Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs Fomento Resources Pvt. Ltd on 26 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.C/85129/15, C/85130/15, C/600/12, C/601/12 & C/718/11 Appln.No.C/S/92614 & 92165/15 (Arising out of Order-in-Appeal No.Goa/Cus/GSK/50/2011 dated 29/07/2011, Goa/Cus/GSK/90 & 91/2012 dated 17/04/2012, Goa-Exccus-002-APP-026&027-2014-2015 dated 08/12/2014 passed by Commissioner of Central Excise (Appeals), Goa) For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) 1. Whether Press Reporters may be allowed to see :No 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 :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Commissioner of Central Excise, Goa Appellant Vs. Fomento Resources Pvt. Ltd., Pokle & Co.
Fomento Resources Pvt. Ltd., Respondents Pokle & Co.
Chowgule & Co. Pvt. Ltd., Appearance:
Shri.Ahibaran, Addl. Comm. (AR) for appellant Shri.HK Maingi, Advocarte with Shri CS Biradar, Advocate for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing : 26/09/2016 Date of Decision : /10/2016 ORDER NO Per: Raju
1. These appeals have been filed by the Revenue against Order-in-Appeal No.Goa/Cus/GSK/50/2011 dated 29/07/2011, Goa/Cus/GSK/90 & 91/2012 dated 17/04/2012, Goa-Exccus-002-APP-026&027-2014-2015 dated 08/12/2014 passed by Commissioner of Central Excise (Appeals), Goa.
2. In all these appeals a common issue is interpretation of Section 16 (1) of the Customs Act, 1962 read with Section 51 of the Customs Act, 1962. Section 16 (1) of the Customs Act and Section 51 of the Customs Act, 1962 reads as follows:
Section 16(1) in the Customs Act, 1962 (1) The rate of duty and tariff valuation, if any, applicable to any export goods, shall be the rate and valuation in force,
(a) in the case of goods entered for export under section 50, on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51;
(b) in the case of any other goods, on the date of payment of duty.] Section 51 in the Customs Act, 1962
51. Clearance of goods for exportation.Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.
The respondents are engaged in export of iron ore from Goa. In all these cases, during the period when the iron ore was being loaded on the ship at the port, the rate of duty was enhanced. Consequently duty was demanded on the entire quantity exported. The respondents had argued that enhanced duty would be applicable only to the material loaded after the duty was enhanced. The respondents have argued that enhanced duty cannot be demanded on the material which was loaded on the ship before the enhancement of duty. In case of M/s.Fomento Resources Pvt. Ltd. and M/s.Pokle & Co. the duty was enhanced from 20% to 30% vide Notification No.129/2011-Cus dated 30/12/2011. In case of M/s.Chowgule & Co. Pvt. Ltd., the duty was enhanced from nil to 5% ad valorem vide Notification No.146/09-Cus dated 24/12/2009. In all the cases, the original adjudicating authority assessed the entire quantity under the higher rate of duty. The appellate authority in all the cases allowed the benefit of lower duty on the material loaded in the ship prior to the enhancement of duty. The appellate authority also allowed consequential refund of duty paid. Aggrieved by the said order of Commissioner (Appeals), Revenue is in appeal before the Tribunal.
4. The learned AR argued that in all the cases let export order on the shipping bill has been given after the complete loading of the ship. The learned AR argued that at the time of passing of the let export order, the rate of duty applicable was the enhanced rate of duty as the let export order was given after the issue of notification enhancing the rate of duty. The learned AR relied on the decision of the Honble High Court in the case of Prime Mineral Export Private Ltd. Vs. UOI 2010 (257) ELT 414. He pointed out that the facts in the said case were identical. He particularly referred to para 2 of the said case which reads as follows:
2.?According to the petitioner, a shipping bill dated 18th December, 2009 was presented for export of 54600 tonnes of lumpy iron ore as provided under Section 50 of the Customs Act, 1962 (hereinafter referred to as the said Act). The case of the petitioner is that the goods were assessed provisionally under Section 18 of the said Act and accordingly, a bond has been furnished by the petitioner. The case of the petitioner is that the goods were presented for examination in three lots between 19th December, 2009 to 22nd December, 2009 and that the same were passed for shipment. Accordingly, an endorsement on the shipping bill, let export order was made on 22nd December, 2009. As per notification dated 7th December, 2008, duty at the rate of 5% ad volorem was assessed on the goods. According to the petitioner, the duty at 5% was paid on 23rd December, 2009. The loading of the vessel commenced on 20th December, 2009 and was completed on 25th December, 2009. The grievance in the petition is as regards non-release of duplicate/exchange control copy of the shipping bill along with the Statutory Declaration Form (for short SDF), so as to enable the petitioner to submit the same to the Reserve Bank of India authorities as per the provisions of Foreign Exchange Management (Export of Goods and Services) Regulation, 2000.
