Custom, Excise & Service Tax Tribunal
Posco Maharashtra Steel Pvt Ltd vs The Commissioner Of Customs-Mumbai ... on 7 December, 2022
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
CUSTOMS APPEAL NO: 86259 OF 2021
[Arising out of Order-in-Original No: S/6-B-93/2020-21 EA dated 1st June 2021
passed by the Commissioner of Customs (Export), Mumbai.]
Posco Maharashtra Steel Pvt Ltd
7th Floor, World Trade Centre-I, Kharadi
Pune - 411014 ... Appellant
versus
Commissioner of Customs (Export-I)
New Customs House, Ballard Estate, Mumbai - 400001 ...Respondent
APPEARANCE:
Shri J C Patel, Advocate for the appellant Shri S B Hatangadi, Assistant Commissioner (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A/86167/2022 DATE OF HEARING: 17/08/2022 DATE OF DECISION: 07/12/2022 PER: C J MATHEW Aggrieved by the rejection of their request, preferred under section 149 of Customs Act, 1962, for amendment of 230 nos.
C/86259/2021 2 shipping bills filed by them between July 2017 and May 2019, M/s Posco Maharashtra Steel Pvt Ltd seeks ouster of communication in F No. S/6-B-93/2020-21 dated 1st June 2021 conveying the decision of the 'proper officer' under the signature of Deputy Commissioner of Customs (Export Assessment), New Customs House Mumbai and grant of authorization to effect amendments sought by them vide letter dated 10th August 2020 and 29th December 2020.
2. The appellant exported 'cold rolled non grain oriented silicon electrical steel sheet/coils in fully/semi-processed state' (67 nos said to be covered under sl no C-1504 of SION), 'cold rolled close annealed (CRCA) skin passed/temper passed (including half hard, quarter hard) non-alloy/alloy steel (excluding stainless steel) sheets/hoop and strips/wide coils' (107 nos said to be covered under sl no. C471 of SION), 'cold rolled full hard/ cold rolled close annealed (CRCA) (without skin passed/temper passed) non-alloy/alloy steel (excluding stainless steel) sheets/hoop and strips/wide coils' (43 nos said to be covered under sl no. C470) of SION) and 'cold rolled galvanized/galvannealed (plain/corrugated) non-alloy/alloy steel sheets/strips/wide coils' (12 nos. said to be covered under sl no. C472 of SION). The enumerations under 'standard input output norms (SION)' acquire significance as the appellant intends to seek the benefit afforded by 'zero duty export promotion capital goods cum duty free import authorization (EPCG-cum-DFIA)' scheme instead C/86259/2021 3 of 'zero duty export promotion capital goods (EPCG)' scheme in the Foreign Trade Policy (FTP) notified under Foreign Trade (Development & Regulation) Act, 1992. The impugned order has disallowed the request as barred by limitation of time and also as the non-availability of goods for examination, prescribed differently for different schemes, precluded ascertainment of description and composition for conformity with corresponding entries in standard input output norms (SION)' as well as adherence to 'value addition norms' by which alone eligibility for the substituting scheme could be determined. Impliedly, the ascertainment under the substituted scheme of manufacture for export using permitted capital goods was not good enough to be compliant with the appending of the other scheme, relating import of permissible inputs, to the existing one.
3. Learned Counsel for appellant contends that the Tribunal has, in Parle Products P Ltd v. Commissioner of Customs [2017 (358) ELT 341] and in Lykis Ltd v. Commissioner of Customs, Mundhra [2020- TIOL-348-CESTAT-AHM], which has since been approved by the Hon'ble High Court of Gujarat, held that the absence of any limitation in section 149 of Customs Act, 1962 precludes consideration of time- frame in disposal of application seeking amendment. It was also pointed out that the Hon'ble High Court of Gujarat, in Mahalaxmi Rubtech Ltd v. Union of India [2022 (5) TMI 879], has declared paragraph 3(a) in circular no. 36/2010-Cus dated 23rd September 2010 C/86259/2021 4 to be ultra vires section 149 of Customs Act, 1962.
