2014 (1) TMI 1458 - AT - Customs

Stay application - Denial of refund claim - Violation of condition stipulated in Notification No. 40/2002-Cus. dated 12-2-2002 - Held that - proceedings were initiated against various importers including the respondent for underinvoicing with regard to import of Polished Marble Slabs from Nepal and for not fulfilling the conditions stipulated in Notification No. 40/2002-Cus. dated 12-2-2002. Both the lower authorities dropped the proceedings initiated against the respondent on the ground that the import was as per Indo-Nepal Treaty which would have the overriding effect against the exemption notification - Board s Circulars would be binding on the Department even if they are contrary to the law. We further find that it is not the case of the Department that the learned Commissioner (Appeals ) Order is ex facie illegal or without jurisdiction - Stay denied.

Summary

Issues:
Revenue's application for staying the operation of Order-in-Appeal, Indo-Nepal Treaty overriding notification conditions, under-invoicing causing revenue loss, domestic law prevailing over international law, Indo-Nepal Treaty not superseding domestic legislation, Board's Circular binding on Departmental Officer, proceedings dropped against respondent, import of Polished Marble Slabs from Nepal, exemption notification conditions, Board's Circular No. 112/2003-Cus., DGFT's clarification on import of Ginger from Nepal, Board's Circulars binding on Department.

Analysis:
The Revenue filed applications seeking a stay on the Order-in-Appeal upholding the dropping of proceedings against the respondent. The Revenue argued that the Indo-Nepal Treaty should not override the conditions of the notification, citing a loss of revenue due to under-invoicing and precedence of domestic law over international law, supported by legal precedents. The Revenue feared a significant revenue loss and potential refunds to the respondent if the Order-in-Appeal was not stayed.

On the contrary, the respondent's Advocate contended that the Board's Circular No. 112/2003-Cus. clarified that the Indo-Nepal Treaty supersedes notification conditions, emphasizing that the Circular remains binding on Departmental Officers unless modified or withdrawn. The respondent relied on Supreme Court decisions and highlighted that the proceedings were dropped by lower authorities, emphasizing compliance with the Treaty provisions.

The Tribunal noted that the proceedings were initiated against importers, including the respondent, for under-invoicing in the import of Polished Marble Slabs from Nepal and non-compliance with notification conditions. Both lower authorities dropped the proceedings, citing the overriding effect of the Indo-Nepal Treaty. The Tribunal considered the Board's Circular and DGFT's clarification, supporting the Treaty's precedence over notification conditions. Referring to legal precedents, the Tribunal emphasized the binding nature of Board Circulars on the Department, even if contrary to the law, and found no illegality in the Commissioner (Appeals)'s Order. Consequently, the Tribunal dismissed the stay petitions, affirming the Commissioner (Appeals)'s decision.

In conclusion, the Tribunal's detailed analysis focused on the conflict between the Indo-Nepal Treaty and notification conditions, the impact of under-invoicing on revenue, the relevance of legal precedents, the binding nature of Board Circulars, and the justification for dismissing the stay petitions based on the Treaty's overriding effect and compliance with Circulars and clarifications.