Custom, Excise & Service Tax Tribunal
M/S Pushpanjali Floriculture Pvt. Ltd vs Cc (Export) Nhavasheva on 23 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. APPEAL No. C/89325/2014 (Arising out of Order-in-Appeal No. 2992 (Gr.VII-I) 2014 (JNCH)/EXP-143 dt. 17.7.2014 passed by the Commissioner of Customs (Appeals), Mumbai-I ) For approval and signature: Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
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 :
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?
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M/s Pushpanjali Floriculture Pvt. Ltd.
:
Appellant
VS
CC (Export) Nhavasheva
:
Respondent
Appearance
Shri Atul Nanda, Sr. Advocate
Mr. Rameera Hakeem, Advocate for Appellant
Shri A.K. Singh, Addl. Commr. (A.R.) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 23/02/2015
Date of decision : /2015
ORDER NO.
Per : P.S. Pruthi
The appellants are in appeal against Order-in-Appeal No. 2992(Gr.VII-I)2014 (JNCH)/EXP-143 dt. 17.7.2014 in the case of M/s. Pushpanjali Floriculture Pvt. Ltd.
2. The issue involved is revalidation of Duty Free Import Authorization (DFIA) Licenses. The appellants are importers of various chemicals and trading thereof. They obtained transferable DFIAs issued against export of chemicals such as Soda Ash. The said DFIAs permit duty free import of, inter alia, Corrosion Inhibitors/Water Treatment Chemicals. The appellants submitted representations to Customs stating that the DFIAs could not be debited (utilized as the department had not permitted duty free import of Sodium Saccharin, Ascorbic Acid by importers against DFIA Licenses in terms of benefit under Customs Notification No. 40/2006. This dispute regarding Saccharin was decided by Honble CESTAT Mumbai vide Order No. A/318/13/CSTB/C-I dt. 23.1.2013 in the case of M/s. Nandlal Bankatlal wherein the Tribunal held that any product which is a corrosion Inhibitor imported under the DFIA License is eligible for benefit of notification No. 40/2006-Cus. This order of the Tribunal has not been challenged in any higher judicial forum. In respect of Ascorbic acid, the Honble Bombay High Court in Writ Petition No. 9367 of 2009 allowed provisional release to the importer i.e. M/s. Sparkling Traders for import against DFIA License. Further, the Honble Tribunal, in view of High Courts Order rejected the stay application filed by Revenue in the same case against the order of Commissioner (Appeals) who had decided the matter in favour of the party. Thus the matter of import of Saccharin and Ascorbic Acid against DFIA Licenses was in litigation. The appellants represented to the Customs department that they had purchased various DFIAs from the market of the above mentioned disputed items, which could not be utilized due to the ongoing litigation. During the period of litigation, the validity period of licenses expired. Therefore, they requested the department for issue of a certificate to DGFT confirming the factual position so as to enable them to apply to the DGFT for revalidation of the DFIAs in terms of Para 2.13.1 of the Handbook of Procedures of DGFT Ministry of Commerce. The department rejected their request. In appeal it was held by the Commissioner (Appeals) that I hold that such licenses are issued to the exporter under the export incentive schemes to boost the export and to earn the foreign exchange. In fact it is against the spirit of Import Export Policy and export incentives declared by the Government. However, I find that there are no express provisions, for issue of certificates for the licenses expired in the hands of the Importer/Exporter due to litigation raised by the customs authority. In view of the above findings, the appeal is disposed off. Against this order of Commissioner (Appeals), the appellant is in appeal before us.
3. Heard both sides.
4. The Ld. Counsel for the appellants stated that the appellants could not utilize the DFIAs legally transferred in their name for claiming duty free benefits for import of Sodium Saccharin/ Ascorbic Acid against input goods mentioned in the licenses, namely Corrosion Inhibitor, Water Treatment Chemicals because of ongoing litigation. The Commissioner (Appeals) while appreciating that the matter is in litigation came to the conclusion that there is no provision for issue of certificate for revalidation of the DFIAs in terms of Para 2.13.1 of the Handbook of Procedures. According to Ld. Counsel, the appellant only wanted a confirmation from the department confirming the litigation during which the licenses could not be utilized. The licensing authorities could not have revalidated the licenses without factual confirmation from Customs explaining the reasons for non-utilization.
4.1. It was confirmed by the Ld. Counsel that they had also imported Saccharin under transferable DFIAs in respect of which the goods were assessed provisionally. Therefore, in some cases they were also importers and not mere transferees of the DFIAs.
5. The Ld. AR read out Para 2.13.1 of the Handbook of Procedures which states that However, revalidation of freely transferable Authorization/duty credit scrips and stock and sale Authorization shall not be permitted unless validity has expired while in custody of customs authority/RA. According to Ld. AR, the DFIAs were not in the physical custody of the department and therefore revalidation of DFIAs cannot be permitted. In his written submissions he has raised doubts regarding evidence of transfer of licences to the appellant and amount of value transferred as well as the validity of licenses on the date of transfer to the appellants. According to him, only DGFT has proper jurisdiction to revalidate licenses. It was also submitted that the earliest request by the appellant for issue of a certificate is dated 19.5.2010 whereas the Commissioner (Appeal)s order allowing appeal filed by another importer in respect of Sodium Saccharin was issued on 1.7.2007 and in the case of Ascorbic Acid on 14.10.2009.
