Custom, Excise & Service Tax Tribunal
M/S Unibourne Food Ingredients Llp vs Commissioner Of Customs, Hyderabad on 6 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH REGIONAL BENCH AT HYDERABAD
BENCH - DB
COURT - I
Appeal(s) Involved:
C/31038/2017-DB
(Arising out of Order-in-original No C.No. S/28/DEEC/DFIA/01/2017-ACC dated 12/09/2017 passed by Commissioner of Customs, Hyderabad)
M/s Unibourne Food Ingredients LLP
62-B, Mittal Chambers,
Behind Vidhan Bhavan,
Nariman Point, Mumbai-21
Appellant(s)
Versus
Commissioner of Customs, Hyderabad -
Respondent(s)
Appearance:
Mr. Sujay Kantawala, Adv for the Appellant.
Mr M. Chandra Bose, A.R. for the Respondent.
CORAM:
HON'BLE Mr. M.V.RAVINDRAN, MEMBER (JUDICIAL)
HON'BLE Mr. MADHU MOHAN DAMODHAR, MEMBER (TECHNICAL)
Date of Hearing: 13/09/2017
Date of Decision: 06/11/2017
Final Order No. A/31757/ 2017
[Order per: M.V.RAVINDRAN]
.
The Appellant M/s. Unibourne Food Ingredients LLP, (IEC Code No. 0315017601), Mumbai imported 275 Kgs.(Drum) of Apple Juice Concentrate and sought duty free clearance of the said goods under a transferable DFIA No. 0310776851 dated 02.04.2014 covered under B/E No. 3095464 dated 04.09.2017. The Appellant contends that the said transferable DFIA No. 0310776851 dated 02.04.2014 was duly transferred in itsfavour in terms of the provision of Para 4.36A of HBP (2009-14), and it inter alia permits import of Relevant Fruit Juice covered under ITC (HS) 2000 0000.
2. The proper officer after examining the relevant documents raised the following query through EDI system-
QUERY RAISED:
Vide Notification No. 31/01.08.2013 Para 4.1.15 was inserted wherein it stipulates that inputs actually used in the manufacturing of the export product should only be imported under the DFIA authorisation. Similarly inputs actually imported must be used in the export product. Please submit the shipping bills under which the related products were exported (Biscuits and Assorted Confectionaries) with the relevant consumption of the imported inputs to fullfill the criteria under the para 4.1.15. Further the actual product being imported i.e, Apple Juice Concentrate is not figuring in the DFIA License No. 0310776851 dated 02.04.2017. Please furnish information/documents on the above issues to take up assessment of the Import consignment
3. The appellant thereafter submitted a reply vide letter 06.09.2017to the Principal Commissioner of Customs, Hyderabad, explaining that the appellant is only a re-transferee of the said DFIA, and inter alia submitted that the appellant is not required to fulfil the condition of Notification No. 31 dated 01.08.2013. The appellant further submitted that the licensing authorities have already verified and examined all the relevant issues and endorsement of transferability was made after satisfying with the said conditions. In any event, the appellant contended that DFIA Notification No. 98/2009-Cus dated 11.09.2009 does not specifyany such condition as stipulated in DGFT Notification No. 31 dated 01.08.2013. It was further contended that the goods are perishable in nature to seek expeditious clearance.
4. Thereafter, Ld. Dy. Commissioner vide letter no. S/28/DEEC/DFIA/01/2017-ACC dated 12.09.2017informed the appellant the decision of the Principal Commissioner pursuant to the said reply dated 06.09.2017, as follows:-
Please refer to your Bill of Entry under DFIA License referred above for clearance of Apple Juice Concentrate.
Consequent on your reply dated 06.09.2017 addressed to the Principal Commissioner of Customs, Hyderabad Customs Commissionerate, to our query dated 05.09.2017, it is to inform you that the matter has been deliberated upon and it is hereby informed as follows:
Since the goods, Apple Juice Concentrate is not figuring in the DFIA License, it appears that the goods are ineligible for duty free import under the DFIA. In view of the perishable nature of the goods, you may either produce a document specifically covering the item sought to be imported in DFIA License or get the goods cleared on merits (without reference to DFIA). If you wish to clear the goods on merits, you may confirm in writing. In case you wish to be heard in person, you may represent/appear before me on 15.09.2017 at 11 AM.
Currently, the Bill is under First Check with a direction to get the clearance of FSSAI, being a food item.
5. The appellant tsubmits that the said letter dated 12.09.2017 though issued by the Dy. Commissioner of Customs, ACC, Hyderabad, but conveys the decision of the Principal Commissioner of Customs declining DFIA benefits for the imported goods as an adjudicating authority. This decision of the adjudicating authority under the Act, is an appealable order under Section 129 (1) of the Customs Act, 1962 as per the ratio laid down in-
a) Sterlite Optical Technologies Vs. Commissioner of Customs (Export), ACC, Mumbai 2008 (226) ELT 0069;
b) Swiber Offshore Construction Pvt. Ltd. Vs. Commissioner of Customs, Kandla 2014(301) ELT 119 (Tri- Ahmd.
