8 or Chapter 20 of the First Schedule to the Customs Tariff Act, 1975. From 1986-87 the heading of the First Schedule to the Customs Tariff Act, 1975 has been changed and specific items of each fruit has been described. The word pulp however has not been mentioned. It appears that in that context in order to avoid any possible controversy Notification No. 461/86-Cus., dated 13th November, 1986 was issued by the Central Government, dealing specifically with Respoerry Pulp, Strawberry Pulp and Cherry Pulp. It was nothing but a mere clarificatory one. It does not throw any light excepting to clarify the matter and to put the matter beyond all controversy. (c) As a matter of fact in order to avoid all controversy and confusion Notification No. 4487-Cus., dated 19th February, 1987 superseded Notification No. 117/78-Cus., dated 9th June, 1978. This new Notification does not have any schedule and it exempts all goods which is specified in Part 'C' of Duty Exemption Entitlement Certificate and which is eligible for exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have required to pay would have been refunded to the petitioner on exports being made by the petitioner. Because of the aforesaid representation the petitioner company instead of obtaining a licence under Open General Licence Scheme obtained the advance licence under DEEC Scheme and thereby has been deprived of the said duty drawback benefit. In view of the aforesaid the respondents are now estopped from denying the benefit under the advance licence by contending that 'pulp' does not come under Notification No. 117/78-Cus., dated 9th June, 1978. 16. In support of this principle the Id. Advocate appearing on behalf of the k- petitioner relied on the decision of the Supreme Court in the case of Motilal Padampat Sugar Mills Ltd. v. State of UttarPradesh Ors. reported in A.I.R. 1979 S.C. 621 and also the decision of the Supreme Court in the case of Gujarat State Financial Corporation v. M/s. Lotus Hotels Private Ltd., reported in A I.R. 1986 S.C. 848 and in the case of Union of lndia Ors. v. Godfrey Philips India Ltd. Ors, reported in AIR 1986 S.C. 806 = 1985 (22) E.L.T. 306 (S.C.). It was further submitted that in any event nocustoms duty could be levied or imposed upon the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of whole of customs duty or additional duty. It was further stated that on and from 30-11-1986 Strawberry Pulp and other pulp had been granted, exemption from payment of import duty on the strength of the notification which was issued by the Central Government under Section 25 of the Customs Act and it makes dear that prior to that Strawberry Pulp was not exempted from payment of import duty. It was further submitted that the principle of promissory estoppel is not applicable in this case and that there can not be any promise which is contrary to law. It was further submitted that no promissory estoppel applied where the goods have been, released earlier which were hot covered by the licence and were released due to the error on the part of the officers. It was submitted that such an error did not constitute any representation. It was further submitted that the declaration filed by the petitioner before the Assistant Collector of Customs was binding upon them for payment of money or demand. 22. The admitted fact of the case is that at the time of importation of the goods in question both the parties namely the petitioner and the respondents accepted the position that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bill of entry the goods were imported under the said DEEC Scheme and that on examination the goods were allowed to be imported after observing the customs formalities which were duly specified in the DEEC Book. Before the Customs Authority the petitioner had given an undertaking that "I/We undertake to pay on demand an amount to the duty leviable in respect of the goods covered by the bill of entry in case the condition specified under notification dated 9-6-1978 are not complied with by me/us." The petitioner gave this undertaking in writing that the goods which have been imported would be re-exported in terms of the said notification and on that basis no Customs duty was leviable. The only condition under which the customs duty could be leviable was the failure on the part of the petitioner to export the goods in terms of the said notification. It may be mentioned that the goods were imported in March, 1985 and after manufacturing of the goods in terms of the said notification, the exports were made in the year 1986. It was submitted that the goods originally brought by the petitioner in March, 1985 were not eligible for exemption from payment of customs duty and that accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the said notice was not in the form of a show cause notice but it was a demand notice. It is not necessary to make any confusion of such matter, inasmuch as the said notice was given as a show cause notice. The show cause notice and/or demand notice both were issued beyond the period of limitation and as such, when the proceeding was barred by limitation, in that event, it is not necessary, to make any further finding on aspect of the matter. 25. In view of the facts that by allowing the goods to be exported duty free under the said scheme the petitioner was prevented from availing the benefit of drawback under Section 75 of the Customs Act. Section 75 of the said Act provides the provision of drawback on imported materials used in the manufacture of goods which are exported. So this is a case if it was found that the petitioner was not entitled to get any exemption on account of import duties on importation of the goods under the said scheme, the petitioner was entitled to as a matter of right get back the import duty paid by the petitioner after the goods are exported after manufacturing of the goods from the imported materials. So the representation made by the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as, one thing is clear that in the instant case, the petitioner had manufactured the end products and the end-products had been re-exported to foreign countries. 27. Under such circumstances, in my view, the principle of promissory estoppel would be applicable withall its force. In my view, the respondents can not take advantage of their own mistake by punishing an innocent importer. It was the duty on the part of the respondents to defect the matter at the time of its entry when the goods were before them and they can make an analysis of the goods to find out the nature of the goods in question. I make it clear that on the basis of the materials on record, it is difficult on the part of this Court to make any pronouncement whether the goods were conformed with the nature of the goods that was brought by the petitioner on the basis of the import licence. But one thing is clear that the respondents had admitted the fact that the goods conform with the required specification and it fall within the relevant items of the Customs Tariff Act and allowed the goods for clearance. After obtaining an undertaking by the petitioner, the petitioner had to re-export the end-products and that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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