4. Our categorization supra of the exports of the appellant according to the enumeration in 'standard input output norms (SION)' has been sourced from submissions of Learned Authorized Representative who drew our attention to the requirements for classification that would entitle benefits intended to be sought by them after obtaining authorization for amendment. Furthermore, he argued that the contention of eligibility, as posited by Learned Counsel, is not acceptable as examination of goods is unavoidable pre-requisite given the rigour of the scheme for permitting 'inputs' to be imported. He placed reliance on the decision of the Hon'ble High Court of Delhi in Terra Films Pvt Ltd v. Commissioner of Customs [2011 (268) ELT 443 ((Del)] and of the Hon'ble High Court of Madras in Commissioner of Customs (Seaport-Export), Chennai v. Suzlon Energy Limited [2013 (2) ECS (28) (Mad-HC)] to buttress his argument.
5. The statutory empowerment for '149. Amendment of documents Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the customs house to be amended.
Provided that no amendment of a bill of entry or a C/86259/2021 5 shipping bill or bill of export shall be so amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be:
...........' in Customs Act, 1962, having undergone amendment by Finance Act, 2019 to transform as '149. Amendment of documents Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the customs house to be amended in such form and manner, within such time, subject to such restrictions and conditions, as may be prescribed.
Provided that no amendment of a bill of entry or a shipping bill or bill of export shall be so amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be:
..............' with effect from 1st August 2019, to empower prescriptions that, in public interest, may delineate contours in the exercise of discretion C/86259/2021 6 while disposing off requests for amendment of documents, the present dispute will also have to be resolved by taking into account the incorporations even though the shipping bills were filed in the pre- amendment era. The absence of any such prescriptions, issued under the enabling empowerment, at any stage upto, and including, the date of the impugned order notwithstanding, it appears that the impugned communication considered the bar of limitation in circular no. 36/2010-Cus dated 23rd November 2010 of Central Board of Excise & Customs (CBEC), which pre-dates the amendment, to be available as authority under the revised section 149 of Customs Act, 1962 even though appellant had resorted to it for its contextual relevance.
6. The Tribunal, having considered an identical assertion of empowerment, has, in Haldiram Foods International Pvt Ltd v. Commissioner of Customs, Nagpur [final order no. 86108/2020 dated 16th December 2020 disposing of customs appeal no. 86048 of 2020 against order-in-original no. F no. VIII (Cus) 25-159/Cus. Hqrs./2019 dated 29th October 2020 of Commissioner of Customs, Nagpur], held that '11. The request of the appellant herein has been denied for non-compliance with the circular cited in the impugned order. Appellant had been compelled to forgo coverage, and inconsistent with the law as it now appears, under a scheme in the Foreign Trade Policy that may have entitled them to C/86259/2021 7 post-exportation import of specified goods without payment of duty and it is only by the requested amendment that the Directorate General of Foreign Trade could consider extending that privilege to them. Approval of the request would exclude them from the reimbursement, contractually stipulated, in section 75 of Customs Act, 1962 and, therefore, entails recourse to section 149 of Customs Act, 1962. Further enablement for privileges flowing from a scheme, devised under the authority of Foreign Trade (Development & Regulation) Act, 1992, would emanate from the flexibility intended by circular no. 36/2010-Cus dated 23rd September 2010of Central Board of Excise & Customs.
