2019 (1) TMI 1190 - AT - Customs

Benefit of exemption under N/N. 12/2012-Cus dated 17.03.2012 - Import of Gold dore bar falling under Customs tariff Item 7108 12 00 - the imported goods were produced by M/s Philippine Associated Smelting and Refining Corporation ( PASAR ) which is a copper smelter and refinery and is not a mining company or laboratory attached to the mining company - revenue has denied exemption on the ground that the condition no. 34 (b) and (c) of the serial No. 318 of the Notification No. 12/2012 Cus dated 17.03.2012 was not followed by the Appellant and hence not eligible for exemption - Held that - We find from the case papers that the undisputed fact is that the PASAR is controlled entity of Glencore which is involved in mining. The copper concentrate is sourced by PASAR from Glencore and used in its refining and smelter plant. It also has sulphuric acid plant and a dore plant which produced alloy of gold and silver. M/s Glencore holds 78.2% of the shareholding of PASAR and the production of PASAR is counted as production of Glencore. It is common for an entity to have its economic activity divided into various subsidiary companies. In the present case it is not in dispute that Glencore after mining of copper concentrate is getting the same refined and smeltered at PASAR which is its own subsidiary. Only for the reason that both the concerns are working under different set up, it does not take away the fact that PASAR is part of Glencore. Therefore there is no difference or distinction between the mining company and the producer company. The condition 34 (b) of the notification states that the goods are to imported in accordance with the packing list issued by the mining company by whom they were produced. Further the condition 34 (c) states that the importer has to produce before the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, an assay certificate issued by the mining company or the laboratory attached to it, giving detailed precious metal content in the dore bar. The assay certificate was issued by Glencore who is itself a mining company. The assay certificate cannot be denied on the ground that it is a provisional certificate. Also, the conditions of the notifications should be construed liberally and should not be so read that it leads to defeat of purpose of the notification. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of conditions under Notification No. 12/2012-Cus regarding import of Gold dore bars.
2. Determination of whether the Appellant fulfilled conditions (b) and (c) of the notification.
3. Assessment of the relationship between PASAR and Glencore for exemption eligibility.
4. Consideration of relevant legal precedents in similar cases for interpreting the notification.

Issue 1: Interpretation of Notification Conditions:
The case involved the import of Gold dore bars under specific conditions of Notification No. 12/2012-Cus. The Appellant, Edelweiss Metals Ltd., availed exemption under serial no. 318 of the notification. The conditions in question required import in accordance with the packing list issued by the mining company and the production of an assay certificate by the mining company or its attached laboratory.

Issue 2: Compliance with Notification Conditions:
The adjudicating authority initially denied the benefit of the notification to the Appellant, citing non-compliance with conditions (b) and (c). It was contended that PASAR, not a mining company, produced the Gold dore bars, and the assay certificate was provisional and not from a mining company or its attached laboratory. The authority held that Glencore and PASAR should be considered separate entities for exemption purposes.

Issue 3: Relationship between PASAR and Glencore:
The Appellant argued that PASAR, a subsidiary of Glencore, produced the Gold dore bars sourced from Glencore's copper concentrates. They asserted that the production of PASAR was considered as Glencore's production, supported by financial statements. The Appellant contended that both entities should be treated as one for exemption eligibility due to their relationship.

Issue 4: Legal Precedents and Interpretation:
The Tribunal analyzed the relationship between Glencore and PASAR, emphasizing that PASAR, as a controlled entity of Glencore, should be viewed as part of Glencore for the notification's conditions. Drawing parallels with legal precedents, the Tribunal interpreted the notification liberally to prevent defeating its purpose. Relying on past judgments, the Tribunal concluded that the Appellant met the notification requirements, allowing the appeal and granting the exemption.

In conclusion, the Tribunal ruled in favor of the Appellant, finding that the relationship between Glencore and PASAR justified treating them as a single entity for exemption purposes. The judgment highlighted the importance of interpreting notification conditions liberally and in alignment with legal precedents to ensure fair application of customs regulations.