2011 (10) TMI 197 - AT - Customs

Eligibility of Exemption Notification 38/96 - whether the import of Chinese raw silk is entitled to the benefit of notification No. 38/96, irrespective of the fact as to whether the importer is a border resident or not. - goods were imported in another person name - Held that - Advance ruling pronounced on 29.08.2006 deals with the scope of Notification - that there is no condition except limiting the import of such goods from China through a specified land customs station and along the specified land routes, for getting the benefit of exemption of duty under notification. It was held that the exemption notification has no actual user condition after the specified goods are imported. Thus decided in favour of aasessee.

Summary

Issues Involved:
1. Entitlement to the benefit of Notification No. 38/96-Cus dated 23.7.96 for the import of Chinese raw silk.
2. Confiscation of goods and imposition of penalties under the Customs Act, 1962.
3. Applicability of the Memo of Understanding (MoU) between India and China for border trade.
4. Relevance of circulars and instructions issued by the Central Board of Excise and Customs (CBEC).

Issue-wise Detailed Analysis:

1. Entitlement to the benefit of Notification No. 38/96-Cus dated 23.7.96:
The core issue was whether the import of Chinese raw silk was entitled to the benefit of Notification No. 38/96-Cus, irrespective of the importer being a border resident. The adjudicating authority confirmed the customs duty demand on the basis that the import could not be considered border trade as per the MoU between India and China. However, it was noted that all conditions of the notification, such as the route of import, were satisfied. The Tribunal referred to a previous decision in the case of Krishna Singh Garbyal, which held that the MoU must be converted into domestic law to be enforceable. The notification did not specify any condition restricting the benefit to border area residents. Therefore, the Tribunal concluded that the benefit of the notification could not be denied based on the MoU.

2. Confiscation of Goods and Imposition of Penalties:
The Commissioner had ordered the confiscation of the imported goods with an option for redemption upon payment of a fine and imposed penalties on the importer and Shri Inder Prasad Negi. The Tribunal, referencing the Krishna Singh Garbyal case, found that the absence of specific conditions in the notification meant that the penalties and confiscation were not justified. The Tribunal emphasized that internal correspondences and circulars could not impose conditions not explicitly stated in the notification.

3. Applicability of the Memo of Understanding (MoU) between India and China for Border Trade:
The Tribunal observed that the MoU between India and China, signed to promote border trade, did not have the force of law unless enacted domestically. The MoU alone could not be the basis for denying the benefits of the notification. The Tribunal reiterated that the notification in question did not incorporate any conditions from the MoU, and thus, the MoU could not restrict the import benefits.

4. Relevance of Circulars and Instructions Issued by the CBEC:
The Tribunal held that circulars and instructions issued by the CBEC could not override the express terms of the notification. It was noted that such circulars and instructions, while reflecting government intentions, do not have the force of law unless incorporated into a legislative enactment. The Tribunal cited the case of Intercontinental vs. UOI, where it was established that a notification could not be altered by subsequent circulars. Therefore, the reliance on CBEC instructions by the adjudicating authority was deemed misplaced.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals and granting consequential relief to the appellants. The judgment emphasized that the benefit of Notification No. 38/96-Cus could not be denied based on the MoU or internal circulars, as the notification itself did not impose any such conditions.