12. The imperative of implementing schemes of export promotion under the Foreign Trade Policy even at the cost of foregoing revenue mandates facilitation that may seemingly be in conflict with the remit of the taxing authority; a post- exportation conferment of that escapement is even less likely to facilitated and circular no.36/2010-Cus dated 23rd September 2010 is but a pathway to the larger objectives of governance. It is moot, therefore, if the intent of the circular is to be perceived in its letter, as held by the 'proper officer', rather than in its spirit as claimed by the appellant. To deduce the propriety of either alternative, we turn to the legislative authority for such prescriptions as well as the chronological evolving of a uniform approach to guiding such facilitation. Circular no. 36/2010-Cus dated 23rd September 2010 was preceded by circular no. 4/2004-Cus dated 16th January 2004 of Central Board of Excise & Customs which it also superseded. The impetus for the original circular was the disadvantage at which an exporter was placed on disallowance of eligibility for a particular scheme by the Director General of Foreign Trade and consequent inability to seek the privileges of another scheme C/86259/2021 8 owing to the absence of any authority that customs formations could take recourse to. Several years later, the facility of migration, contingent only upon such rejection, was, upon representation by the exporting community, considered to be ripe for availment as a commercial option to be exercised by the exporter. The timeframe of one month, in the first of the circulars, kicking in from rejection by the Directorate General of Foreign Trade, could no longer be the benchmark and a longer span of three months from the date of 'let export order (LEO)' was considered to suffice for the exercise of such option. Hence, it is apparent that the more recent circular was intended to liberalise the migration from one scheme of the Foreign Trade Policy to another. The other conditions in both the circulars were intended to ensure that it was indeed eligible goods that had been exported. Neither of the circulars claim to draw sustenance from any statutory enablement under Customs Act, 1962 and are, therefore, to be construed as guidance for trade facilitation on the part of the field formations under Central Board of Excise & Customs.
13. Central Board of Excise & Customs is, under section 151A of Customs Act, 1962, empowered to issue 'orders, instructions and directions' to officers of Customs who are required to observe and follow these; however, even when the superseding circular was communicated, such empowerment was limited to 'uniformity in the classification of goods or with respect to the levy of duty thereon' and it was only with effect from 8th April 2011 that such 'orders, instructions and directions' could encompass '....implementation of any other provisions of this Act or of any other law for the time being in force, insofar as they relate to any provision, restriction or procedure for import or export of goods...' C/86259/2021 9 In the absence of such authority, which could be construed as empowerment to enforce restricted applicability, the impugned circular, as well as its predecessor, could not have imposed rigid restrictions that are not contemplated in the parent statute and, in the context of facilitative intent, is to be implemented in accordance with the spirit of liberalised approach to request for conversion from one scheme to another. The Tribunal, in re Parle Products Pvt Ltd, also acknowledged this conclusion thus '5.6 We find strong force in the contentions raised by learned Counsel for the appellant that Hon'ble High Court of Kerala in the case of Leotex (supra) in para 4 has held that the Board itself had decided to liberalise the provision regarding conversion from one scheme to another, there should not be any reason to allow the same. Consequently, the bar of limitation could be invoked only in the absence of any mitigating circumstances offered up in response to clarification sought by the 'proper officer' from the appellant for an appropriate decision. We are unable to perceive any such considered resolution of the request preferred by the appellant to the Commissioner of Customs.' making it abundantly clear that the invoking of any time bar, whatsoever, for rejection of such applications does not have the authority of law in the absence of such disbarment in section 149 of Customs Act, 1962 or by any prescription issued after 1st August 2019 under the authority of amended section 149 of Customs Act, 1962.
7. The contextual setting of the circular - commonly referred to in the application for amendment and in the impugned refusal of permission - had also been examined by the Tribunal in the decision supra to conclude that its intent was facilitative. In the present C/86259/2021 10 instances, amendment may well have the beneficial consequence of affording import of goods against, or transferability of, authorization issued under the appropriate scheme of the Foreign Trade Policy (FTP) upon grant by the competent authority. Hence, resort to the pre- amendment circular in the application preferred by the appellant does not, in the light of its facilitative intent, invite opprobrium or conclusion that the stipulations are applicable in entirety.
8. However, the authority drawn therefrom in the impugned order does not stand on the same footing as the circular was intended, in the pre-amended setting, to enable intramural migration so as not to deny the incentives flowing from eligible exports. The amendment sought for does not involve alteration of description of the exports themselves as declared in accordance with section 50 of Customs Act, 1962 or the ascertainment recorded by customs authorities under section 51 of Customs Act, 1962. That the goods exported are such as have been manufactured by deploying the capital goods permitted for import under the licence envisaged in the 'zero duty export promotion capital goods (EPCG)' scheme is not disputed as the bills have been cleared without objection as intended for fulfilling obligations therein. This is also not a case of intramural migration but the appending of another scheme in the Foreign Trade Policy (FTP) relating to 'inputs' to the permitted scheme for import of capital goods for manufacture of related 'output' that has, indisputably been exported. Every change C/86259/2021 11 sought under section 149 of Customs Act, 1962 does not, therefore, involve verification of documentary evidence in existence at the time of import or export, as the case may be.
