Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (G), Mumbai vs Akm Trading Corporation on 30 July, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/412/03 (Arising out of Order-in-Appeal No. 36/2003(JCH) dated 7.3.2003 passed by Commissioner of Customs (Appeals), Nhava Sheva) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. S.K. Gaule, Member (Technical) ======================================================
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?
====================================================== Commissioner of Customs (G), Mumbai Appellant Vs. AKM Trading Corporation Respondent Appearance: Shri S.S. Katiyar, Authorised Representative (SDR), for appellant Shri V. Sridharan, Advocate, for respondent CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. S.K. Gaule, Member (Technical) Date of Hearing: 29.7.2010 Date of Decision: 30.7.2010 ORDER NO................................. Per: P.G. Chacko
This appeal filed by the Revenue is directed against the appellate Commissioner's order granting the benefit of Notification No.48/2000-Cus. dated 25.4.2000 to the respondent in respect of processed cotton fabrics imported by them under Duty Free Replenishment Certificate (DFRC) No.0410009541 dated 12.10.2000. The respondent had purchased the DFRC from the original licensee, viz. M/s. Texsyard International, Chennai, who had obtained it from the Joint Director General of Foreign Trade, Chennai, on the strength of two shipping bills covering export of "cotton processed made-ups other than grey". The DFRC permitted import of "processed cotton fabrics" to the extent of 12 kg. in quantity and Rs.19,933.80 in value. The respondent, as transferee of the DFRC, imported what was described as "cotton fabrics (55% cotton and 45% polyester)" in the relevant bill of entry. They also claimed the benefit of the above Notification. The bill of entry was provisionally assessed with the above benefit and accordingly the goods were allowed to be cleared. In finalisation of the provisional assessment, the original authority denied the benefit of the DFRC and the Notification to the assessee and confirmed demand of duty of Rs.4,57,852/- against them. This decision of the Deputy Commissioner of Customs was taken in appeal to the Commissioner (Appeals) and the latter allowed the same. Hence the present appeal of the Revenue.
2. The learned SDR for the appellant reiterates the grounds of this appeal and submits that the respondent did not satisfy condition No.2(c) of Notification 48/2000-Cus. ibid. The Notification exempted certain materials from payment of basic customs duty as well as CVD subject to the following conditions:-
(1) That the importer has been granted DFRC by the licensing authority for import of the said material in terms of para 7.4 of the Export and Import Policy and the said certificate is produced at the time of clearance for debit by the proper officer of Customs;
(2) That the said licence contains endorsements specifying inter alia;
a) the Standard Input Output Norm (SION) number, description and value of the resultant product exported, on the reverse;
b) the shipping bill numbers and dates and FOB value in Indian rupees of the resultant product, on the reverse; and
c) the quality, technical characteristics, specifications and quantity of the materials used in the resultant product which are allowed to be imported duty-free.
(3) That the DFRC and/or materials shall be freely transferable;
(4) That the imports and exports are undertaken through seaports at ........
The exports and the import in the instant case were undertaken during the currency of the EXIM Policy 1997-2002. The "materials" referred to in the above Notification meant raw materials, components, intermediates, consumables, computer software and parts used in the manufacture of the resultant product as well as packing materials used in the packing of the resultant product. The learned SDR has not raised any objection in relation to any of the above conditions other than condition No.2(c). It is submitted that the DFRC in question did not contain the necessary endorsements specifying the quality, technical characteristics, specifications and quantity of the materials used in the resultant product which were allowed to be imported duty-free. It merely described the import item as "processed cotton fabric", which, according to the learned SDR, was not sufficient to determine whether fabrics of the same quality, technical characteristics and specifications as those of the fabric used in the export goods had been imported by the respondent. It is submitted that it was the burden of the respondent to ensure that the above condition of the Notification had been duly complied with. In this connection, he has referred to para 7.62 of the Handbook of Procedures 1997-2002, which provides that the licensing authority shall ensure that, while issuing the DFRC, the shipping bill numbers and dates, FOB value as per the shipping bills and description of the export products are endorsed on the reverse of the DFRC and that, before allowing imports against DFRC, the Customs shall verify that the details of the exports as given on the DFRC are as per their records. According to the learned SDR, implied in this provision of the Handbook of Procedures is the responsibility of the importer to get the details of the exports verified by the proper officer of Customs before making the import. Had this verification been done, the present issue would not have arisen. The learned SDR has also relied on the DGFT's letter dated 1.7.2002 which communicated to the respondent the decision of the Advance Licence Committee (ALC) to reject their request for permission to import processed cotton fabric containing 55% cotton and 45% polyester under the subject-DFRC. In this connection, the learned SDR submits that the decision of the DGFT is binding on the importer under para 4.13 of the EXIM Policy, which reads as follows:-
"4.13 If any question or doubt arises in respect of the interpretation of any provision contained in this Policy, or regarding the classification of any item in the ITC(HS), Handbook (Vol.1), Handbook (Vol.2), the said question or doubt shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding.
