Gujarat High Court
Andagro Services Pvt.Ltd. & vs The Union Of India Thr' Secretary on 8 February, 2008
Author: M.S.Shah
Bench: M.S.Shah, Ravi R.Tripathi
SCA/8596/2007 1 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION No. 8596 of 2007
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ANDAGRO SERVICES PVT.LTD. & 1 - Petitioner(s)
Versus
THE UNION OF INDIA THR' SECRETARY, & 4 - Respondent(s)
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Appearance :
MR VIKRAM NANKANI with MR HARDIK P MODH for Petitioner(s) : 1 - 2.
NOTICE SERVED BY DS for Respondent(s) : 1 - 5.
MR HARIN P RAVAL for Respondent(s) : 1,
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CORAM : HONOURABLE MR.JUSTICE M.S.SHAH
and
HONOURABLE MR.JUSTICE RAVI R.TRIPATHI
Date : 08/02/2008
ORAL ORDER
(Per : HONOURABLE MR.JUSTICE M.S.SHAH) RULE. Heard Mr Vikram Nankani for the petitioner and Mr Harin Raval, learned Assistant Solicitor General for the respondents on the question of interim relief.
2. What is challenged in this petition under Article 226 of the Constitution is the order dated 09.01.2007 of the Assistant Commissioner (Gr.-VII), Customs House, Kandla denying the petitioner the benefit of DFEC (Duty Free Entitlement Certificate) scheme exemption under Notification No.53/2003 dated 08.04.2005 in respect of Crude Soyabean Oil imported in July 2006 (750 metric tons) and also determining and confirming under the provisions of Section 28(2) of the Customs Act, 1962 a demand of duty of Rs.1,00,38,321/- only (Rupees one crore thirty eight thousand three hundred twenty one only) along with interest thereon under Section 28 AB of the Customs Act.
SCA/8596/2007 2 ORDER
3. At the outset, the learned Assistant Solicitor General has raised a preliminary contention that the petitioner had an alternative remedy of challenging the adjudication order in an appeal before the Commissioner of Customs (Appeals) and that the petitioner not having availed of such alternative remedy, the petition is not maintainable.
4. On the other hand, Mr Nankani for the petitioner has submitted that the petition does not raise any disputed question of fact, but only questions of interpretation and inconsistency of the notifications and the circulars issued by different departments of the Union of India are raised in this petition and, therefore, the petition is required to be entertained, more particularly when there is also controversy about the power of the appellate authority to condone delay after expiry of the period of limitation.
5. On merits, it is submitted by Mr Nankani that the petitioner exported Non-Basmati Rice (E/38), Sesame seeds (E/93), White Sugar (E /52/79) and Soyabean Meal extract (E/42) which are admittedly food products. It is the petitioner's case that against export of these goods, the petitioners were granted the import license on 21.04.2006 indicating that the import will have nexus with Product Group Exported as per the following proportion :-
Sr. Exp. Product Group Name % of Eligible Exports No. 1 67 / Food Products 100.00 This DFCE is issued under Customs Notification No. 53/2003 dated 01.04.2003 It is submitted that on the basis of the above import license, the petitioner imported Crude Soyabean Oil which is an import item at No. E/121. It is, therefore, submitted that it was rightly held by SCA/8596/2007 3 ORDER the authority while making the assessment on the bill of entry at the time of importing the goods that the import was covered by the import license and the exemption notification dated 21.4.2004, subsequently the Customs Department has taken a different view holding that the petitioner was liable to pay customs duty on the import of Crude Soyabean Oil.
It is submitted that as per the Exim Policy for the period 2002-07, the petitioner was entitled to Duty Free Entitlement and that the matter was governed by the notification dated 21.04.2004 issued by the Ministry of Commerce and Industry (Department of Commerce, Govt. of India) which excluded only certain products from the purview of the Duty Free Entitlement Certificate. As per Note 7 in the notification dated 21.04.2004, the following items would not be allowed for imports under the said scheme :-
"Agricultural products, which fall under Chapters 1-24 of ITC (HS) Classification of Export and Import items."
It is submitted that as per the above exclusion clause only agricultural products per se were excluded and not the products derived from agricultural products and therefore, import of Crude Soybean Oil was not excluded under the scheme. It is submitted that the Director General of Foreign Trade, Ex-officio Additional Secretary to the Govt. of India made a specific amendment through public notice No. 42/2004-2009 dated 06.01.2005 stating as under:-
"Import of all edible oils classified under Chapter 15 of ITS (HS) Classification of Export and Import items, shall be allowed under the scheme only through STC and MMTC."
It is the petitioner's case that since the petitioner had made the imports of Crude Soybean Oil to MMTC, the petitioner was entitled to get the benefit of scheme in respect of import of Crude SCA/8596/2007 4 ORDER Soybean Oil. It is further submitted that the terms and conditions of the notification did not require the petitioner to use the imported goods for the purpose of manufacturing the exported goods. In fact, the export took place first and thereafter, the import took place and that in any view of the matter the Exim Policy did not provide for any grouping except what was specifically stated in the license, which is already quoted hereinabove.
7. On the other hand, Mr Raval, learned Assistant Solicitor General has submitted that the Department of Revenue in the Ministry of Finance had issued Circular No. 10/04 - Customs dated 30.01.2004 specifically stating that DGFT had sought for a clarification from the Department of Revenue whether the restriction regarding agriculture and dairy products would apply to all products derived from agriculture/dairy origin and that in response thereto, the Department of Revenue had clarified that import of any product derived from agriculture/dairy origin shall not be permitted as input under DFEC scheme. It is also submitted that condition No.2 in Notification No.53 of 2003 dated 01.04.2003 specifically provides that the certificate and the goods imported against the said certificate shall not be transferred or sold and therefore, it is implied that the imported goods were to be used as inputs for manufacturing the exported goods.
8. Having heard the learned counsel on the question of interim relief, we are of the view that the petitioner has made out a prima facie case for a detailed examination of the contention raised in the petition that while the Department of Revenue Circular dated 30.01.2004 provided that the products derived from agriculture including Crude Edible Oil shall not be permitted, the DGFT himself vide subsequent public notice No.42 of 2006 dated 06.01.2005 specifically permitted import of edible oils under the scheme through STC and MMTC. The petitioner is stated to have made SCA/8596/2007 5 ORDER inputs of Crude Soybean Oil through MMTC.
Considering the contents of the said public notice dated 06.01.2005 issued by DGFT and the Department of Revenue Circular No.10/2004-Cus, dated 30.01.2004 and also the contents of license dated 21.04.2006, we are of the view that the interests of justice would be served if interim stay of execution of the impugned order dated 09.01.2007 is granted on condition that the petitioner deposits 25% of the duty demanded under the impugned order.
9. In the facts and circumstances of the case, we accordingly grant interim stay of execution of the impugned order dated 09.01.2007 at Annexure-K to the petition subject to the condition that the petitioner deposits with the respondents 25% of the amount demanded under the said order as specified in Para 2 of the operative order i.e. 25% of Rs.1,00,38,321/- (Rupees one crore thirty eight thousand three hundred twenty one only) within two months from today.
It is clarified that such deposit will be without prejudice to the rights and contentions of the parties.
[M.S. SHAH, J.] [RAVI R. TRIPATHI, J.] mrpandya*