Custom, Excise & Service Tax Tribunal
M/S. Global Exim vs Cc (Export) Nhavasheva on 23 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. APPEAL No. C/89337/2014 (Arising out of Order-in-Appeal No. 3016(Group-VII-I)/2014 (JNCH)/EXP-150 dated 25/07/2014 passed by the Commissioner of Customs (Appeals), Mumbai-II) For approval and signature: Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
=============================================================
M/s. Global Exim
:
Appellant
VS
CC (Export) Nhavasheva
:
Respondent
Appearance
Shri Atul Nanda, Sr. Advocate
Mr. Rameera Hakeem, Advocate for Appellant
Shri A.K. Singh, Addl. Commr. (A.R.) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 23/02/2015
Date of decision : /2015
ORDER NO.
Per : P.S. Pruthi
The appellants is in appeal against Order-in-Appeal No. 3016(Gr.VII-I)2014 (JNCH)/EXP-150 dt. 25.7.2014.
2. The issue is regarding revalidation of Duty Free Import Authorization (DFIA) Licenses. The appellant is an importer of various chemicals and trading thereof. They obtained transferable DFIAs issued against exports. The DFIAs permit duty free import of Boric Acid. The appellants import of Boric Acid under Bill of Entry No. 781840 dt. 27.11.2009 against transferable DFIA No. 0310485994 dt. 11.9.2008 was rejected duty free clearance under Order-in-Original No. 54/2009 dt. 8.12.2009 passed by Assistant Commissioner for failure of the appellant to produce an import permit from the Central Insecticide Board & Registration Committee (CIB &RC) under the Insecticide Act 1968. In appeal, the case was decided by Commissioner (Appeals) in appellants favour. Revenue challenge the same before CESTAT. The appellant filed writ petition before the Bombay High Court in Writ Petition No.1449/2010 for implementing Commissioner (Appeals) order. The High Court allowed the provisional release on Bond and Bank Guarantee and with directions to the department to get stay from CESTAT on the Order passed by Commissioner (Appeals). However both the stay application and the main appeal were dismissed by CESTAT. The main appeal was dismissed by CESTAT vide Order No. A/527/10/CSTB/C-II dt. 3.12.2010. Another consignment of Boric Acid was imported by the appellant vide Bill of Entry No. 712175 dt. 28.6.2010 under transferable DFIA Nos. 0310485994 dt. 11.9.2008, 0310486783 dt. 17.9.2008 and 031048840 dt. 30.9.2008. However, duty free claim of appellant was again rejected. The matter again went up to the Tribunal who passed an order favouring the appellant vide order No. A/05/14/SMB/V-IV dt. 19.12.20013 relying on the Kerala High Court (Single Bench) decision in the case of Maliakkal Industrial Enterprises Vs. Union of India 2013 (290) ELT 330 (Ker.). This case of Maliakkal, however, dealt with imports under OGL Licenses. Although, the Kerala High Court (Division Bench) in the case of Maliakkal case held against the assessee but the fact remains that the said case (Maliakkal) pertains to import under OGL Licenses. In a decision of Calcutta High Court it was held that import permit is required for Boric Acid; however this decision was also in the context of imports under OGL. In view of the prolonged litigation, the appellant had continued to furnish PD Bond and Bank Guarantees while clearing their consignments on provisional basis. But with the passing of CESTAT Final Order dt. 19.12.2013, the department finally assessed all Bills of Entry and released Bank Guarantees and PD Bonds from March 2014 onwards. The import under DFIA Licenses was considered by the Mumbai CESTAT Bench which held vide order No. A/05/14/SMB/C-IV dt. 19.12.2013 that the appellant is entitled to get benefit under the DFIA Scheme for import of Boric Acid. But due to litigation for many years, the period of validity of many Licenses held by the appellant had expired. Therefore, the appellants represented to the Customs department that as the DFIAs could not be utilized due to the ongoing litigation, the validity period of licenses had expired. Therefore, they requested the department for issue of a certificate to DGFT confirming the factual position so as to enable them to apply to the DGFT for revalidation of the DFIAs in terms of Para 2.13.1 of the Handbook of Procedures of DGFT Ministry of Commerce. The department rejected their request. In appeal it was held by the Commissioner (Appeals) that litigation in matter of Boric Acid has not been finally decided as this Commissionerate has decided to file an appeal before Honble High Court against the CESTAT Order No. A/05/14/SMB/C-IV dated 19.12.2013, and that as per para 2.13 of Handbook of Procedure, Import Authorization is revalidated by the concerned RA of DGFT and this office has no role in revalidation of import licenses and hence your request for the same is rejected. Para 2.13.1 of the Handbook of Procedures state that However revalidation of freely transferable authorization/duty credit scrips and stock and sale authorization shall not be permitted unless validity has expired while in custody of custom authority/RA. I also find that the impugned issue in case of Maliakkal Industrial Enterprises [2013(290) ELT 330 (KER)] has been stayed by order passed by Division Bench of same High Court and the appeal is still pending and stay is operative. Since the matter is still under litigation, I do not find any reason to interfere with the decision of the lower authority. Against this order of Commissioner (Appeals), the appellant is in appeal before us.