4.1 The learned AR further argued that the decision in the case of Narayan Bandekar & Sons Pvt. Ltd. Vs. CC&E, Goa 2010 (259) ELT 362, the Honble High Court of Bombay held as follows:
6.?We are concerned with clause (a) of sub-section (1) of Section 16 which provides that in case of goods entered for export under Section 50, the date of determination of rate of duty and tariff valuation of export goods will be the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under Section 51 of the said Act. Sections 50 and 51 of the said Act read thus :
50.?Entry of goods for exportation.- (1)?The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form.
(2)?The exporter of any goods, while presenting a shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration as to the truth of its contents.
51.?Clearance of goods for exportation.- Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.
7.?Sub-section (1) of Section 50 contemplates that the exporter of the goods should make entry thereof to the proper officer by presenting a shipping bill. After satisfying that the exporter has paid the duty assessed on the goods, the proper officer can exercise power under Section 51 and make an order permitting clearance and loading of the goods for exportation. In the case of Prime Mineral Exports Private Ltd. v. Union of India and another, (W.P. No. 374/2010, decided by this Court on 5th July, 2010 [2010 (257) E.L.T. 414 (Bom.)], in paragraph 7, this Court has observed thus :
As per paragraph 40 of the CBECs Customs Manual of Instructions, on passing of a shipping bill by the Export Department, the exporter has to present the goods to the shed appraiser (export) in docks for examination. The shed appraiser may mark the document to a Custom Officer for examining the goods. If the description and other particulars of the goods are found to be as declared, the shed appraiser gives a let export order after which the exporter may contact the preventive superintendent for supervising the loading of the goods on the vessel. The order passed in the nature of let export order is an order permitting the clearance and loading of the goods for exportation in accordance with Section 51 of the said Act.
8.?Coming back to the facts of the case, on the shipping bills, the proper officer - Commissioner of Central Excise has recorded the examination report which reads thus :
Examination Report Inspected the lot, checked the description. Quantity actually loaded will be determined on the basis of draught survey Report. The Shipping Bills show that Let Export Order was signed on 28th February, 2007 by the Superintendent Central Excise and on the same day an order allowed for shipment in full was passed by the said officer. Admittedly, as of 28th February, 2007, only cess was payable on export of iron ore. There is no dispute that cess of Rs. 25,000/- and Rs. 17,000/- respectively was paid against the shipping bills on 28th February, 2007. Admittedly, on 28th February, 2007 no export duty was payable and what was payable was the export cess which was admittedly paid on the same day. The remarks made by the Superintendent of Central Excise show that he was satisfied that the goods were not prohibited goods and, therefore, he passed an order allowed for shipment on 28th February, 2007 and signed Let Export Order on the same day. Thus, the order permitting clearance and loading of goods for exportation under Section 51 of the said Act was made on 28th February, 2007. Thus, 28th February, 2007 is the date for determination of the rate of duty. Admittedly, on that day, the export duty was not payable. It became payable with effect from 1st March, 2007. The Commissioner of Customs (Appeals) held that the Let Export Order was issued on 28th February, 2007 and, therefore, both the requirements of filing of the shipping bill and issue of the Let Export Order were completed on 28th February, 2007 and, therefore, the relevant date under Section 16(1)(a) is 28th February, 2007. This aspect has been completely overlooked by the CESTAT. The CESTAT committed an error by holding that the relevant date as per Section 16(1)(a) of the said Act will have to be treated as 1st March, 2007 when loading was actually started. On a plain reading of Section 51 read with clause (a) of sub-section (1) of Section 16 of the said Act, the date of determination of the duty is the date on which an order was passed under Section 51 by the proper officer which in this case is 28th February, 2007. The date on which actual loading of iron ore was started is totally irrelevant.