6. After the impugned decision of the Principal Commissioner of Customs, Hyderabad, which was communicated to the appellant, the Dy. Commissioner had also granted a hearing for further course in the matter. The appellant submits that the Dy. Commissioner, who is not empowered to review the decision of the Principal Commissioner of Customs, in the understanding of the appellant, has given the said hearing only for further consequential procedural aspects.
7. Since the goods are perishable and carry short shelf life and the mandatory pre-deposit is also paid by the appellant in terms of Section 129E of the Customs Act, 1962, the appeal was taken up for disposal with consent of both sides.
8. The Ld. Advocate of the appellant contended that the entire case is squarely covered by the judgement of A.V. Industries Vs. UOI- 2005 (187) ELT 9 (BOM) of the HonbleBombay High Court, wherein it was held that-
16.However, when the import is in accordance with import license issued to petitioner, the Respondents cannot take shelter under the import policy and purport to take action against the petitioner. It is not the case of the respondents that the deletion of the conditions set out in the license is due to misrepresentation or suppression of material facts on the part of the petitioners. It is not even the case of the revenue that the deletion of the license condition was carried out by the officers of the department in connivance of the petitioners. Therefore, if the deletion of the condition was a bona fide error or misconstruction of the import policy by the officers of the department the petitioners cannot be made to suffer.
9. In the instant case, the imported goods are Apple Juice Concentrate which is covered under the description of Relevant Fruit Juice as mentioned in the DFIA. In order to justify the usability of Apple Juice Concentrate in the export product, the advocate of the appellant produced documentary evidence taken from internet website which evidently shows that Apple juice concentrate is inter alia usable in confectionary, candies and bakery products.
10. The advocate of the appellant contends that the said DFIA is made transferable by the Regional Licensing Authority after examining and verifying the inputs /quantity etc. used in the export product. Once the licensing authority has finally endorsed the DFIA with transferability, it was not open to the customs authorities to seek further information on the usability and quantity of inputs used in the export product. Further DFIA Notification No. 98/2009-Cus dated 11.09.2009 has no such conditions with respect to the actual usability of input and quantity for availing DFIA benefits. Since the present consignment was sought for duty free clearance under a transferable DFIA issued as per Notification No. 98/2009-Cus dated 11.09.2009, there is no violation of any of the conditions of the said Notification. The Ld. Advocate contended that DFIA is issued under Standard Input-output Norms (SION) as specified by the DGFT and therefore the instant import being covered under the SION is clearly eligible for duty free exemption under DFIA Scheme. The appellant has relied upon the judgement of USMS Saffron Co. IncVs. Commissioner of Customs, ACC, Mumbai in Order No. A/3267/15/CB dated 30.09.2015.
11. It was further argued that the Honble Punjab & Haryana High Court in the case of Pushpanjali Floriculture Ltd., Vs. UOI 2016 (340) ELT 32 (P&H) has quashed and set aside Effect of the Notification nos. 31 dated 01.08.2013, 90 dated 21.08.2014 and Policy Circular No. 3 dated 02.08.2013. Therefore no such condition of actual usability of inputs and quantities can now be imposed on the DFIA. Accordingly, the Ld. Advocate for the appellant submits that the impugned decision deserves to be quashed and set aside by extending DFIA benefits for the present consignment covered under the aforementioned Bill of Entry.
12. In response, the Ld DR submitted that actual usability is required to be established in the case of DFIA Licenses, since it is covered under Notification No. 31 dated 01.08.2013. The DR also pointed out the condition of actual usability as mentioned in the said DFIA.The Ld. DR further contended that no proof to show that the DFIA has been actually transferred to the present appellant is annexed in the Appeal in the instant case.
13. Heard both the parties and perused the records.
14. On maintainability of appeal, the Ld. DR has not disputed that pursuant to query raised during assessment under the Act, the impugned decision is taken by the Principal Commissioner, and communicated by the Dy. Commissioner. We are satisfied that the appeal is maintainable as per the ratio laid down in the case of Swiber Offshore Construction Pvt. Ltd. Vs. Commissioner of Customs, Kandla 2014 (301) ELT 119 (Tri-Ahd).
15. Now coming to the merits of the case, the issue involved is on a narrow compass. In the instant case, the goods imported are Apple Juice Concentrate. The exemption is sought under Exemption Notification No. 98/2009-Cus dated 11.09.2009 by presenting a transferable DFIA No. 0310776851 dated 02.04.2014 which permits duty free import of Relevant Fruit Juice/Pulp/Puree. There is no reason given as to why Apple Juice Concentrate is not covered under the description Relevant Fruit Juice/Pulp/Puree permitted in the DFIA. Ld. DR could not justify as to how Apple Juice Concentrate would not be covered under the description Relevant Fruit Juice/Pulp/Puree, when the fact that Apple Juice Concentrate can inter alia be used in the manufacturing of export product in DFIA Assorted Confectionary and Biscuits, is not in dispute, and the Ld. Advocate has produced evidence to show that the imported product can be used in manufacturing of various products which includes candies and confectionary applications and pies and bakery goods.
