Custom, Excise & Service Tax Tribunal
Yadav Agro Industries vs Commissioner, Customs-New Delhi(Air ... on 13 January, 2023
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Custom Appeal No. 50013 of 2020
(Arising out of Order-in-Appeal No. CC(A)/Customs/D-1 EXP-NCH/319/2019 dated
05.09.2019 passed by the Commissioner of Customs (Appeals), New Delhi)
M/s. Yadav Agro Industries .... Appellant
New Mandi, Farrukhabad Road,
Etawah-206001 (UP)
VERSUS
The Commissioner of Customs,
Air Cargo Export, New Delhi ....Respondent
New Customs House, New Delhi APPEARANCE:
Shri Ashish Kumar Shukla, Advocate for the Appellant Shri Rakesh Kumar, Authorized Representative of the Department CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P.V.SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing/ Decision: January 13, 2023 FINAL ORDER NO. 50052/2023 JUSTICE DILIP GUPTA This appeal seeks the quashing of the order dated September 05, 2019 passed by the Commissioner of Customs (Appeals)1, by which the order dated November 17, 2016 passed by the Additional Commissioner confirming the demand of customs duty in respect of a licence issued under the Export Promotion Capital Goods2 Scheme has been confirmed.
2. It transpires from the records that the appellant had imported and cleared capital goods under a licence dated December 06, 2006 issued under the EPCG Scheme at concessional rate of customs duty of 5% under the notification
1. the Commissioner (Appeals)
2. the EPCG 2 C/50013/2020 dated September 17, 2004. The exemption under the said notification is subject to certain conditions and the relevant portion is reproduced below:
"2. The exemption under this notification shall be subject to the fallowing conditions, namely :-
(1) that the goods imported are covered by a valid licence issued under the Export Promotion Capital Goods Scheme in terms of Chapter 5 of the Foreign Trade Policy permitting import of goods at the rate of five percent duty and the said licence is produced for debit by the proper officer of customs at the time of clearance:
Provided that for import of spare parts specified at S. No. 4 of the said Table, the validity period of the licence shall be deemed to be the period permitted for fulfillment of the export obligation in full;
(2) that the importer executes a bond in such form and for such sum and with such surety or security as may be specified by the Deputy Commissioner of Customs or Assistant Commissioner of Customs binding himself to fulfil export obligation on FOB basis equivalent to eight times the duty saved on the goods imported as may be specified on the licence, or for such higher sum as may be fixed by the Licensing Authority, within a period of eight years from the date of issue of licence, in the following proportions, namely:-
S.No. Period from the date of issue of licence Proportion of total export obligation (1) (2) (3)
1. Block of 1st to 6th year 50%
2. Block of 7th to 8th year 50% Provided that where the duty saved is not less than Rs. 100 crores or where the licence is issued to units in the agri export zone as may be notified by the licensing authority, the export obligation shall be fulfilled within a period of twelve years from the date of issue of licence in the following proportions, namely:-
S.No. Period from the date of licence Proportion of total export obligation (1) (2) (3)
1. Block of 1st to 10th year 50%
2. Block of 7th to 8th year 50%
3. The appellant has enclosed a copy of the license dated December 06, 2006, which clearly shows that the export obligation period is twelve years.
4. A perusal of the aforesaid notification indicates that where the export obligation period is twelve years, 50% of the 3 C/50013/2020 proportion of total export obligation has to be fulfilled in block of first to tenth year. The appellant had, therefore, to fulfill 50% of the total export obligation by December 05, 2016.
5. A show cause notice dated October 14, 2015 was, however, issued to the appellant by the Additional Commissioner of Customs mentioning therein that the appellant had failed to fulfill the conditions of the Notification as he failed to submit the Export Obligation Discharge Certificate3 within the stipulated time. The relevant portion of the show cause notice is reproduced below:
" Whereas it appears that M/s. Yadav Agro Industries, New Mandi, Farrukhabad Road, Etawah-206001 (U.P.) (having IC No. 0606002588) (hereinafter referred to as the notice) had imported and cleared capital goods under EPCG Licence No.0630000774 dt. 06.12.2006 at concessional rate of 5% under Notification No. 97/2004-Cus dt. 17.09.2004 as amended subject to the condition that the importer fulfills Export Obligation as prescribed in the said Notification.