6. We have carefully considered the submissions of both sides. At the outset, we find that the lower authorities have misread the provisions of law. As per Para 2.13.1 of the Handbook of Procedures, only the licensing authorities can permit the revalidation of freely transferable DFIAs. There is no dispute on this. But it should be fairly understood that adequate justification for revalidation has to be made available to DGFT. And this information can only be made available by Customs. The appellant has merely sought a statement for issue by Customs to the DGFT certifying that the admissibility of import of Saccharin/Ascorbic Acid against the DFIAs licenses remained in litigation. In fact the Commissioner (Appeals) acknowledges this position but comes to a conclusion that there are no express provisions for issue of certificates for revalidation. The Commissioner (Appeals) held that I find that there is no dispute that there was litigation for a long period of time on the issue as discussed above. Once the dispute starts no importer will further import said item for clearance under the DFIA licenses. Naturally, the license put up for clearance which is under litigation and purchased before starting of litigation will remain in his hand and may expire if litigation continues for a long period of time. Further under such licenses (DFIA) number of items can be imported as per SION norms. They could have utilized license for other items but due to litigation disputed item may have remained unutilized. These licenses may have been purchased by them after starting of litigation but before finalization of issue. In the present case, the appellant have asked for the certificate from the Assistant Commissioner for licenses with them. The present matter is incidental to the basic dispute raised b y the customs authority. There is an explicit provision for the license expired while in direct custody of the customs authority. Once matter is in litigation, it is not in the hands of the importer or the customs authority to finalize the issue within the time frame so that such situation does not arise. The Commissioner (Appeals) accepts the fact that the licenses are to be revalidated by the licensing authority but does not acknowledge that the licensing authority has no information about the prolonged litigation through which the importer went while importing the said goods under DFIAs. This information, only, can help DGFT to allow revalidation.
7. The Ld. AR in his written submissions has raised the issues of evidence regarding transfer of licenses and amounts unutilized, validity of licenses on date of transfer etc. We find that these issues were never before the lower authorities nor have we seen any evidence to support these doubts. Therefore, we reject these contentions. Further, the Ld. AR also submitted that the earlier request for issuing certificate to the DGFT was made in 2010 whereas the Commissioner (Appeals) order cited above in which Commissioner (Appeal)s allowed the appeal filed by another importer was passed on 14.10.2009. This contention of the Ld. AR only helps the case of appellants. The factual position is that Customs still did not permit utilization and the litigation went to the level of CESTAT which gave decisions in 2013 (saccharin) and in 2011 (ascorbic acid). From the records, we see that the appellant M/s. Pushpanjali Floriculture Ltd., in its letter dt. 19.5.2010, very clearly informed the Dy. Commissioner Customs, Nhava Sheva that they are holding DFIAs that could not be utilized for the relevant import of Sodium Saccharin due to prolonged litigation. Thereafter, they made repeated requests for duty free import against the DFIAs. In the said letter dt. 19th May 2010, they requested the Deputy Commissioner to (1) To issue a certificate confirming the denial of duty free benefits against the relevant DFIAs; (2) To allow debiting all the three authorizations as a single authorization.
It was only in 2014 that their request to issue a certificate was rejected. We fail to understand what more grounds are required to issue a certificate to the DGFT to the effect that the DFIA Licenses could not be utilized due to prolonged litigation.
8. We also note that apart from being transferees of licenses, the appellants have also imported Saccharin and on provisional basis during the period in dispute. Therefore, it cannot be said that the appellants were only making their request on the basis of litigation undergone by other importers. In any case, the fact that the import of said goods under DFIAs was in dispute is sufficient ground for holding that the licenses could not be utilized due to litigation with customs. It is to be noted that the licenses are for specific inputs.
9. The whole scheme of DFIAs is to allow duty free imports against exports. Denial of benefit under the scheme only because of expiry of Licenses due to refusal by Customs to allow import of such goods under the Licenses and their resultant non-utilisation, would amount to denial of substantial benefits. This is more so when the appellants have invested huge sums of money in purchasing such licenses. Now that the goods have been permitted to be imported against such Licenses by the Tribunal, the appellants must get the favour of revalidation.
10. The Ld. ARs contention is that the licenses should be in custody of Customs to enable the appellants to seek revalidation in terms of Para 2.13.1 of the Handbook of Procedures. In our view, it is for DGFT to revalidate the Licenses. The fact remains that the Licenses were presented to the Custom Authorities for debit but the goods were cleared on provisional basis. Due to ongoing litigation licenses were also not presented for debit for obvious reasons. The appellants cannot be expected to present Licenses for debit when the department continued to refuse duty free import against the said Licenses. It can hardly be imagined that Para 2.13.1 would require physical custody with the customs. Commissioner (Appeals) himself held that once matter is in litigation it is not in the hands of the importer or the Customs Authorities to finalize the issue within the time frame of the licenses. In fact, the licenses remained in constructive custody of customs because customs refused to debit the licenses for duty free import of such goods by all importers.
11. In the circumstances, we agree with the appellant. The department is directed to issue a certificate to DGFT within two weeks of the receipt of this order for the purpose of revalidation of licenses under Para 2.13.1 of the Handbook of Procedures.
12. The appeal is allowed in above terms.
(Pronounced in court on /2015)
(Anil Choudhary)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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