In view of the above, the learned AR argued that the date and time of actual loading is not relevant and the only thing relevant date on which the let export order has been given. He also relied on the decision of the Tribunal in the case of Jindal Saw Ltd. Vs CC(E), Mumbai 2012 (280) ELT 135 (Tri-Mumbai) wherein the Tribunal has held that the rate of duty leviable on the date of let export order is applicable. The learned AR argued that multiple clearances for loading of goods are given as a trade facilitation measure and each order permitting loading of goods is not a let export order. He further pointed out that permission of loading of goods are given at the stage of check list of shipping bills. He argued that such directions of loading of goods cannot be treated as let export order and only the final let export order date mentioned in the shipping bill can be considered as the date of let export order.
5. The learned Counsel for the respondents argued that the permission under Section 51 is granted to them every day the physical loading is done. He pointed out that in the check list of the shipping bill it can be seen that such permission has been granted on each day when loading has taken place. Thus rate applicable on each day of loading will be applicable to the material loaded on that day since for each loading a separate permission of loading is granted. He argued that in such circumstances the enhanced rate of duty would be applicable only to the consignments loaded after the issue of notification enhancing the rate of duty as only in such cases the permission for loading under Section 51 was granted after the issue of notification. He argued that enhanced rate of duty cannot be applied to the material loaded prior to the issue of notification enhancing the duty as in this case the permission under Section 51 of the Customs Act was granted prior to the issue of notification. He argued that the Commissioner (Appeals) has rightly allowed their appeals.
5.1 He argued that the endorsement on the check list for export reads as follows:
Inspected the lot of 20,000 MT of iron ore fines at bank stream in barges. Examined the same superficially checked the desp. and quantity as per invoice and other related documents, RSS will be drawn in triplicate as per ISI specifications by recognized sampler in presence of CHA/exporter under customs supervision and the same will be forwarded to Dy.CC for test.
Under this endorsement there is a remarks passed for shipment of the Preventive Officer. He pointed out that this kind of endorsement was made separately on each day when the loading has happened. The learned Counsel argued that this is in fact the permission under Section 51 of the Customs Act and can be called a let export order.
5.2 He argued that there is no bar on granting such permission under section 51 or the let export order for part consignment and he relied on the decision of the Tribunal in the case of Kineta Minerals & Metals Ltd. 2009 (241) ELT 416 (Tribunal). He particularly relied on para 6 of the order which reads as follows:
6.?The Customs procedure is like this. In case of export of the goods, the export manifest is filed prior to the departure of the vessel in terms of Section 41 of the Customs Act. The said manifest contains all the goods which are in the ship and to be exported. In terms of Section 31, loading of the export goods will be done only after the grant of entry outwards and no export goods shall be loaded unless the shipping bill is passed by the proper officer and unless the goods are handed over to the Master of the vessel. We have already seen that Section 51 provides that when the proper officer is satisfied that an entry made under Section 50 is correct and exporter has paid the duty, if any assessed, then he may make an order permitting clearance and loading for exportation. We also note that the order under Section 51 is a composite order permitting clearance and loading of the goods for export. Once that order is given, the relevant date in terms of Section 16 is the date of that order. Just because the loading is not completed or in process, there was change in the rate of duty, it does not mean that the earlier order permitting clearance and loading of the goods for export becomes null and void and the new rate would be applicable. That is not there in the Scheme of the Customs Act. What is relevant is that the date of assessment of the shipping bill. The assessment has been done prior to the imposition of Export duty, i.e. on 1-3-2007 arid the duty/cess determined in this case has already been collected prior to 1-3-2007. Nothing can prevent for the export of the consignment and the later changes in the rate of duty would not be relevant. In view of this, we do not find that the impugned order is legal and proper. In fine, we are of the view that of the entire quantity covered by the two shipping bills, no export duty would be leviable as the order permitting clearance and loading has been done even prior to 1-3-2007 which is prior to the imposition of Export duty. Hence in terms of Section 16 of the Customs Act, in the present case, the rate of duty and valuation would be only as on the date of order permitting clearance and loading under Section 51 of the Customs Act, 1962. Any change subsequent to the date of order under Section 51 would not be applicable to the consignments in question. Hence we allow the appeal with consequential relief.