If any question or doubt arises whether a licence has been issued in accordance with this Policy or if any question or doubt arises touching upon the scope and content of a licence, the same shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding."
After conceding that, in a reference made by the party, the DGFT offered contradictory clarifications, the learned SDR submits that the benefit of doubt should be given to the Revenue. In this connection, he has relied on Liberty Oil Mills (P) Ltd. vs. CCE, Bombay 1995 (75) ELT 13 (SC), wherein the Hon'ble Supreme Court held that any ambiguity or doubt in an exemption provision should be resolved in favour of the Revenue and not in favour of the assessee. According to the learned SDR, the ratio of the apex court's judgment would also be applicable to a case where ambiguity or doubt arises out of contradictory clarifications offered by the licensing authority under the EXIM Policy. With reference to another ground of this appeal, the learned SDR submits that Public Notice No.4 dated 1.4.2002 issued by the DGFT amending para 4.31 in the Handbook of Procedures (Vol.1) is clarificatory in nature and hence should be given retrospective effect. According to the amended provisions, the exporter shall be required to give declaration with regard to technical characteristics, quality and specifications in the shipping bill and the licensing authority while issuing DFRC shall mention such technical characteristics, quality and specifications in respect of inputs used in the export product. Textile fabrics are also in the list of inputs added to para 4.31 ibid. by the aforesaid amendment. It is argued that, as the respondent merely described the imported item as 'cotton fabrics (55% cotton and 45% polyester)' and did not declare the technical characteristics, quality and specifications of the goods in the bill of entry to enable the proper officer of Customs to determine whether the same input as used in the export product had been imported, they would not be eligible for the benefit of the Notification.
3. The learned counsel for the respondent also refers to the relevant provisions of the EXIM Policy as also of the Handbook of Procedures (Vol.1). At the outset, he submits that the DGFT's Public Notice No.4 dated 1.4.2002 did not have retrospective effect inasmuch as it expressly stated that it should come into effect from 1st April 2002. It is submitted that, prior to 1.4.2002, there was no requirement that the technical characteristics, quality and specifications should be declared by the exporter in the shipping bill or that similar particulars of the input should be mentioned by the licensing authority in the DFRC. The DFRC issued by the DGFT described the export goods as 'processed cotton made-ups other than grey'. It did not specify the chemical composition of the material. According to the learned counsel, any textile fabric composed predominantly of cotton is understood to be cotton fabric as is evident from the various entries of the Standard Input Output Norms (SION). In this connection, the learned counsel has drawn our attention to the relevant part of the SION. Against item Nos. J257-264, the outputs are boys garments and the corresponding input, in all cases, is 100% cotton fabric. Similar other instances also have been indicated by the counsel, whose endeavour is to show that, where the policy-making authority required input to be 100% cotton fabric corresponding to garments, it specified so. If it was not so specified, the cotton fabric need not be 100% and can include a fabric consisting predominantly of cotton. In this context, the learned counsel has also invited our attention to the relevant tariff entries. Heading 52.08 of the Customs Tariff Act Schedule covers "Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200 g/m2." Heading 52.10 covers "Woven fabrics of cotton, containing less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing not more than 200 g/m2." The learned counsel submits that the goods covered under both the Headings are cotton fabrics. The processed fabrics imported by the respondent, which was composed of 55% cotton and 45% polyester, are also, therefore, to be considered as cotton fabrics for purposes of the DFRC scheme and the connected Notification. The learned counsel