2019 (7) TMI 61 - HC - Customs

Benefit under Served From India Scheme (SFIS) denied - denial of credit with demand of duty in cash - double jeopardy or double whammy - import of Radar equipments- restricted item - HELD THAT - The Scheme SFIS only envisaged the submission of the Scrips in question as a mode of payment in lieu of cash payment of the custom duty in question payable by the Assessee on the import of Radar equipments and other items in question. They were always in the list of ' Restricted Items ' for import. They were never freely importable items. It is against the foreign earnings of the Assessee which provides services to the domestic as well as international airlines that the Airports Authority of India earned foreign exchange for the country from the international airlines, to which it provides services in question and a part thereof was given to them as an incentive in the form of Scrips in question to be availed as payment of custom duty, which may be payable on the future imports made by them. The amendment in SFIS w.e.f. 01.04.2006 by insertion of the words 'otherwise freely importable under ITC (HS) EXIM Code' did not really affect the Assessee's case at all, because, the items in question were always in the Restricted List. The mode of payment of custom duty against the future imports thus were still available to the Assessee in the present case either in the form of cash or by the Scrips in question. The authority in question seems to have not only used these Scrips by debiting or cancelling the same against the custom duty obligation of the Assessee, but took further cash payment from it for the discharge of the custom duty obligation of the Assessee on such imports - there has been a double jeopardy or double whammy on a public statutory authority like Airports Authority of India by another wing of the Central Government Department, namely, Customs Department. The learned Tribunal and also the Original Adjudicating Authority have erred in denying the said benefit to the Assessee - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of benefit of payment of Custom Duty under SFIS
- Imposition of penalty and Redemption Fine

Analysis:
- The Appellant, Airports Authority of India (AAI), was denied the benefit of paying Custom Duty partly in the form of Scrips under the SFIS scheme due to an amendment in the scheme.
- AAI imported radar equipment and other items in 2007 and the Scrips were denied as payment by the Assessing Authority citing the amendment.
- The Tribunal partially allowed AAI's appeal, reducing penalties and granting relief regarding the Redemption Fine.
- AAI argued that the Scrips were issued after export earnings and the amendment did not restrict their use for payment of custom duty.
- The Revenue contended that as per the amendment, the items were not freely importable, justifying the denial of benefits under SFIS.
- The Court found that the items were always restricted for import, and the Scrips remained valid, thus allowing AAI's appeal in full.
- The Court criticized the Revenue for imposing penalties on a statutory body like AAI and emphasized fair treatment for public bodies in such cases.
- The Court concluded that the Scrips could have been used for custom duty payment despite the amendment and allowed the appeal, leading to the dismissal of penalties.

This detailed analysis of the judgment highlights the issues of denial of benefit under SFIS and the imposition of penalties and Redemption Fine, along with the arguments presented by both parties and the Court's final decision in favor of the Appellant, AAI.