9. Though the issue has been portrayed as befitting ascertainment within the rigour of first proviso in section 149 of Customs Act, 1962 as shipping bills were sought to be amended, the distinction between the generality of the principal enactment and the particularity of the proviso as enunciated in re Haldiram Foods International Pvt Ltd thus '9. From a plain reading of '149. Amendment of documents.- Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the customs house to be amended;
PROVIDED that no amendment of a bill of entry or shipping bill or bill of export shall be so to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except in the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be.' in Customs Act, 1962, it is seen that amendments of documents can be facilitated at any time after their presentation in the custom house. The seemingly 'open- ended' jurisdiction for amendment of documents is, nonetheless, constrained within the discretion vested in the 'proper officer' to permit that. Clearly, it is not a right to have the amendments incorporated and the applicant is, therefore, obliged to justify the necessity, in terms of consequential detriment, for invoking the provision. Concomitantly, it devolves on the 'proper officer' to place the applicant on notice of any want that may impede such C/86259/2021 12 permission or of any doubts that may be brought to bear on grant of the application and to further issue a reasoned order in the event of rejection. The deployment of the expression 'document' and the appending of proviso is calculatedly significant. Though not one of the enumerations in section 2 of Customs Act, 1962, 'document' is found scattered within several operative provisions, especially in the context of entries, as prescribed, and of assessment, connoting the evidence in support of the contents in the entry under section 46 and section 50 of Customs Act, 1962. Having been specifically defined, and being forms designed for assessment and clearance, 'bill of entry' and 'shipping bill' are not documents as intended in section 149 of Customs Act, 1962; indeed, the distinguishment accorded to these by the proviso argues the special dichotomy of the prescription for making the entry from the documents evincing the entry. This cleaving appears to have been intended to justify further limitation on the generality of empowerment to permit amendments in disposal of requests pertaining to bills of entry/shipping bills by freezing the moment of clearance/exportation as the touchstone. The distinction is attributable to source; 'documents' belong to the importer/exporter and the freedom to amend those is to be unabridged save of such content the amendment of which may be detrimental to the interests of the State while bills of entry/shipping bills, being prescriptions of the State, may be allowed for amending by importer/exporter only for conformity with the factum pertaining to export/import. The rationale for distinguishing the approach to making changes in shipping bills and the ultimate consequence of shifting between schemes cannot be more blindingly apparent.
10. From our discussion supra on the legal provisions and judicial pronouncements, it emerges that amendments sought C/86259/2021 13 under section 149 of Customs Act, 1962 may be permitted in 'documents' subject to justification including the reasonableness of the time within which such alteration is sought to be incorporated and in bills of entry/ shipping bills alterations are to be denied only to the extent of not mirroring the facts at the time of clearance/exportation. Implicitly, the ascertainability of the facts, and not mere elapse of time which was not considered for specifying in the legislation, is to be the factor in determining limitation. Elaboration of unavoidability of the change is a pre-requisite for exercise of discretion by the proper officer who may deny the amendment only upon sufficient reason after considering the submissions of the applicant to counter the proposal for rejection. Any circumscribing or circumvention of this essence is not a correct exercise of discretion vested in the proper officer.' makes it clear that rejection of request for amendment in circumstances that are outrightly not in conformity with the literal phraseology of section 149 of Customs Act, 1962 may not be overturned for lack jurisdiction but can upon passing the test of conformity with either the principal enactment or the more rigourous in the proviso, as the case may be. From the nominal nature of the amendment sought without impacting any statutorily prescribed detail in the entry mandated by section 50 of Customs Act, 1962, the application does not fall within the sphere of the proviso that has been resorted to in the impugned order.