submits that, having allowed export of processed cotton made-ups under claim for the benefit of DFRC scheme, the Customs authorities cannot insist on technical specifications of the export product for the purpose of grant of the benefit of Notification 48/2000-Cus. The DGFT issued the DFRC after verification of the relevant shipping bills duly processed by the Customs authorities. The respondent being the transferee of the certificate cannot be required to bring on record particulars such as quality, technical characteristics or specifications of the export goods. The description of the goods given in the DFRC by the licensing authority is liable to be accepted by the Customs authorities inasmuch as the description of the imported item tallies with that of the export goods (processed cotton made-ups and processed cotton fabrics). It is submitted that, when the shipping bills were filed by the exporter under the DFRC scheme, the proper officer of Customs was aware of prospective importation of inputs by the licensee or his transferee. The officer ought to have taken the necessary precautions against any prospect of undue benefit being claimed by the importer. This could have been done through sampling of the export product and getting the same tested in the department's laboratory. Having not done this, the Customs authorities cannot disentitle the importer to the benefit of the DFRC scheme. In this context, the learned counsel has relied on two decisions of this Tribunal, viz. Global Exim vs. CC, Mumbai 2010 (253) ELT 417 (Tri.-Mumbai) and CC, Mumbai vs. Matriaco (I) Ltd. 1999 (114) ELT 99 (T). While in the former case, this Tribunal held that the benefit of Notification 40/2006-Cus. was available to the importer on the strength of Duty Free Import Authorisation (DFIA) issued by the DGFT, the Tribunal in the latter case granted the benefit of Notification 203/92-Cus. to the importer who imported cotton denim fabric and exported gents shirts manufactured out of the fabric. In the two cases, the specifications of the export goods as given in the DFIA or the advance licence, as the case may be, were held to be sufficient in the absence of departmental verification leading to contra findings. According to the learned counsel, the ratio of the decision of the Tribunal in the aforesaid cases is squarely applicable to the instant case.
4. The learned counsel has also referred to the clarifications issued by the DGFT. He has conceded that the opinion given by the DGFT on the reference made by the respondent is adverse to them. It is submitted that the clarification offered by the DGFT is not binding on this Tribunal. In this context, the learned counsel has claimed support from the Tribunal's Larger Bench decision in Sanwah Micro System Pvt. Ltd. vs. CC, Madras 2000 (118) ELT 294 (Tribunal-LB). The counsel has also referred to the Calcutta High Court's judgment in Kalpa Ghosh vs. CC 1994 (70) ELT 533 (Cal.). It is argued that the finality and binding character of the DGFT's clarification of any provision of the EXIM Policy would not extend to any authority beyond the Ministry of Commerce. According to him, what was laid down under para 4.13 of the EXIM Policy 1997-2002 was that any decision of the DGFT on any issue referred to it for clarification might be binding on other intra-departmental authorities. With reference to the learned SDR's argument that the conditions of Notification 48/2000-Cus., being an Exemption Notification issued under Section 25 of the Customs Act, should be strictly construed, the learned counsel submits that this proposition may not be squarely applicable to an Exemption Notification pertaining to an export promotion scheme. According to the learned counsel, any strict interpretation of such a Notification without regard to the purpose of the export promotion scheme is likely to defeat the very purpose. It is also pointed out that, of late, DFRCs/DFIAs have been issued by the DGFT with better particulars relating to quality, technical specifications etc. of the export/import items, which is in pursuance of Public Notice No.4/2002 ibid.
5. In his rejoinder, the learned SDR refers to certain entries of the SION in his endeavour to show that the proposition made by the learned counsel on the basis of other entries of the SION may not be correct.