2. And whereas the notice was required to fulfill the conditions of the said Notification including condition to produce within 30 days of the expiry of each block year from the date of issue of licence, evidence showing the extent of Export Obligation fulfilled, and where Export Obligation of any particular block is not fulfilled, the importer shall within 3 months from the expiry of said block pay duties of Customs of an amount equal to that portion of the duties leviable on the goods, but for the said exemption, which bears the same proportion as the unfulfilled portion of the Export Obligation bears to the total Export Obligation together with interest at the rate applicable from the date of clearance of the goods.
3. Whereas the notice has failed to fulfill the conditions of the said Notification and submit the requisite evidence within the prescribed period regarding fulfillment of export obligation. It, therefore, appears that the total Customs duty foregone in respect of import made by them amounting to Rs. 5,31,762/- (Rs. Five Lakh Thirty One Thousand Seven Hundred Sixty Two Only) is liable to be recovered under the proviso of Section 143(3) of the Customs Act, 1962 read with Section 28 and interest under Section 28AA of the Customs Act, 1962."
6. The appellant filed a reply to the aforesaid show cause notice stating therein that it had written a letter dated September 26, 2016 mentioning that it had applied for issue of the EODC to
3. the EODC 4 C/50013/2020 the Joint Director General of Foreign Trade, Kanpur and so sometime may be given to submit the certificate.
7. The Additional Commissioner, however, by order dated November 17, 2016 confirmed the demand of customs duty for violation of the conditions of the exemption notification. The Additional Commissioner noticed that though sufficient time had been given to the appellant to submit the EODC, but it was not certain in how much time the said certificate would be produced and therefore, no purpose would be served by keeping the adjudication proceedings pending. The Additional Commissioner, therefore, observed that the appellant failed to comply with the conditions of the notification as it had not submitted the Export EODC within the stipulated period. The relevant portion of the order passed by the Commissioner is reproduced:
"8. The issue involved in the instant case is that the notice had imported and cleared capital goods under ECG Licence No. 0630000774 dated 06.12.2006 at concessional rate of Custom duty of 5% under Notification No. 97/2004-Cus dated 17.09.2004 as amended subject to the condition that the importer fulfills Export Obligation as prescribed in the said Notification. The notice was required to fulfill the condition to produce, within 30 days of the expiry of each block year from the date of issue of license, evidence showing the extent of Export Obligation fulfilled, and where Export Obligation of any particular block is not fulfilled and where Export Obligation of any particular block is not fulfilled, the importer shall within 3 months from the expiry of said block pay duties of Customs of an amount equal to that portion of the duties leviable on the goods but for the said exemption, which bears the same proportion as the unfulfilled portion of the Export Obligation bears to the total Export Obligation together with interest at the rate applicable from the date of clearance of the goods. I observe that the noticee has not submitted export obligation discharge certificates within the stipulated period so far, hence he has failed to fulfill the condition of the notification. The notice failed to meet with their legal obligations.
9. The matter was taken up with concerned office of DGFT vide this office letters dated 18.05.2016 and 15.06.2016 informing therein that Government revenue was locked up due to non issuance of the required EODC. It was also informed to the DGFT that the case is 5 C/50013/2020 pending adjudication in this office owing to decisions pronounced by the higher courts to the effect that principles of natural justice should be maintained while deciding the cases where issuance of EODC is involved, Meetings were also held with officials of DGFT to obtain pending EODC but subject EODC has not been submitted till date. It is not understood as to how such a vital legal requirement can be kept pending for years. I find that the notice has been given. sufficient time and opportunity to produce the EODC. However, as stated before, the notice has not submitted any proof/evidence with regard to fulfillment of export obligations in respect of aforesaid authorization and for want of any information it is also. not ascertainable whether the noticee has filed an applications with DGFT in this regard. It appears that the notice is least concerned regarding their case."
(emphasis supplied)
8. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals), who by order dated September 05, 2019 dismissed the appeal and confirmed the order passed by the Additional Commissioner. The relevant portion of the order passed by the Commissioner (Appeals) is reproduced below:
"5.2 I also find that the Adjudicating Authority was in touch with the DGFT and the DGFT had intimated the status as pertaining to Kanpur. It was not clear as to how much time would lapse by the time the EODC was obtained by the appellant. In the interest of revenue and in the interest of Justice, enough opportunity was already granted. The submission of EODC cannot be kept pending for an indefinite period. Order passed by the adjudicating authority is correct, as the EODC was not submitted at that point of time and the order strictly adheres to the principles of natural justice.