10. That the said goods may find enumeration in the 'standard input output norms (SION)' is also not disputed and it would appear that anticipated additional benefit of procurement of 'raw material for such C/86259/2021 14 manufacture' from abroad by additional coverage of the 'duty free import authorization (DFIA)' scheme subsequent to export has not sat well with the 'proper officer' under section 149 of Customs Act, 1962 prompting 'nipping in the bud' as it were. Such rejection, based on the consequential impact of proposed amendment owing to operability of other provisions of Customs Act, 1962 or any other law for the time being in force, is stealthy adjudication within the rubric of the other provisions or other laws attended by material detriments arising therefrom. The essential for such adjudication is the mandate of section 122A of Customs Act, 1962 and a decision to reject, thereby, without placing the importer/exporter on notice and offer of concomitant opportunity to rebut the conjectures, is contrary to law and procedure; the denial of notice has denied the applicants opportunity to demonstrate consequential eligibility and to challenge the jurisdictional competence to decide on deprivation of eligibility in the guise of deciding on amendment under section 149 of Customs Act, 1962.
11. The impugned order has been passed without issue of show cause notice. And yet, the 'proper officer' did not hesitate to decide on the lack of wherewithal for ascertainment of 'value addition' norms in the exports, of the raw materials and other inputs in the manufacture of the goods, of conformity of the utilized inputs with permissibility in the Standard Input Output Norms (SION) and, indeed, the C/86259/2021 15 classification of the exported goods within the said 'standard input output norms (SION)' in the Foreign Trade Policy. The determination of ineligibility, for want of the goods physically, to operate under the 'duty free import authorization (DFIA)' scheme in the Foreign Trade Policy (FTP) as ground to refuse the amendment traverses beyond the scope and intent of section 149 of Customs Act, 1962.
12. Yet another aspect of jurisdiction, even by stretching of the framework, to pre-judge eligibility in the context of the nominal amendment sought by appellant has been brought up by Learned Counsel. In many of the schemes in the Foreign Trade Policy (FTP), both the tax collection agency and the trade promotion authority are inevitably, and inextricably, to synergistically oversee the performance and compliance - episodically by the former and terminally by the latter - for ensuring optimal tradeoff between sacrifice of duties of customs and incentivization of exports. The 'duty free import authorization (DFIA)' scheme in the Foreign Trade Policy (FTP) envisages that the authority under Foreign Trade (Development & Regulation) Act, 1992 scrutinizes eligibility and issues the instrument designed to achieve the objectives of the scheme by import of permitted goods to be used in manufacture of stipulated goods and furnishing of evidence of fulfillment of export obligation to the issuing authority for closure of the file concerned in the office of Directorate General of Foreign Trade; within this sequence, customs C/86259/2021 16 authorities are concerned with assessment of shipping bills relating to stipulated goods under section 51 of Customs Act, 1962 and, while undertaking statutory mandate of section 47 of Customs Act, 1962, with adherence of imports effected against bills of entry with the enumeration in the instrument issued by the authority under Foreign Trade (Development & Regulation) Act, 1992. As far as post- exportation variant of the scheme is concerned, it is for the authority under Foreign Trade (Development & Regulation) Act, 1992 to take a call on eligibility for the instrument specified in the Foreign Trade Policy (FTP); any which way, the jurisdictional oversight of customs authorities will not surface until the benefit of corresponding notification, issued under section 25 of Customs Act, 1962, is sought and that, as yet, was only a gleam in the eye of the applicant herein. We also find that there is no controverting of the submission of Learned Counsel for appellant that post-exportation processing of application under 'duty free import authorization (DFIA)' scheme in the Foreign Trade Policy (FTP) by the Directorate General of Foreign Trade (DGFT) is not contingent upon any specific evaluation of the exported goods. Neither is the pivotal role of that agency contested in the submission of Learned Authorized Representative. To decide on eligibility of import at this stage is patently in excess of jurisdiction and peremptory. This premature filtration at the threshold not envisaged in section 149 of Customs Act, 1962 and arrogating of C/86259/2021 17 'policing' over statutory authority vested in another agency of the State is unacceptable.
13. In the light of our findings supra, we find no reason to sustain the order impugned before us. Consequently, we set aside the rejection to allow the appeal and direct the respondent-Commissioner to effect the amendments in the shipping bills as sought for by the appellant.
(Order pronounced in the open court on 07/12/2022) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as