5.3 The learned Counsel further argued that each permission for loading granted on the checklist of shipping bill is valid permission under section 51. In this regard he referred to Rule 5 & 6 of the Shipping Bill (Electronics Declaration) Regulations 2011 which reads as follows:
5. The checklist together with the supporting export documents and challan evidencing payment of duty and/or cess, if any, shall be presented to the proper officer of customs for making an order permitting clearance, for loading of goods for exportation, after examination of the export goods if so required.
6. After making an order under regulation 5 the proper officer shall generate the original (customs copy), exporters copy exchange control copy and the export promotion copy of shipping bills.
The learned Counsel argued that let export order on each consignment of the shipping bill is necessary otherwise the goods will be liable to confiscation under Section 13 of the Custom Act. He pointed out that the goods loaded in vessel without a let export order have been held to be liable to confiscation and penalty in the following case of Saurashtra Cement Ltd. 2013 (298) ELT 580 and Nichrome India Ltd. 2010 (251) ELT 147.
5.4 The learned Counsel further sought to differentiate their case from the decision of the Commissioner (Appeals) in the case of Alpine Mineral (order-in-appeal dated 03/04/2013). He argued that in the said case approximately 1,16,000 MT was loaded by mid-night of 29/12/2011 and balance on 30/12/2011. The rate of duty was enhanced to 20% with effect from 30/12/2011. He argued that in the said case let export order under Section 51 granted on 30/12/2011. There was no permission to load granted on 29.12.2011. In view of the above, he argued that since there was only one let export order and the same was granted on 30/12/2011 the rate of duty applicable on 30/12/2011 became applicable. He argued that in their case there are in fact four permissions to load on different dates, therefore the case is distinguishable.
6. We have considered the rival submissions. We find that Section 16 (1) and Section 51 of the Customs Act, are relevant in this case. The said sections reads as follows:
Section 16(1) in the Customs Act, 1962 (1) The rate of duty and tariff valuation, if any, applicable to any export goods, shall be the rate and valuation in force,
(a) in the case of goods entered for export under section 50, on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51;
(b) in the case of any other goods, on the date of payment of duty.] Section 51 in the Customs Act, 1962
51. Clearance of goods for exportation.Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.
Section 51 prescribes that on being satisfied that the export goods are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the goods may permit clearance and loading of goods for exportation.It is seen that in the instant case at the time of export following endorsement has been made by the Customs officers.
Inspected the lot of 20,000 MT of iron ore fines at bank stream in barges. Examined the same superficially checked the desp. and quantity as per invoice and other related documents, RSS will be drawn in triplicate as per ISI specifications by recognized sampler in presence of CHA/exporter under customs supervision and the same will be forwarded to Dy.CC for test.
Under the endorsement the preventive officer has also recorded passed for shipment. It is seen that in all these cases the duty has been paid before start of loading. The fact that permission of loading is granted implies that the officer has held that the goods are not prohibited. In each of the cases entire duty has been paid on the first date of loading. Thus each permission of loading can be construed to be a permission under section 51 of the Customs Act.