5.3 Revenue matters pertaining to Customs Duty or benefits arising out of these Schemes are to boost exports. These facilities shall not be misused. There has to be a deterrent for effective measures to be taken to safeguard the revenue. I have gone through the other case laws submitted by the appellant and find that the facts and circumstances of the case laws are different from that of the facts and circumstances in the instant case, hence, the same have no bearing on the present proceedings and therefore, are distinguishable. In the light of these findings, I don't find any reason to interfere with the decision in the Order in Original and hence pass the following order."
(emphasis supplied) 6 C/50013/2020
9. Shri Ashish Kumar Shukla, learned counsel appearing for the appellant submitted that the adjudicating authority and the Commissioner (Appeals) both failed to appreciate that in a case where the export obligation period is twelve years, 50% of the total export obligation was required to be fulfilled by the December 05, 2016 and therefore, the show cause notice could not have been issued prior to this date on October 14, 2015 alleging violation of the conditions of the notification. Learned counsel also pointed out that in this case the entire export obligation had been fulfilled within ten years and the appellant had sent a letter dated November 09, 2016 to the DGFT for issuing of the EODC, which Certificate was ultimately provided to the appellant on December 09, 2016. Learned counsel also pointed out the delay on the part of the DGFT in issuing the Certificate cannot be attributed to the appellant. In this connection, learned counsel placed reliance upon the decision of the Delhi High Court in Smiiel vs. Deputy Commissioner of Customs4.
10. Shri Rakesh Kumar, learned authorized representative appearing for the Department has stated that though the license does mention that the export obligation period is twelve years, but it should have been eight years and the total export obligation was required to be fulfilled by the appellant at the end of the sixth year and since this was not done, the show cause notice was issued to the appellant. It is, therefore, his contention that as the appellant has not fulfilled the export obligation, the Commissioner (Appeals) was justified in dismissing the appeal filed by the
4. 2017 (347) E.L.T 20(Del.) 7 C/50013/2020 appellant to challenge the order passed by the Additional Commissioner.
11. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered.
12. It is not in dispute that the license that was issued to the appellant under the EPCG Scheme mentions the export obligation period is twelve years. This fact has neither been disputed in the show cause notice nor in the two orders passed by the Additional Commissioner and the Commissioner (Appeals). The show cause notice, in fact, does not even mention the obligation period and only makes a general allegation that the appellant had failed to fulfill the conditions of the notification and submit the requisite evidence within the prescribed period regarding fulfillment of export obligation. It is non-submission of the Certificate of fulfillment of export obligation that has been stressed by the Additional Commissioner since the order holds that despite time having been granted to the appellant to submit the Certificate it was not submitted.
13. Though it was the contention of the appellant that it had applied for issue the Certificate in time and the application was pending before the Director General of Foreign Trade, but still as the export obligation period has been mentioned to be twelve years in the license granted to the appellant and the conditions prescribed in the notification for fulfillment of export obligation is 50% at the end of the tenth year, which period expired on December 05, 2016, the show cause notice for non-fulfillment of the export obligation could not have been issued prior to 8 C/50013/2020 December 05, 2016. In the instant case, it was issued on October 14, 2015. It appears that show cause notice was issued to the appellant treating the total export obligation period to be eight years from the date of issuance of the license.
14. It is also not disputed that the appellant had applied for the issuance of the Certificate on November 09, 2016 before the expiry of ten years but it was issued to the appellant by the DGFT only on December 09, 2016. The appellant cannot be blamed for delay of three days since the appellant had admittedly applied for issuance of the certificate on November 09, 2016.
15. This issue was also examined by the Delhi High Court in Smiiel and it was observed that when there is a delay on the part of the DGFT in issuing the certificate, the appellant cannot be blamed.
16. Such being the position, it cannot be said that the appellant had violated any of the conditions of the notification.
17. The order dated September 05, 2019 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside. The appeal is, accordingly allowed with consequential relief(s).
(JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Archana