6. We have given careful consideration to the submissions. The short question arising for consideration is whether the benefit of Notification 48/2000-Cus. (serial No.10) is admissible to the processed cotton fabrics imported by the respondent in the month of March 2001. This Notification was issued under Section 25 of the Customs Act to grant the benefit of the DFRC scheme to exporters/importers. As per condition No.1 read with condition No.3 of the Notification, the benefit was admissible to transferees of DFRCs also, subject, of course, to due compliance, by them, of other conditions of the Notification. The respondent is a transferee of the subject-DFRC. If they satisfy other conditions of the Notification, the Revenue is agreeable for granting them the benefit of the Notification. The relevant condition, which is in the centre stage of the controversy in this case, is condition No.2(c) which stipulates that the DFRC should contain endorsements by the licensing authority specifying "quality, technical characteristics, specifications and quantity of the materials used in the resultant product which are allowed to be imported duty-free". The DFRC in question merely described the input item as "processed cotton fabrics" and the resultant product as "cotton processed made-ups other than grey". The question agitated before us is as to whether the above input description would suffice the purpose of condition No.2(c) of the Notification.
7. In this context, references have been made by both sides to certain "clarifications" offered by the DGFT (licensing authority). There are three such "clarifications" of the DGFT available on record. In a letter dated 23.5.2001, the DGFT informed the Deputy Commissioner of Customs that his reference had been considered in the ALC meeting dated 3.5.2001 and a decision not to allow import of the material in question under the DFRC scheme had been taken. A decision to the contra was communicated to the respondent by the DGFT in a letter dated 8.12.2009 under the provisions of the Right to Information Act. The decision so communicated had been taken by the ALC in its meeting dated 21.3.2002 on a reference from the Deputy Commissioner of Customs. It appears from the text of the ALC's proceedings that the decision was taken on the basis of the opinion offered by the Textile Commissioner, which was to the effect that blended fabric with predominant cotton content could be accepted as processed cotton fabric. In view of the Textile Commissioner's opinion, the ALC decided in favour of granting the benefit of the DFRC to the respondent in respect of the consignment of cotton fabrics (55% cotton and 45% polyester) imported by them. Thus, on the reference made by the Deputy Commissioner of Customs, the DGFT conveyed two contradictory advices on the aforesaid question. The third "clarification" of the DGFT was based on the decision of the ALC dated 6.6.2002, which was taken on a reference from the respondent. The decision of the ALC was to reject the respondent's request for allowing import of processed cotton fabric (55% cotton and 45% polyester) under the DFRC. Thus we are confronted by contradictory "clarifications" issued by the DGFT. Both sides agree that these clarifications were issued by the DGFT in exercise of his authority under para 4.13 of the EXIM Policy 1997-2002, whereunder the DGFT could decide on any question or doubt which arose in respect of interpretation of any provision contained in the Policy or regarding the classification of any item in the ITC(HS), Handbook of Procedures (Vol.1 or Vol.2) and which was referred to him. If any question or doubt arises touching upon the scope and content of the licence and the same was referred to the DGFT, his decision shall be final and binding as per para 4.13 ibid. In the present case, it appears, the question which was referred to the DGFT by the Deputy Commissioner of Customs and the respondent touched upon the scope and content of the DFRC inasmuch as both the Deputy Commissioner of Customs and the respondent wanted to know as to whether cotton fabrics composed of 55% cotton and 45% polyester covered by the subject-bill of entry would come within the scope of "processed cotton fabric" mentioned as import item in the DFRC. In the reference made by the Deputy Commissioner of Customs, the DGFT offered contradictory clarifications, one of these being in favour of the importer. In the reference made by the party through the Deputy Commissioner, the DGFT's "clarification" was against the party. The