2018 (9) TMI 673 - HC - Customs

Liability of administrative charges - appellant stored 7785.925 MT of Molasses in their storage tank inside the Chennai Harbour - It is the contention of the appellant that the procurement is only for export and there is no requirement either to take ML-5 licence or to pay administrative charges under Rule 7(2) of Molasses Control Rules for transit whether the appellant is liable to pay the administrative charges treating the transaction as one covered under ML-5 licence? Held that - The appellant appears to be under the impression that import would mean only the import from outside the country and export out of the country. There is absolutely no basis in the contention taken by the appellant - It is very clear that exporter like the appellant even for exporting Molasses to a place outside Andhra Pradesh shall pay the administrative fee for export. The state is not concerned as to whether export is to a foreign country. In short, the exporter like the appellant must pay administrative charges to the excise authorities at Andhra Pradesh for exporting molasses to a place outside the state of Andhra Pradesh. The payment made by M/s. Sudalagunta Sugars Limited on behalf of the appellant should be considered in the context of the definition for the term export under the Andhra Pradesh Molasses Rules. The Tamil Nadu Molasses Control and Regulation Rules very clearly provides that every dealer desiring to import molasses from places outside the State and every dealer desiring to export molasses outside the State must procure licence in Form ML-5 on payment of administrative charges - There is no dispute that the appellant imported molasses to the State of Tamil Nadu for the purpose of exporting it into a place outside the State. There are two elements involved in this process; one relating to the import of molasses from Andhra Pradesh and another exporting the molasses outside the State. The term export/import must be interpreted in the light of the definition given to the said term in the Tamil Nadu Prohibition Act, 1937. There are no documents produced before us to show that while taking the export permit from the excise authorities at Andhra Pradesh, the appellant declared that it was intended for export to a particular country. The appellant conveniently failed to produce the export permit and produced only the receipt with a view to deprive this Court of the vital information as to whether the export was to the State of Tamil Nadu or it was to a foreign country. The fact that the appellant paid the export fee in the State of Andhra Pradesh would not stand in the way of the Prohibition and Excise Department in the State of Tamil Nadu to collect the administrative charges treating it as an export from the State of Tamil Nadu - there is absolutely no merit in the contention taken by the appellant. Appeal dismissed.

Summary

Issues:
Interpretation of Molasses Control Rules regarding import and export of molasses, liability to pay administrative charges under Rule 7(2), requirement of ML-5 license for import/export transactions, segregation of stock intended for export, compliance with Andhra Pradesh Molasses Rules 2008, statutory obligations for exporters, impact of export fee payment in another state on administrative charges in Tamil Nadu.

Analysis:
1. Interpretation of Molasses Control Rules: The judgment revolves around the interpretation of the Tamil Nadu Molasses Control and Regulation Rules, 1958, specifically focusing on the requirements for import and export of molasses. The Rules mandate that every dealer desiring to import or export molasses from outside the State must obtain a license in Form ML-5 and pay administrative charges as per Rule 7(2).

2. Liability for Administrative Charges: The core issue in the case is whether the appellant, holding an ML-2 license for possession and sale of molasses, is liable to pay administrative charges under Rule 7(2) for importing molasses into Tamil Nadu for export. The judgment emphasizes that even for export to a place outside the state, the appellant must procure an ML-5 license and pay the requisite administrative charges.

3. Segregation of Stock: The court highlighted the lack of segregation of molasses stock intended for export from the stock held under the ML-2 license. The appellant's failure to keep the export-intended molasses separate contributed to the loss of identity of the product exported from Andhra Pradesh, leading to the imposition of administrative charges.

4. Compliance with Andhra Pradesh Molasses Rules: The judgment also delves into the Andhra Pradesh Molasses Rules 2008, which define export as dispatching molasses outside the state, including foreign countries. The payment of export fees in Andhra Pradesh does not exempt the appellant from paying administrative charges in Tamil Nadu for exporting molasses to a place outside the state.

5. Statutory Obligations for Exporters: The court emphasized that the appellant, even for exporting molasses to a location outside Andhra Pradesh, must adhere to the administrative requirements set by the Tamil Nadu Molasses Control Rules. This includes obtaining an ML-5 license and paying the prescribed charges.

6. Impact of Export Fee Payment: The judgment clarifies that the payment of export fees in another state does not absolve the appellant from fulfilling the statutory obligations in Tamil Nadu. The export from Andhra Pradesh to Tamil Nadu constitutes import in the latter state, necessitating compliance with the local regulations, including administrative charges.

7. Judgment and Conclusion: Ultimately, the court dismissed the intra-court appeals, upholding the decision that the appellant is liable to pay administrative charges for importing molasses into Tamil Nadu for export. The lack of segregation of stock, failure to produce necessary documents, and the statutory requirements under the Molasses Control Rules led to the dismissal of the appeals without costs.