3. Heard both sides.
4. The Ld. Counsel for the appellant states that the appellant could not utilize the DFIAs, legally transferred in their name, for claiming duty free benefits for import of Boric Acid against input goods because of ongoing litigation. The Commissioner (Appeals) while appreciating that the matter was in litigation, however did not find any reason to interfere with the decision of the lower authority. According to Ld. Counsel, the appellant only wanted a confirmation from the department confirming the aspect of litigation during which the Licenses could not be utilized. The Licensing authorities could not have revalidated the licenses without factual confirmation from Customs explaining the reasons for non-utilization.
5. The Ld. AR read out Para 2.13.1 of the Handbook of Procedures which states that However, revalidation of freely transferable Authorization/duty credit scrips and stock and sale Authorization shall not be permitted unless validity has expired while in custody of customs authority/RA. According to Ld. AR, the DFIAs were not in the physical custody of the department and therefore revalidation of DFIAs cannot be permitted. In his written submissions, he has raised doubts regarding evidence of transfer of licences to the appellant and amount of value transferred as well as the validity of licenses on the date of transfer to the appellants. According to him, only DGFT has proper jurisdiction to revalidate licenses.
6. We have carefully considered the submissions of both sides. At the outset, we find that the lower authorities have misread the provisions of law. As per Para 2.13.1 of the Handbook of Procedures, only the licensing authorities can permit the revalidation of freely transferable DFIAs. There is no dispute on this. But it should be fairly understood that adequate justification for revalidation has to be made available to DGFT. And this information can only be made available by Customs. The appellant has merely sought a statement to be issued by Customs to the DGFT certifying that the admissibility of import of Boric Acid against the DFIAs licenses remained in litigation. In fact, the Commissioner (Appeals) acknowledges this position regarding the litigation.
7. The Ld. AR in his written submissions has raised the issues of evidence regarding transfer of licenses and amounts unutilized, validity of licenses on date of transfer etc. We find that these issues were never before the lower authorities nor have we seen any evidence to support these doubts. Therefore, we reject these contentions.
8. It is noted that after the department started finalizing the Bills of Entry and releasing PD Bonds and Bank Guarantee from March 2014 onwards, the appellant vide their letter dated 12th April 2014, informed the department that various licenses held by them could not be debited against import of Boric Acid as the matter was in litigation and it was not possible for them to submit huge amounts of Bank Guarantees every time. Essentially, their request to the department was that a certificate be issued to DGFT confirming the prolonged litigation with Customs so as to enable them to get the licenses revalidated in terms of Para 2.13.1 of Handbook of Procedures. But their request was rejected by the Assistant Commissioner vide his letter dt. 28.5.2014 and the Commissioner (Appeals) upheld the decision of the Assistant Commissioner. While rejecting the request the Assistant Commissioner mentioned that the department has decided to file the appeal before the Honble High Court against CESTAT Order No. A/05/14/SMB/C-IV dt. 19.12.2013. The Assistant Commissioner did not appreciate the real issue. To us, the issue is very clear. The real issue is not the admissibility of duty free import of Boric Acid under DFIA Licenses. The simple issue is that the appellant has not been able to use DFIA Licenses because of litigation by Customs. Therefore the expiry of validity period of the Licenses cannot be attributed to the appellant.
9. The whole scheme of DFIAs is to allow duty free imports against exports. Denial of benefit under the scheme only because of expiry of Licenses due to refusal by Customs to allow import of such goods under the Licenses and their resultant non-utilization, would amount to denial of substantial benefits. This is more so when the appellants have invested huge sums of money in purchasing such licenses. And for non-utilization of licenses, they cannot be faulted. Now that the goods have been permitted to be imported against such Licenses by the Tribunal and the Bills of Entry finalized, the appellants must get the favour of revalidation for all Licenses held by them during the period of litigation.
10. The Ld. ARs contention is that the licenses should be in custody of Customs to enable the appellants to seek revalidation in terms of Para 2.13.1 of the Handbook of Procedures. In our view, it is for DGFT to take a view and revalidate the Licenses. The fact remains that the Licenses were presented to the Custom Authorities for debit but the goods were cleared on provisional basis. Due to ongoing litigation all licenses were also not presented for debit for obvious reasons. The appellants cannot be expected to present Licenses for debit when the department continued to refuse duty free import against the said Licenses. It can hardly be imagined that Para 2.13.1 would require physical custody with the Customs. Commissioner (Appeals) himself held in another case (Pushpanjali) that once matter is in litigation it is not in the hands of the importer or the Customs Authorities to finalize the issue within the time frame of the licenses. In fact, the licenses remained in constructive custody of customs because customs refused to debit the licenses for duty free import of such goods by all importers.
11. The request made by the appellant to the Customs Department is very legitimate. The request is not for revalidation of Licenses by Customs, but only a certificate to be issued to DGFT confirming the sequence of events from the date of first refusal of duty free clearances of imported Boric Acid till the date when the Customs started finding Bills of Entry and releasing PD Bonds/Bank Guarantees. This factual certificate will enable the appellant to approach the DGFT who can consider the appellants case on merits for revalidation of such expired licenses.
12. In the circumstances, we agree with the appellant. The department is directed to issue a certificate in above terms to DGFT within two weeks of the receipt of this Order for the purpose of revalidation of licenses under Para 2.13.1 of the Handbook of Procedures.
13. The appeal is allowed in above terms.
(Pronounced in court on /2015)
(Anil Choudhary)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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