authority given to the DGFT under para 4.13 ibid. was not to be exercised in a trifling manner inasmuch as it is an authority conferred exclusively on the DGFT for clearing doubts or questions arising out of conflicting interpretations of the provisions of the EXIM Policy. To construe the provisions of the EXIM Policy correctly in keeping with the legislative intent underlying the Policy is a function of paramount importance and the same has to be exercised with judicious application of mind. We think, this is the reason why the law makers did not permit the DGFT to delegate this power to any other authority. In two of the above three cases, the DGFT appears to have delegated this authority to the ALC and it was the ALC's decision which was communicated by the DGFT. In this context, we find that the function given to the ALC in the Directorate-General of Foreign Trade was only to recommend grant of licences under duty exemption schemes and to recommend input output norms and value addition norms to be notified by the DGFT. The ALC did not figure in the area of clarification of EXIM Policy provisions or doubts/questions touching upon the scope of DFRCs coming within the realm of para 4.13 of the EXIM Policy, nor was the DGFT authorised under para 4.13 ibid. to delegate his function of "clarification" to any other authority whatsoever. Therefore, the advice offered by the DGFT without independent application of mind and merely on the strength of the outcome of ALC's proceedings cannot be said to be binding on anyone. What is binding is a decision independently taken by the DGFT on a reference for clarification of any doubt or question relating to interpretation of any provision of the EXIM Policy or touching upon the scope of the provisions of DFRC etc. A decision taken beyond the scope of para 4.13 of the EXIM Policy cannot be said to be binding on anyone. We have also noted that one of the "clarifications" offered by the DGFT was based on the decision taken by the ALC by relying on Public Notice No.4/2002-07 dated 1.4.2002 which had come into effect from 1st April 2002 only, with no retrospective operation. The ALC chose to give retrospective effect to the public notice and the DGFT blindly followed the ALC's decision. This is yet another serious infirmity of one of the clarifications offered by the DGFT. We are aware of the ruling of the Hon'ble Calcutta High Court's decision in Kalpa Ghosh's case (supra) wherein the Hon'ble High Court held that the DGFT was the only authority to issue clarifications and that any clarification issued with reference to the provisions of the EXIM Policy by any other authority could not be binding or final. The learned counsel has argued that the finality and binding nature of the DGFT's clarification cannot extend beyond the horizons of the Ministry of Commerce. This submission is not acceptable inasmuch as the burden of implementing the EXIM Policy provisions is not merely on authorities working directly under the Ministry of Commerce. Some of the Policy provisions may have to be carried into effect by authorities working under other Ministries as in the present case. The benefits of the DFRC scheme are meant for exporters and importers. In so far as importers are concerned, such benefits are administered by Customs authorities in terms of Notifications issued under Section 25 of the Customs Act and that is how the present dispute arose before the lower authorities. The question/doubt which arose in this case, as we have already noted, directly touched upon the scope of the expression "processed cotton fabrics" used in the DFRC issued by the DGFT. The respondent interpreted this expression in such a way as to claim the benefit of Notification 48/2000-Cus. before the Customs authorities. The Customs authorities interpreted the above expression in a different way so as to deny the benefit of exemption to the party. It was in this scenario that both the Deputy Commissioner of Customs and the party were constrained to approach the DGFT for his clarification. Such clarification, where it is offered in proper exercise of authority under para 4.13 of the EXIM Policy, is final and binding not only on the other authorities under the Ministry of Commerce but also on the Customs authorities. This is the reason why we have rejected the aforesaid arguments of the counsel. Nevertheless, on the facts of this case, we are not in a position to accept as final and binding any of the "clarifications" offered by the DGFT, for the reasons which we have already recorded.
