Custom, Excise & Service Tax Tribunal
M/S Global Exim vs Commissioner Of Customs (Exports) ... on 28 April, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. C/85169/15 (Arising out of Order-in-Appeal No. 1 (Gr.VII-I)/2015 (JNCH)-Appeal-I dated 07.01.2015 passed by the Commissioner of Customs (Appeals), Nhavasheva.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
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 : Yes 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?
=====================================================
M/s Global Exim
: Appellant
Versus
Commissioner of Customs (Exports) JNCH, Nhavasheva
: Respondent
Appearance
Shri Mihir Mehta, Advocate
: For Appellant
Shri M.K. Mall, Asst. Commr. (A.C.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 28.04.2015 Date of Decision: 26.06.2015
ORDER NO.......................................................
Per: Anil Choudhary:
1. The appellant-importer is in Appeal in respect of a live consignment. They imported a consignment of 300 MT of Boric Acid vide B/E No. 6321863 dated 02.8.2014 seeking duty free clearance against a transferable DFIA (Duty Free Import Authorisation) for non-insecticidal purpose. The DFIA in question was issued by DGFT against export of glass vials/phials etc., to Piramal Glass Ltd., who in turn obtained transferability endorsement after the completion of export obligation and thereafter transferred the DFIA to the appellant in terms of the provisions of Foreign Trade Policy. The said DFIA inter alia allows Boric Acid as one of the input item required for use in export product without stipulating any further requirement of permit. There is no dispute with regard to the import of Boric Acid either for its eligibility under the DFIA or use for non-insecticidal purpose.
2. The entire dispute is with regard to ITC (HS) classification No. 28100020 which indicates that the import of Boric Acid is subject to an import permit issued by the Central Insecticide Board & Registration Committee under the Ministry of Agriculture, constituted under the Insecticides Act, 1968. The departments case in the adjudication order dated 29.9.2014 is that without production of import permit, import of Boric Acid cannot be allowed as per clause 7 of DGFT Notification No. 2 (RE-2006)/2004-2009 dated 07.04.2006. Reliance was also placed by the adjudicating authority upon order dated 3.6.2014 of the Division Bench of Kerala High Court in the matter of Union of India Vs. Maliakkal Industrial Enterprise in Writ Appeal no. 617 of 2012. Also order dated 29.7.2009 passed by the Honble Kolkata High Court in Writ Petition No. 505 of 2009 filed by Subhas Chandra Agarwal, and another wherein it was held that import permit is required for the import of Boric Acid as per DGFT Notification No. 2 dated 7.4.2006. An appeal filed by the present appellant against the Order-in-Original was rejected by the Commissioner of Customs (Appeals), Nhava Sheva vide impugned order dated 07.01.2015, relying on the findings in the Order-in-Original.
3. The learned Counsel for appellant contends:-
3.1 Boric acid is a chemical having multifarious application in the industry. It is also listed as an insecticide under the Insecticides Act, 1968. The consignments of boric acid imported against the DFIA by the appellant for non insecticidal use, prior to the present consignment, have been assessed to duty on provisional basis and allowed to be cleared on furnishing the bond for full amount of duty with a bank guarantee of 20% of the duty amount.
3.2 The practice of allowing clearance on provisional basis has been adopted pursuant to the order passed by the Hon'ble Bombay High Court vide their orders dated 19.03.2010 in the WP No. 1449/2010 filed by the appellant. The petition was filed by the appellant seeking implementation of the Order-in-Appeal No. 710(Export)/2009 (JNCH)/Exp-41 dated 10.12.2009 passed by the Commissioner (Appeals), relating to import of a consignment of 50 MTs of boric acid. The Commissioner (Appeals) accepted the contention that import permit is not required for import of boric acid for non insecticidal use. The department challenged the said order by filing an appeal before the CESTAT, Mumbai. The Departments appeal has been rejected by Division Bench of this Tribunal vide final order dated 03.12.2010 holding that the importer is not required to obtain any permission from the Ministry of Agriculture for import of boric acid for non insecticidal use.
3.3 The appellant imported another consignment comprising of 100 MTS of Boric acid. The claim for importation, without import permit was again rejected by the assessing authority. The rejected order passed by the Joint Commissioner was challenged before the Commissioner (Appeals). The Commissioner (Appeals), however, vide his Order-in-Appeal No. 259 (Gr.VII-I)(JNCH)/EXP-14 dated 17.09.2010 rejected the appeal. The appellant challenged the order passed by the Commissioner Customs (Appeals) by filing an appeal (Appeal No. C/641/10-Mum) before the CESTAT, Mumbai.
3.4 Vide the final order A/05/14/SMB/C-IV dated 19.12.2013, on the appeal filed by the appellant, this Tribunal held that import of boric acid was permissible without import permit issued by the Central Insecticide Board and Registration Committee (CIB & RC). While deciding so the CESTAT also relied upon the decision of the learned single judge of Hon'ble Kerla High Court in the case of M/s Maliakkal Industrial Enterprises, which held that the notification No. 2(RE-2006)/2004-2009 dated 07.04.2006 issued by the DGFT is without the authority of law.
