Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (Export ... vs M/S. Kamani Oil Industries on 4 April, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. C/745/06-Mum [Arising out of Order-in-Appeal No. 105/2006/MXH/AC/GrVII/06 dated 07/04/2006 passed by the Commissioner of Customs (Appeals), Mumbai] For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, 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 : No
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?
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Commissioner of Customs (Export Promotion), Mumbai
:
Appellant
VS
M/s. Kamani Oil Industries
:
Respondent
Appearance
Shri M.K. Sarangi, Jt. Commr. (AR) for the Appellant
Shri J.C. Patel, Advocate for the Respondent
CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial)
Honble Mr. C.J. Mathew, Member (Technical)
Date of hearing: 04/04/2016
Date of decision: 04/04/2016
ORDER NO.
Per : M.V. Ravindran
This appeal is filed by the Revenue against Order-in-Appeal No. 105/2006/MXH/AC/GrVII/06 dated 07/04/2006.
2. Heard both sides and perused the records.
3. The issue involved in this case is limited in as much it is to be considered whether the Crude Palm Kernel oil is vegetable fat and whether benefit of Notification No. 46/2002-Cus can be extended or otherwise. Notification No. 46/2002-Cus exempts material imported into India from whole of customs duty, as well as from CVD if the same is for replenishment by a licence as an intermediate. It is the case of the revenue that Crude Palm Kernel oil is not used as raw material, but it is an intermediate for manufacturing biscuits, it is not a raw material, hence not covered by DFRC licence. Coming to a conclusion that such a Crude Palm Kernel oil can not be used for manufacturing of biscuits, the benefit of Notification No. 46/2002-Cus was denied and the re-validation of DFRC lience were rejected.
4. Ld. departmental representative reiterated the grounds of the appeal and would submit that the Commissioner of Appeals has erred in coming to a conclusion that Crude Palm Kernel oil is covered under the duty free replenishment certificate license for intermediate supply.
5. We find that the first appellate authority is correct in coming to conclusion that Crude Palm Kernel oil is covered under the duty free replenishment certificate in as much, the Tribunal in the case of Good Health Agro Tech Pvt. Ltd. by final order No. 1334/2010 dated 10th November, 2010, was considering identical issue. After going through the requirements of DFRC held as under:
7.2 It is undisputed that the DFRC licences produced by the assessee/importer before the authorities are genuine and the said DFRC licences were purchased by the assessee from M/s. Parle Products Pvt. Ltd., Mumbai. It is also undisputed that the goods, which were imported by the assessee, are crude palm oil (edible grade). Another factual matter which is clear from the records is that the said crude palm oil (edible grade) does not figure in the list of sensitive items, which are listed in 4.31 of the handbook of procedure Volume-1 as amended by DGFT/Notice No. 4/2002-07 dated 1-4-2002.
7.3 We also find from the records that the DGFT authorities vide letter dated 29-6-2006 had informed M/s. Parle Products Pvt. Ltd. as under:
7.4 It can be seen from the above reproduced letter of the DGFT authorities that palm oil, coconut oil, palm kernel oil are one of the inputs which are required for the manufacture of biscuits.
7.5 Be that as it may, at the same time, we find that the Public Notice issued by the Customs Authorities vide Circular No. 24/2002 dated 6-5-2002 in respect of DFRC scheme reads as under:
2.2 DFRC Scheme DFRC scheme was first announced in Exim Policy 2000-2001 with effect from 1.4.2000 DFRC Scheme has been continued in Exim Policy 2002-2007 with some minor changes. The ealier DFRC scheme announced in 2000-01 Exim Policy required that for the purpose of allowing DFRC benefit to imported inputs used in the resultant expourt product, the quality, technical characteristics and specifications of the inputs under import should be the same as those used in the resultant export product. For this purpose the quality, technical characteristics and specifications of each input used in the resultant export product were required to be specified on the shipping bill and at the time of import Customs were required to co-relate it with the input under import so as to allow DFRC benefit to those inputs which were of the same quality, technical characteristics and specifications. Under the new DFRC scheme such co-relation of quality, technical characteristics and specifications has been done away except in the case of item which are listed in para 4.31 of the Hand book of procedure volume 1 as amended by DGFT/Notice No. 4/2002-07 dated 1.4.200. In respect of such items customs shall continue to ascertain the quality, technical characteristics and specifications of the inputs under import with reference to the quality, technical characteristics and specifications of the inputs used in the export product as declared on the shipping bill. Quantity of the each input shall be permitted in the DFRC licence in terms of SION for the relevant export product as earlier. Licence issued under DFRC scheme are freely transferable as earlier.
