Custom, Excise & Service Tax Tribunal
M/S P. T. Impex Pvt. Ltd vs Cce, Delhi-Iii on 29 November, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/decision: 29.11.2013 For Approval and Signature: Honble Mr. Justice G. Raghuram, President 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of 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? Customs Appeal No. 668 of 2009-SM (Arising out of order No. 212/MA/FFN/2009 dated 08.08.2009 passed by the Commissioner (Appeals), Customs and Central Excise, Delhi-III). M/s P. T. Impex Pvt. Ltd., Appellant Vs. CCE, Delhi-III Respondent
Appearance: Ms. Reena Khair & Ms. Tuhina Sinha, Advocates for the appellant Shri R. Puri, DR for the Respondent Coram: Honble Mr. Justice G. Raghuram, President Final Order No. 58482/ 2013 Per: Justice G. Raghuram:
The appellant is the assessee and an importer (the importer). Through its CHA M/s Reliance Cargo Movers (P) Ltd., the appellant filed a Bill of Entry No. 938 dated 09.08.2006 for clearance of sandalwood (Yasi) valued at Rs.15,80,124/-. As per Policy Circular No. 1(RE-2006) 2004-06 dated 07.04.2006 issued by the DGFT, sandalwood imports inter alia require a license. No such license was produced but it was stated that the appellant had applied for a license before arrival of shipment and it would take some time for to completing formalities and sought provisional release of the goods under Section 143 of the Customs Act, 1962. The goods were released on 13.03.2006 against a bank guarantee provided. The appellant could not obtain a license within the validity period of the bank guarantee. The Bank Guarantee was extended upto 13.11.2008. By the letter dated 18.01.2008 the appellant was directed to produce the licence. In response the appellant, on 02.02.2008 sought further extension of time, on the ground that its application was pending with the DGFT.
2. Eventually, a show cause notice dated 12.03.2008 was issued, to explain why imported sandalwood, provisionally released, be not confiscated; penalty imposed and the bank guarantee dated 17.11.2006 invoked/ encashed. In response, the appellant on 03.05.2008 inter alia pleaded that in terms of paragraph 1A.5 of the Foreign Trade Policy 2004-09, since a firm contract was entered into and bills of lading and other supporting documents furnished establish even payments made for import of the sandalwood, prior to alteration of the policy, restrictions subsequently imposed on import of sandalwood (on 07.04.2006) would not be applicable. Appellant also relied on the judgments of the Bombay High Court and of this Tribunal to support his contention.
3. By the order dated 30.12.2008 the Additional Commissioner, Central Excise, Delhi-III ordered confiscation of the imported sandalwood, valued at Rs. 15,80,124/-; provided an option to the appellant to redeem the same on remittance of a redemption fine of Rs. 5 lakhs, under Section 125; and imposed a penalty of Rs. 10 lakhs under Section 112(a), of the Customs Act, 1962.
4. Aggrieved, the appellant preferred an appeal which was disposed of by the order dated 18.08.2009 of the Commissioner Central Excise (Appeals), Delhi-III. The appellate authority adverted to the contention of the appellant which was reiterated in terms similar to those stated before the adjudicating authority; referred to the decisions relied on by the appellant in support of its contentions, in para 7 of the appellate order; extracted the provisions of Chapter 1A, para 1.5 of the Foreign Trade Policy 2004-09; observed that there was no irrevocable letter of credit in the instant case and the appellant could not invoke the benefits of the provisions relied upon; and concluded that since restricted goods were imported without an import license and thus provisions of the Foreign Trade Policy, 2004-09 were contravened, the order of the primary authority, ordering confiscation of goods; providing for redemption on payment of redemption fine and imposing penalty under Section 112(a) of the 1962 Act, was not in error. The appeal was dismissed.
5. Heard the ld. Counsel for the appellant-assessee and ld. DR for the respondent/ Revenue.
6. From the material on record it is seen that the exporter M/s Pacific Customs Agency Limited, Fiji had issued a proforma invoice No. 12809 for export of 4 MT of sandalwood (Yasi) on 30.03.2006, at a price of US$ 38000. The appellant remitted US$ 38,000 to the credit of the exporter on 30.03.2006 itself. On 07.04.2006 Policy Circular No. 1(RE-2006) 2004-06 dated 07.04.2006 was issued clarifying that import of sandalwood under EXIM Code No. 44039922 would be restricted and subject to ceiling of 5000 cum each year and that imports would be permitted only against import licence issued. There is on record a customs invoice dated 11.04.2006, issued by Republic of Fiji, certifying supply of 3482 kg. of sandalwood by M/s Pacific Customs Agencies Limited to the appellant, specifying the container number in which export was made and the value of the export. A bill of lading evidencing export of 3482 kgs. of sandalwood in favour of appellant is also on record. A Phytosanitary Certificate dated 11.04.2006 certifying Fumigation of the sandalwood, issued by the Department of Agriculture, Fiji is also on record. The amount of US$ 4921 was refunded to the appellant representing the value of the lesser quantity of sandalwood actually delivered vis-a-vis the payment made by the appellant, on 30.03.2006. M/s Pacific Customs Agency Limited has also issued a certificate stating that the shipment was made under an invoice dated 11.04.2006 pursuant to the proforma invoice dated 30.03.2006; that the appellant had remitted US$ 38,000 on 30.03.2006; that the exporter had shipped 3.482 MT only and that the difference amount of US$ 4921 was remitted in favour of the appellant by demand draft. This certificate by the exporter corroborates the whole chronology of events, established by the documents.
7. It requires to be noticed that paragraph 1.5 of Chapter 1A of the Foreign Trade Policy, 2004-09 clarifies that in case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that shipment of export or import is made within original validity of an irrevocable letter of credit established before the date of imposition of such restriction; however a time limit for operationalising such LCs may be prescribed.
8. In the light of the fact that the proforma invoice is dated 30.03.2006, the remittance for the value of sandalwood to be imported was also made on 30.03.2006; the customs invoice, the fumigation certificate and the Bill of lading, though issued later establish a concretised agreement for export of sandalwood prior to 07.04.2006 (when the restriction on import of sandalwood were issued by the policy circular). The agreement to import the sandalwood thus got crystallised prior to 07.04.2006. The High Court decision in Matraco (India) Ltd. vs. Union of India 2003 (162) ELT 1992 (Bom.) is an authority for the proposition that since the import of the sandalwood was bonafide, there is no justification for imposing a redemption fine or confiscating the goods; and that existence of a concluded contract could be inferred from other circumstances, even in the absence of an irrevocable letter of credit. The material on record establishes on the basis of the relevant circumstances that an agreement between the parties for the export and import was entered into and had crystallised prior to the change in the policy. The appellant is entitled to paragraph 1.5 of Chapter 1A of the FTP 2004-09. The decision of this Tribunal in Viraj Impex Ltd. vs. CC, Mumbai 2004 (177) ELT 960 (Tri. Mumbai) is an authority for the proposition that where an importer has entered into a contract in good faith, at a time when goods were importable freely, without restrictions; and had no means to forseeing restrictive changes in the import policy, there is no justification for imposing a redemption fine.
9. For the aforesaid reasons, the order of the adjudicating authority as confirmed by the Commissioner (Appeals) order dated 18.08.2009 cannot be sustained and is accordingly quashed. The appeal is allowed but in the circumstances without costs.
Justice G. Raghuram President Pant