3.5 Against the above background the show-cause notice dated 17.09.2014 was issued to the appellant proposing confiscation of the live consignment (Bill of Entry dated 02.08.2014) and imposition of penalty.
3.6 The learned Additional Commissioner, vide his Order-in-Original No. 165/2014 dated 29.09.2014 rejected the claim of the appellant to allow the clearance of the consignment without production of the Import Permit as stipulated in the DGFTs Notification No. 2(RE-2006)/2004-2009 dated 07.04.2006. Consequently the consignment was confiscated, with an option to pay the redemption fine of Rs. 17,00,000/-, alongwith production of the import permit (issued by CIB&RC). A penalty of Rs. 14,00,000/- was also imposed on the appellant under Section 112(a) of the Customs Act, 1962 (Act for short).
3.7 On appeal, the learned Commissioner (Appeals) rejected the appeal filed by the appellants vide the impugned Order-in-Appeal dated 07.01.2015 adopting the findings enumerated in the order passed by the Additional Commissioner and maintained the amounts of fine and penalty imposed by the Additional Commissioner.
3.8 The learned Counsel for the appellant urges that the Division Bench of this Tribunal in appellants own case in similar facts and circumstances have allowed the appeal in favour of the appellant as indicated herein above, wherein it was held that, import of boric acid for non-insecticidal use does not require an import permit from the CIB&RC as stipulated in DGFT Notification dated 7.4.2006. It is further urged that there is no stay against two orders of the Tribunal in the appellants own case and as such the said order is binding on the Revenue despite the decision of the Division Bench of the Hon'ble Kerala High Court in the case of Maliakkal Industrial Enterprise (supra).
3.9 It is further urged that the impugned order passed by the learned Commissioner (Appeals) is cryptic and non-speaking. The learned Commissioner (Appeals) has failed to consider by putting heavy reliance on the decision of the Division Bench of the Hon'ble High Court, which was rendered in respect of the imports of Boric Acid on payment of duty, and were not against any DFIA as in the case of the appellant and as such the facts are distinguishable. Both the adjudicating authority and Commissioner (Appeals) have erred in placing heavy reliance on the Division Benchs ruling of the Hon'ble Kerala High Court dated 3.6.2014. The fact of import against DFIA makes the import immune for the requirement of import permit.
3.10 Once the DFIA licence is issued there is no need to obtain any other licence as provided in para 4.1.13(d) of the Policy read with the Policy Circular dated 16.3.2009. The said para in the Policy states that import of restricted items shall be allowed in advance authorization/DFIA. The same have been further clarified in the Policy Circular No. 70/08 issued by the DGFT, that once the DFIA is issued for importing the item listed in the DFIA, the same can be imported against the transferred DFIA, without the requirement of Licence/authorization unless otherwise mentioned under the said notification. Thus, ipso facto, even though the Notification No. 2(RE-2006)/2004-2009 stipulates import of boric acid for non-insecticidal use against the import permit issued by CIB&RC, this requirement is waived when the export is against the DFIA.
3.11 It is further pointed out that the DFIA has been issued to allow duty free import among others of boric acid for non-insecticidal use. It is further pointed out that by virtue of the application of the provisions contained in para 4.1.13(d) of the Policy, other licensing formalities by way of restriction through the FTP stand waived. It is further contended that the provisions of Insecticide Act have no jurisdiction to place restrictions on import of any item for non insecticidal use. It is further evident that the restriction placed on the import of boric acid for non insecticidal purposes is a restriction arising through the Policy and not through the Insecticide Act. Otherwise there was no legal necessity for the Central Government to notify the restriction in exercise of its power under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992.
3.12 It is further urged that the learned Commissioner (Appeals) is in error in holding that the import licence for restricted goods and import permit from the CIB&RC are independent of each other. Further, the DFIA scheme has no overriding provision for exempting the goods under DFIA licence from the mandatory requirement prescribed under the Customs Act or any other law for the time being in force.
3.13 It is further urged that it is a rule of law that while interpreting the scope of a given term (restricted), it is necessary to examine as to how the same term is defined or applied in the said statute. From the description appearing in the ITC(HS) classification of import & export item, it can be seen that the column no. 4 is devoted to describe the precise restrictions. Under the ITC(HS) classification, boric acid has been described as Freely importable under the Policy, in Column 4, it have been mentioned vide Notification No. 2(RE-2006)2004-2009 dated 7.4.2006 for import of boric acid for non-insecticidal purpose, when import permit issued by the CIB&RC under the Ministry of Agriculture. It is strongly contended that no violation has been made with respect to any DFIA/Advance Authorization as stipulated in para 4.1.13 of the FTP. It is further contended that the reliance placed by the Revenue on the ruling of the Apex Court in the case of Sheikh Mohd. Omer Vs. Collector of Customs, Calcutta 1983 (13) ELT 1439 (SC) to hold that the boric acid imported without the permit from the CIB&RC is liable to confiscation is mis-placed as import of boric acid is neither prohibited nor restricted. As such, the learned Commissioner (Appeals) is in error in holding that the import of boric acid is liable for confiscation under Section 111(d) of the Act.