14. In the case of of Narayan Bandekar & Sons Pvt. Ltd., the Honble High Court of Bombay reported in 2010 (259) ELT 362 has observed that actual time of loading of the ship is not relevant for the purpose of ascertaining the date for the purpose of Section 16 (1) (a) . In the said case the duty was enhanced from 01/03/2007 while the goods were received in the port and order allowing shipment of the same was given on 28/02/2007 the loading of the goods happened on 01/03/2007. In these circumstances, the Honble High Court held that the date on which let export order has been given i.e. 28/02/2007 is the relevant date for the purpose of Section 16 (1) (a). The facts in the said case are significantly different in so far as no seperate permission for loading was granted in ports and there was only one let export order. Since there was only one let export order (permission for clearance) for loading of the ship as against multiple permissionsin the instant case, the decision of the Honble High Court cannot be applied. In the case of Kineta Minerals & Metals Ltd. 2009 (241) ELT 416 (Tribunal). Under similar circumstances permission for clearance and loading of goods for exportation was granted prior to 01/03/2007. However, loading on the goods continued after 01/03/2007. In these circumstances the Tribunal observed as follows:
6.?The Customs procedure is like this. In case of export of the goods, the export manifest is filed prior to the departure of the vessel in terms of Section 41 of the Customs Act. The said manifest contains all the goods which are in the ship and to be exported. In terms of Section 31, loading of the export goods will be done only after the grant of entry outwards and no export goods shall be loaded unless the shipping bill is passed by the proper officer and unless the goods are handed over to the Master of the vessel. We have already seen that Section 51 provides that when the proper officer is satisfied that an entry made under Section 50 is correct and exporter has paid the duty, if any assessed, then he may make an order permitting clearance and loading for exportation. We also note that the order under Section 51 is a composite order permitting clearance and loading of the goods for export. Once that order is given, the relevant date in terms of Section 16 is the date of that order. Just because the loading is not completed or in process, there was change in the rate of duty, it does not mean that the earlier order permitting clearance and loading of the goods for export becomes null and void and the new rate would be applicable. That is not there in the Scheme of the Customs Act. What is relevant is that the date of assessment of the shipping bill. The assessment has been done prior to the imposition of Export duty, i.e. on 1-3-2007 arid the duty/cess determined in this case has already been collected prior to 1-3-2007. Nothing can prevent for the export of the consignment and the later changes in the rate of duty would not be relevant. In view of this, we do not find that the impugned order is legal and proper. In fine, we are of the view that of the entire quantity covered by the two shipping bills, no export duty would be leviable as the order permitting clearance and loading has been done even prior to 1-3-2007 which is prior to the imposition of Export duty. Hence in terms of Section 16 of the Customs Act, in the present case, the rate of duty and valuation would be only as on the date of order permitting clearance and loading under Section 51 of the Customs Act, 1962. Any change subsequent to the date of order under Section 51 would not be applicable to the consignments in question. Hence we allow the appeal with consequential relief.
In the said decision, the Tribunal distinguished the Boat note issued under Section 35 of the Customs Act from the permission given under Section 51 of the Customs Act. It was held that date of issue of boat note is irrelevant in so far as the determining the date relevant for the purpose of Section 15 (1) (a). This decision is consistent with the decision of the Honble High Court in the case of Narayan Bandekar & Sons (supra). The decision of Kineta Minerals & Metals Ltd. has been upheld by the Honble High Court of Andhra Pradesh as reported in 2011 (269) ELT 494 (A). The Revenue has relied on the decision of the Honble High Court in the case of Prime Mineral Export Pvt. Ltd. (supra). In the said case the goods were presented for examination in three lots between 19/12/2009 to 23/12/2009 and the same were passed for shipment and endorsement of the shipping bill as let export order was made on 22/12/2009. The loading of the vessel was commenced on 20/12/2009 and was completed on 26/12/2009. The duty @ 5% was paid on these goods as per the existing rate on 23/12/2009. However, on 24/12/2009 the rate of duty was enhanced to 10%. The issue before the Honble High Court in the said case was the grievance of the appellant regarding the non-release of duplicate/exchange control copy of the shipping bill along with the statutory declaration form so as to enable the petitioner to submit the same to the Reserve Bank of India authorities as per the provisions of Foreign Exchange Management (Export of Goods and Services) Regulation, 2000. After examining the facts of the case the Honble High Court observed that after a let export order is issued the documents cannot be withheld and the said documents will have to be released. Even if the documents are released, the authorities are not precluded from taking steps for recovery of duty in accordance with law. It can be seen that the dispute before the Honble High Court of Bombay was not regarding the relevant date for the purpose of assessment under Section 16 (1) (a) but release of goods. Thus, no ratio has been laid down in the said decision of the Honble High Court.
6.1 In view of above we dismiss the appeals.
(Pronounced in Court on .) (MV Ravindran) Member (Judicial) (Raju) Member (Technical) pj 1 2