8. We have, therefore, got to construe the relevant condition of the Notification with reference to the facts of this case. Both sides have extensively referred to certain entries in the SION. The purport of the learned counsel was to show that, in the absence of the figure "100%" to qualify the expression "processed cotton fabrics" used in the DFRC, cotton fabrics composed predominantly of cotton should be treated as coming within the ambit of the expression "processed cotton fabrics" used in the DFRC. The attempt of the learned SDR was to establish that the expression "cotton fabrics" could only mean 100% cotton fabrics. Both sides have relied on entries of the SION to establish their respective positions and, therefore, we think, we will also be justified in drawing support from the provisions of SION in determining the question presently under consideration. The entry relevant to the export and import in question is J119 of the SION, which provides that "processed cotton fabrics" is permitted to be imported to the extent of 1.02 kg. vis-`-vis export of 1 kg. of "processed cotton made-ups other than grey". The question is whether, in each of these expressions, the word "cotton" should be qualified as 100%. We find that, elsewhere in the SION, certain input items have been so qualified. For instance, the input item mentioned against entry J98 is 100% cotton yarn against the output item, viz. bleached/dyed/printed cotton knitted fabrics. The input item mentioned at entry J108 is "cotton yarn", which appears against the output item described as "dyed 100% cotton table cover". Both the input and output items mentioned against entry J125 are found to be qualified by the figure "100%", the input being 100% natural silk fabric and the output being 100% natural silk made-ups/garments. Against entries J257 to 265, we come across "100% cotton fabric" as the input item while the output items are various garments meant for boys. It thus appears that, wherever the textile material was intended to be 100% and not intended to be blended, it was qualified by the figure 100% in the SION. In the instant case, the DFRC mentioned the input item as "processed cotton fabrics" and the output item (export goods) as "processed cotton fabric made-ups other than grey". Therefore, we are of the view that both the input and output items mentioned in the DFRC could be a blend of cotton with a different textile material, cotton, of course, having to be the predominant constituent. The Revenue, in this case, has accepted the importer's declaration as "cotton fabrics (55% cotton and 45% polyester). Obviously, what was imported by the respondent was a consignment of fabrics composed predominantly of cotton. Considering the basis of classifying inputs and outputs in the SION, we hold that the expression "processed cotton fabrics" used for the import item in the DFRC should be construed so as to include such fabrics composed predominantly of cotton. The learned counsel has usefully referred to certain tariff entries also. Heading 52.08 of the CTA Schedule covers woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200 g/m2. Heading 52.10 covers woven fabrics of cotton, containing less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing not more than 200 g/m2. Heading 52.11 covers woven fabrics of cotton, containing less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing more than 200 g/m2. It would thus appear that the tariff considers woven fabrics composed predominantly of cotton blended with man-made fibres as "woven fabrics of cotton". In our considered view, this is another reliable basis for holding that the processed fabrics composed predominantly of cotton and partly of polyester, imported by the respondent, are liable to be brought within the scope of the import item (processed cotton fabrics) mentioned in the DFRC.
9. In this context, it may be pertinent to note that the DFRC licensee had obtained it from the DGFT after exporting "processed cotton fabric made-ups other than grey", a fact not in dispute. Those exports were made under shipping bills filed under the DFRC scheme. The proper officer of Customs, who dealt with those shipping bills, was aware of the eventuality of the input item being imported under claim for exemption from payment of duty either by the DFRC licensee or by a transferee of the licence. The said officer was also aware of the conditions of the relevant Notification (Notification 48/2000-Cus.). It was very much known to the officer of Customs, who dealt with the shipping bills, that an officer of Customs, who may have to deal with a bill of entry filed by a prospective importer under the DFRC scheme, will necessarily be confronted by the question whether the imported material is the same as the input used in the exported goods. In this scenario, it should have occurred to the officer of Customs, who dealt with the shipping bills, that a sample of the export goods should be preserved and got tested for its chemical composition and other specifications. This was not done in the present case. Therefore, as held by this Tribunal in the case of Global Exim (supra), on a comparable set of facts, we hold that it was not justifiable for the Customs authorities to have found fault with the importer with reference to the description of the import item given in the bill of entry. The relevant provisions of the EXIM Policy and of the Handbook of Procedures indicate that both the DGFT and the Customs authorities have the responsibility of ensuring that the exporter/importer has complied with the requirements of the DFRC scheme. Before issuing the DFRC, the DGFT shall ensure that the shipping bill particulars including the description of the export product are endorsed on the reverse of the DFRC. On the part of the Customs authorities, there should be verification of records to ensure that the details of the exports given on the DFRC tally with the Customs records. The Customs verification should be made before allowing any import against the DFRC. These provisions of para 7.62 of the Handbook of Procedures 1997-2002 would indicate that sufficient safeguards should be taken by the licensing authority and the Customs authorities to ensure that any import made against a DFRC issued by the DGFT is in accordance with the records maintained by the Customs. It would, therefore, appear that the records maintained by the Customs in respect of export of the resultant product should be sufficient for the proper officer of Customs dealing with a subsequent import of input to verify whether such input is of the same quality, technical characteristics and specifications as those of the input actually used in the resultant product exported earlier. In our view, in a case of this kind, the Customs authorities should have maintained records pertaining to quality, technical characteristics and other specifications of the export goods, which they could have easily maintained through the process of sampling and testing. It appears, this record was not maintained by the department in this case. Therefore, at this stage, the Revenue cannot call upon the respondent (transferee of the DFRC) to prove that the material imported by them is of the same quality, technical characteristics and other specifications as those of the input used in the goods exported by the original licensee. It is enough for the department to accept the undisputed declaration of description of goods (processed cotton fabrics) in the bill of entry.