3.14 It is further contended that Section 111(d) provides for confiscation of any goods under import, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. Further, prohibited goods is defined under Section 2(33) of the Customs Act, 1962, means - any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. Thus, it is evident that unless the goods are listed as prohibited either in the FTP or under the Customs Act, there can be no confiscation under the provisions of Section 111(b) of the Act. Only for the fact that the goods are restricted for import, does not authorize for confiscation.
3.15 It is further urged that even assuming for argument sake that there is violation of FTP consequent to failure to comply with the mandate contained in the notification dated 7.4.2006, it amounts to only violation of a restriction and is not a violation of any prohibition, and hence the provisions of Section 111(d) are not applicable and accordingly, the impugned order of confiscation and penalty is fit to be set aside. It is further urged that in the case of Sheikh Mohd. Omer (supra) before the Apex Court, was related to a situation when the words in a statute are ambiguous and require to be interpreted. However, in the facts of the present case, there is no ambiguity and as such the ruling of the Apex Court in Sheikh Mohd. Omer case is not applicable.
3.16 It is further urged that Board Circular No. 401/101/2011/Cus-III dated 22.6.2011 regarding import of substances listed in Insecticide Act, for non-insecticidal use Exemption from registration & import permit from CIB&RC clarified that the clearance of imported items listed in Insecticide Act for non-insecticidal use would not be subject to requirement of registration/import permit from CIB&RC. In the facts of this clarification, it is irrational for the CBEC to say, that it is, however, clarified that the import of Boric Acid would continue to be governed by the specific instructions on the item that are currently in force.
3.17 It is further urged that the redemption fine and demanding import permit cannot go together as it amounts to blowing hot and cold in the same breath.
4. The Revenue contends that due to restriction, i.e. requirement of permit, the goods became prohibited and therefore confiscation under Section 111 (d) of the Customs Act, 1962 is warranted and relies upon the judgement of the Honble Supreme Court in Sheikh Mohd. Omer v. Collector of Customs, Calcutta &Ors, 1983 (13)ELT 1439 (SC), as well as the findings in the impugned order.
5. I have considered the submissions made by both the sides and perused the records.
6. It is seen that Boric Acid is freely importable as per ITC (HS) classification 2810 0020, subject to a restriction of furnishing an import permit issued by the Central Insecticide Board & Registration Committee under the Ministry of Agriculture. The goods are thus not notified as prohibited for imports, but import is restricted as above.
6.1 That Para 4.1.13 of FTP notified by the Central Government is relevant in this regard-
Importability / Exportability of Items that are Prohibited / Restricted / STE 4.1.13
(d) Import of restricted items shall be allowed under Advance Authorisation / DFIA.
6.2 Thus, Central Government vide Para 4.1.13 (d) has stipulated that import of restricted items shall be allowed under DFIA. In the instant case, the import of Boric Acid is against DFIA issued by DGFT. No restriction can therefore come in way of allowing import of such restricted item when import is sought against DFIA.
6.3 No separate permit is therefore necessary for the said clearance, once DGFT has considered the eligibility for imports and after being satisfied issued the DFIA permits import of Boric Acid without stipulating any condition, to furnish any further permit, at the time of clearance under DFIA.
6.4 The learned A.R. could not show from any of the judgments relied upon, that the same were concerning imports of Boric Acid under DFIA issued by DGFT. Moreover, Revenue could not show any judgment where despite considering the said provision of FTP issued by the Central Government, the Honble Courts were satisfied that permit would still be required for the clearance under DFIA. The judgments relied upon by Revenue are thus not applicable in the facts of the present case involving imports under DFIA. Since there is no violation, the judgment of the Honble Supreme Court in Sheikh Mohd. Omer (supra) has no application in the present case.
7. Having considered the rival contentions, I hold, neither the goods, Boric acid, imported for non-insecticidal use under a specific DFIA license issued by DGFT are liable to confiscation, nor is any fine or penalty imposable under the Customs Act, 1962. The Ruling of the Division Bench of Hon'ble Kerla High Court in writ Appeal No. 617/2012 dated 03.06.2014, is held disguisable, as the matter before the Hon'ble High Court was with respect to import of boric acid on payment of duty, whereas in the present case, the import is against DFIA. Thus, the impugned order is set aside.
8. Thus, the appeal is allowed with consequential reliefs. The customs authority is directed to release the goods to the appellant forthwith, imported under Bill of Entry No. 6321863 dated 02.08.2014, within a period of seven days from receipt or production of a copy of this order.
(Pronounced in Court on 26.06.2015) (Anil Choudhary) Member (Judicial) Sp 2