Other procedural requirements of DFRC scheme as specified in DORs earlier Circuler Nos. 33/2000-Cus dated 2.5.2000, 42/2000-Cus dated 2.5.2000 and 59/2000-Cus dated 11.5.2000 shall continue to be followed with the aforesaid modifications.
Customs Notification No. 46/2002-Cus dated 22.4.2002 has been issued to operationalise this scheme. 7.6 It can be seen from the above reproduced Circular that the question of co-relating the input and output would arise only in the case of sensitive items, as already reproduced by us in the earlier para that crude palm oil is not listed as a sensitive item, in para 4.31 of the Handbook of Procedures. The adjudicating authority has also not recorded any contrary findings to this submission made by the assessee before him. The entire adjudication proceedings and the findings of the adjudicating authority has proceeded only on the ground that the Crude Palm oil of Edible Grade imported by the assessee is required to be refined before it is put for any further use. This would indicate that the adjudicating authority has accepted the fact that after refining, the crude palm oil (edible grade) can be used for the manufacturing of biscuits. It is relevant to reproduce Notification No. 90/2004 which extends the benefit of DFRC scheme to the goods imported under DFRC License.
Notification: 90/2004-Cus. dated 10 September, 2004 Duty Free Replenishment Certificate (DFRC) or DFRC for intermediate Supply- Exemption to imports thereunder-
In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials required for the manufacture of the final goods when imported into India, from the whole of the duty of Customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), subject to the following conditions, namely:-
(i), (ii), (iii), (iv) Explanation: For the purposes of this Notification:
(i), & (ii) .
(iii) Materials means
(a) raw materials, components, intermediates, consumables and parts used in the manufacture of resultant product;
(b) packaging materials required for packing of resultant product; and
(c) fuel.
7.7 It can be seen from the above reproduced General Exemption Notification No. 90/2004-Cus, the benefit can be availed by an importer for the materials imported under DFRC licence, even if it is an intermediate. In the case in hand, there is factual findings that the goods imported, i.e crude palm oil (edible grade) requires refining before it can be put to use for the manufacturing of biscuits, it would get covered under the category of materials as an intermediate. If that be so, the benefit of Notification No. 90/2004 cannot be denied to the assessee.
7.8 We also find strong force in the submissions of the Ld. Counsel, that the nexus is not required to be established by the transferee of the licence. It is seen that in the case before us, it is undisputed that the appellants/importer had purchased DFRC licences from M/s. Parle Products Pvt. Ltd., there is no need for them to establish the nexus of the goods imported and the consumption thereof in the export of the goods as mentioned in the DFRC. This law has been squarely settled by the co-ordinate bench in the case of Ramniklal S. Ghosalia & Co., wherein the bench held as under:-
2. We have heard both sides. We find that the Commissioner (Appeals) has rightly relied upon the decisions of the Tribunal holding that nexus is not required to be established by the transferee of the licence. No contra decision has been cited by the Ld. D.R. or in the appeal memo. Further, the recent decision of this Tribunal and the Honble Madras High Court have taken the same view. In the case of C.C., Chennai vs. Salem Stainless Steel 2001(131)ELT30 (Mad.), the High Court has held that when the original licensees having already discharged their export obligations and obtained transfer endorsements and sold the licence, nexus is not required to be established by the transferee. This is the view taken by this Tribunal in Shyam Traders vs. C.C., Mumbai 2002 (143) ELT 96 (Tri.-Mum.).
7. It can be seen from above reproduced ratio that the issue is now squarely covered by the decision of the Tribunal. We hold that the impugned order is correct, legal and does not suffer from any infirmity, and no interference is warranted.
8. Impugned order is upheld and the appeal is rejected with consequential relief of re-validation of licence in favour of respondent.
(Operative part pronounced in court) C.J. Mathew Member (Technical) M.V. Ravindran Member (Judicial) saifi 8 Appeal No. C/745/06-Mum