16. There is no dispute that the quantity and value of goods Apple Juice Concentrate is within the maximum permitted quantity of Relevant Fruit Juice/Pulp/Puree and CIF value endorsed on the Transferrable DFIA. The issue before the Adjudicating Authority was whether documentary evidence is required to show that imported Apple juice concentrate is actually used in the exported product, and further whether to extend DFIA benefit apart from actual use, the quantity actually used is also required to be established in terms of DGFT Notification No. 31 dated 01.08.2013.
17. We find that the said DFIA is made transferable by the licensing authority by an endorsement dated 14.07.2017. With the endorsement of transferability, the DFIA and inputs are made freely transferable in terms of the provision of Para 4.2.6 of the FTP read with para 4.36A of Hand Book of Procedures. Therefore we find force in the contention of the Ld. Advocate for the appellant that once the transferability is endorsed after the verification and examination by the licensing authority, department cannot take shelter under import policy and purport to take action against importer as held by the Honble Bombay High Court in the case of A.V. Industries Vs. UOI 2005 (187) ELT 9 (BOM). We are bound by the binding precedent and we cannot ignore the same to deny exemption once covered under the description, value and quantity mentioned in the Transferrable DFIA.
18. The second arguement put forward by the Ld. Advocate is with respect to conditions of DFIA exemption Notification No. 98/2009-Cus dated 11.09.2009. The said notification exempts materials imported into India against a DFIA issued in terms of Para 4.2.1 and 4.2.2 of FTP from the whole of customs duty leviable thereon which is specified in the First Schedule to the Custom Tariff Act, 1975 (51 of 1975) subject to the condition namely that the description, value and quantity of materials imported are covered by the said authorisation and the said authorisation is produced before the proper officer of customs at the time of clearance of debit.
19. We find that in the instant case imported goods described as Apple Juice Concentrate and value &quantity thereof, is covered under the description, value and quantity of inputs permitted in the DFIA. We do not find any condition in the Notification 98/2009-Cus dated 11.09.2009 (as amended) to the extent that only those inputs and to the extent of their quantity actually used shall be available for claiming the exemption benefits.
20. We also find that Larger Bench of Tribunal in the case of Hico Enterprises Vs. Commissioner of Customs, Mumbai reported in 2005 (189) ELT 0135 (Tri-LB) has observed that 42. ...The Customs officers, while implementing the Notification 203/92-Cus., cannot question or appear to question the decisions and actions of the competent authority in the said Directorate unless it is strictly permitted by the terms of the Notification. The plain reading of condition (vii) makes it abundantly clear that benefit of Notification is to be extended to a person other than a person to whom the licence has been issued, if there is an endorsement of transfer by the licensing authority both on the VBAL and the DEEC. Benefit of Notification, cannot, therefore, be denied to the transferee on the ground of breach of condition (va). The Customs Authorities cannot question the powers of the licensing authorities unless it is mentioned in the Notification.
21. We further find that the effects of Notification No. 31 dated 01.08.2013 which is relied upon by the Ld. DR has already been quashed and set aside by the Honble Punjab & Haryana High Court in Pushpanjali floriculture Ltd., Vs. UOI 2016 (340) ELT 32 (P&H), along with effects of Notification No. 90 dated 21.08.2014 and Policy Circular No. 3 dated 02.08.2013, while observing thus-
28.How an importer could be required only to import? inputs which have actually been used in products which already stand exported. SION norms are notified to prescribe permissible inputs against any export product. The DFIA is issued on such standard basis. It cannot be argued that what is contemplated by these clauses is only replenishment, as replenishment is an entirely independent concept, in respect of which the FTP and the HOP contains separate clauses. We can only understand these clauses, i.e., Para 4 of the impugned Notification dated 1-8-2013, and Para 2 of the impugned Public Notice dated 30-10-2013, as stipulating that, from the product which already stands exported, the inputs used in the manufacture of thereof should somehow be extracted, and only such inputs be allowed to be subsequently imported into India. To say the least, such requirement is manifestly absurd, and its very incorporation, in the impugned Notification and Public Notice, reflective, as the learned Senior Counsel has correctly emphasized, of total non-application of mind, on the part of the authorities issuing the said Notification/Public Notice.
22. The Hon. High Court in the aforementioned case has clearly observed that the condition that only those inputs which are actually been used in the export product shall only be imported appears to be manifestly absurd. Thus, in view of the above observation of the Honble High Court and by considering the documents on record, we are of the view that the transferee license holder need not prove the actual quantity and use of input in the exported product for availing benefits of exemption notification no. 98/2009-Cus dated 11.09.2009.
23. We therefore find that the impugned decision to the extent it denies exemption is erroneous. The appellant is entitled for duty free import of the goods Apple Juice Concentrate under the Transferable DFIA presented by it. The clearance of FSSAI, being a food item will have to be obtained as mentioned in the impugned decision.
24. Accordingly the appeal is allowed with consequential reliefs.
(Order pronounced in open court on 06/11/2017)
MADHU MOHAN DAMODHAR
MEMBER (TECHNICAL)
M.V.RAVINDRAN
MEMBER (JUDICIAL)
Neela Reddy
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