10. The Tribunal's decision in Global Exim (supra) is in support of the above view. In that case, the party had imported bearings of upto 50 mm bore against a DFIA claiming the benefit of exemption under Notification 40/2006-Cus. dated 1.5.2006, which inter alia required that the description, value and quantity of the materials imported were as covered by the DFIA. The specification provided in the DFIA was "upto 50 mm bore" in respect of bearings and the appellant had imported several types of bearings. The Tribunal held that the Customs officers should have verified the specifications and that, having allowed export of motors with input specifications as bearings upto 50 mm bore, it was not proper for the Customs authorities to insist on technical specifications at the time of import of bearings. In the facts of the case, the Tribunal held that the specifications provided in the DFIA had to be considered as sufficient.
11. The decision of this Tribunal in the case of Matriaco (I) Ltd. (supra) is also supportive of the respondent's case. In this case, the party had imported a consignment of cotton denim fabric under an advance licence, which permitted import of cotton fabrics. The party claimed the benefit of Notification 203/92-Cus. Advance licence had originally been issued to M/s. Hindustan Lever Ltd. and the same was subsequently transferred to the importer. The goods exported under the DEEC scheme were gents cotton shirts. The question arose whether the cotton denim fabrics were permitted to be imported against the advance licence which required export of gents cotton shirts. This Tribunal found no evidence to show that the shirts, which were exported, were not manufactured out of denim cotton fabrics. The learned counsel for the respondent has told us that the expression "denim" stands for a weaving pattern. We have found this expression in the present tariff also. It appears to us that, under the DEEC scheme, gents cotton shirts must have been exported in fulfilment of export obligation vis-`-vis import of cotton fabrics. The cotton fabrics imported by the party were of "denim" pattern but the cotton shirts exported in the case were described only to be cotton shirts. The question, therefore, arose as to whether the exported goods were also of the same weaving pattern (denim). This Tribunal found no evidence on record of the Customs authorities to indicate that the gents shirts exported were not of denim. Again, what emanates from this decision of the Tribunal is that the importer should not be denied the benefit of the Exemption Notification on the ground of breach of any condition attached thereto where the Customs authorities had not, at the relevant stage, maintained the proper records to establish correlation between export goods and import goods.
12. The respondent's arguments are very much supported by the decisions in Global Exim case and Matriaco case.
13. The format of DFRC presently in vogue has also been shown to us, from which it appears that the licensing authority has started specifying the composition of textile materials in DFRCs, both for export and for import and, therefore, today, there is no scope for issues of this kind to arise. This, however, would not detract from the applicability of the case law cited by the learned counsel for the prior periods. We have also noted that the Public Notice dated 1.4.2002 issued by the DGFT has no retrospective effect and hence will not have any bearing on the present case.
14. In the result, the decision of the lower appellate authority granting the benefit of Notification 48/2000-Cus. to the respondent is sustained and this appeal of the Revenue is dismissed.
(Pronounced in Court) (S.K. Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) tvu 1 25