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2019 (5) TMI 924 - AT - CustomsValuation of duty free imports - Advance License - mis-match between the declared unit price of imported goods on Bill of Entry and that computed on the basis of quantity and value mentioned in the license - Interpretation of statute - Circular No 23/96-Cus dated 19.04.1996 - what determines the entitlement to duty free imports under a Value Based Advance License, the value mentioned in license or the quantity mentioned in the license? HELD THAT - It was for Custom Authorities after noting the mis-match in the declared unit value on Bill of Entry and that arrived on the basis of quantity and value mentioned in Value Based Advance License to refer the matter to licensing authority and seek corrections. In absence of any correction/ amendments in the license, the value of imported goods sought to be exempted by the said license cannot be suo motto altered by the Custom Authorities. In the case under consideration the issue is not in respect of license obtained by fraud. The issue is in respect of mis-match between the declared unit price of imported goods on Bill of Entry and that computed on the basis of quantity and value mentioned in the license. The real issue is vis a vis the amendment to the said license to resolve the mismatch. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Competence of Custom Authorities to question the decision of DGFT. 2. Legality of CBEC Circular No. 23/96-Customs dated 19.04.1996. 3. Validity of duty demands under provisional assessments. 4. Applicability of interest on finalization of provisional assessments. 5. Relevance of the Aafloat Textiles (I) Pvt Ltd case to the present case. Detailed Analysis: 1. Competence of Custom Authorities to Question the Decision of DGFT: The appellants argued that Custom Authorities are not competent to question the decision of DGFT, as the license was issued by DGFT and transferred to them after export obligations were met. They cited several judgments, including Pradip Polyfils P Ltd and Polynova Chemicals Ltd, which held that Customs Authorities have no jurisdiction to amend the value mentioned in the license or question its authenticity. The Tribunal agreed, emphasizing that Customs Authorities cannot alter the value of imported goods specified in a license without seeking corrections from the licensing authority. 2. Legality of CBEC Circular No. 23/96-Customs dated 19.04.1996: The department relied on CBEC Circular No. 23/96-Customs, which aims to prevent overvaluation of imports in Advance License applications. The Circular mandates that if there’s a significant mismatch between the declared unit price and the price based on the license, the matter should be referred to the licensing authority. The Tribunal noted that the Circular does not authorize Customs Authorities to unilaterally deny exemptions based on quantity discrepancies without referring the matter to the licensing authority. 3. Validity of Duty Demands under Provisional Assessments: The appellants contended that demands under Section 28 cannot be sustained in cases of provisional assessments. The Tribunal did not specifically address this issue in the judgment, focusing instead on the broader question of the authority of Customs to question the license values. 4. Applicability of Interest on Finalization of Provisional Assessments: The appellants argued that interest on finalization of provisional assessments for periods prior to 13.07.2006 is not sustainable. The Tribunal did not delve into this issue, as the primary focus was on the legitimacy of the duty demands based on the Circular and the authority of Customs. 5. Relevance of the Aafloat Textiles (I) Pvt Ltd Case to the Present Case: The department cited the Aafloat Textiles case to support their stance. However, the Tribunal distinguished this case, noting that Aafloat Textiles involved licenses obtained by fraud, whereas the present case concerns a mismatch in declared unit prices. The Tribunal concluded that the Aafloat Textiles precedent was not applicable to the current scenario. Conclusion: The Tribunal held that the Customs Authorities acted beyond their jurisdiction by demanding duty based on quantity discrepancies without referring the matter to the licensing authority. The appeals were allowed, and the orders of the Commissioner (Appeals) were set aside, granting consequential relief to the appellants.
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