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2020 (2) TMI 1262 - AT - CustomsDuty Free Import Authorisation (DFIA) scheme - seeking clearance of Cocoa Powder as against Maida, Atta and Flour - export of Biscuits - whether entries in SION or Exim Policy are to be understood in common man s understanding/trade parlance or on the basis of Technical literature? - right to reopen the issue once the same was settled by the Apex Court - applicability of principles of ejusdem generis or Noscitur a socciis - extended period of limitation. HELD THAT - If Flour is placed along with Maida/Atta it cannot be taken to include Cocoa Powder for the reason that Cocoa Powder is a technically a Flour of beans. The issue is not so complicated and isolated that one requires to refer to Technical Literature to understand the terms. Technical Literature, being in its place, is no alternative to common sense and common man s understanding or for that matter Trade parlance. It s not the case of the importers that a common man on the street understands that Cocoa Powder and Atta/ Maida/Flour to be one and the same. No common man would go to a Flour mill to purchase Cocoa Powder . Therefore, no amount of painful elaboration based on too technical literature would replace common man s understanding particularly when the issue concerns very mundane thing like Atta/ Maida/Flour and certainly not Rocket Science. Whether the principles of ejusdem generis or Noscitur a socciis are applicable? - HELD THAT - The word Flour has been used in conjunction with Atta/Maida and therefore, it would take the meaning of the words used along with it. One need not stretch the imagination and mental faculties to adduce the meaning of Flour to Cocoa powder . In view of the same and going by common man s understanding as enunciated by the various judgments of Higher Courts, we are inclined to accept the contention of the Revenue in this regard. We reject the contention of the importers that Cocoa Powder can be imported as a replacement for Atta/ Maida/Flour . DGFT, vide Public Notice No. 93 (RE-2010)/2009-14 dated 1/2/2012, permitted duty free import of 09gm of Cocoa Powder as additive/ingredient against export of 1kg of Biscuits. This means that, prior to 1/12/2012, import of Cocoa Powder as an input item was not permissible against export of Biscuits under DFIAs. In the present case, the Department has obtained required clarification from DGFT authorities who clarified that the importers are not allowed to import Cocoa Powder under the DFIAs issued against the item description Maida/Atta/Flour . Reopening of assessments - HELD THAT - The appellants have argued that in most of the cases, department has assessed the import consignments on the basis of Tribunal s decision in the case of S. Kushalchand Co and therefore, it is not open for the customs to reopen the assessments. There is no estoppel in taxation matters and Revenue can set right a wrong that has crept in to the system in the past. The benefit of Notifications No 40/2006-Cus dated 1/5/2006 and No 98/2009-Cus dated 11/9/2009is not automatic. It is subject to fulfilment of various conditions. Both notifications prescribe that the description, value and quantity of materials imported are covered by the said authorisation and the said authorisation is produced before the proper officers of customs at the time of clearance for debit . Therefore, the Customs Officers who are administering the exemption are within their right to revise the practice despite a precedent. Cocoa Powder cannot be equated with Flour/Atta/Maida and thus cannot be imported against the DFIAs issued against export of Biscuits before the issuance of Notification, No 93 (RE-2010)/2009-14 dated 1/2/2012 by DGFT, permitting import of 09gm of Cocoa Powder as additive/ingredient against export of 1kg of Biscuits - the Notification is prospective only. Extended period of limitation - HELD THAT - No elements of suppression of fact, misstatement, misrepresentation etc which necessitate invocation of extended period are present in the circumstances of the cases on the part of various importers. Therefore, though it was open to the department to revise the assessments, the same should have been done in the normal period. It is not free for the department to invoke extended period - the appeals made by Revenue survive, though survive on merits, demands being hit by limitation; appeals are liable to be rejected on the issue of limitation. Thus, the importers are not eligible to import Cocoa Powder against the items Flour/ Atta/Maida . However, Revenue appeals are liable to be rejected on the grounds of limitation - appeal dismissed - decided against Revenue.
Issues Involved:
1. Eligibility of import of Cocoa powder against Duty Free Import Authorisations (DFIA). 2. Whether Cocoa powder can be considered as "flour" under the DFIA. 3. Applicability of the decision in C.C., Mangalore Vs. Kushalchand & Co. 4. Validity of reassessment and demands issued by the Department. 5. Justification of seizure, confiscation, and penalties imposed by the Department. Detailed Analysis: 1. Eligibility of Import of Cocoa Powder Against DFIA: The core issue in the appeals was whether various appellants were eligible to import Cocoa powder against the item "Maida/Atta/Flour" under the DFIA issued for the export of Biscuits. The Tribunal found that according to the SION norms and corresponding Customs Notifications, "Maida/Atta/Flour" are distinct from Cocoa powder, as they fall under different chapters of the Central Excise Tariff Act, 1985. The Tribunal concluded that Cocoa powder could not be imported duty-free against DFIA meant for "Maida/Atta/Flour." 2. Whether Cocoa Powder Can Be Considered as "Flour" Under the DFIA: The Tribunal examined technical literature and common parlance to determine if Cocoa powder could be classified as "flour." The definitions under the Food Safety & Standards (Food Products Standards & Food Additives) Regulations, 2011, clearly distinguished Cocoa powder from "Maida/Atta/Flour." The Tribunal emphasized that common understanding should prevail over technical definitions, concluding that Cocoa powder is not "flour" and cannot be imported as such under the DFIA. 3. Applicability of the Decision in C.C., Mangalore Vs. Kushalchand & Co: The importers relied on the decision in Kushalchand & Co., where the Tribunal had allowed the import of Cocoa powder under a similar DFIA. However, the Tribunal noted that the Supreme Court’s decision in Kushalchand was specific to the parties involved and did not set a precedent for other cases. The Tribunal held that the decision in Kushalchand & Co. did not apply to the present appeals, as the Department had obtained clarifications from the DGFT, which were not considered in the Kushalchand case. 4. Validity of Reassessment and Demands Issued by the Department: The Tribunal acknowledged that while the Department was correct on the merits, the demands were time-barred. The importers had presented the goods and licenses to the Customs authorities, who had allowed the exemptions based on the Tribunal’s decision in Kushalchand & Co. Since there was no suppression of facts or misrepresentation by the importers, the Tribunal held that the reassessment should have been done within the normal period, and the extended period could not be invoked. 5. Justification of Seizure, Confiscation, and Penalties Imposed by the Department: In the case of M/s Ravi Foods Pvt Ltd, the Tribunal found that while the Department was within its rights to provisionally assess the Bill of Entry, the seizure and confiscation of goods, and the imposition of penalties were not justified. The Tribunal noted that other importers had imported Cocoa powder under similar circumstances without facing such actions. The Tribunal set aside the fines and penalties imposed on M/s Ravi Foods Pvt Ltd and its personnel, finding no justification for the Department’s actions. Judgment: (i) Appeal No C/86741/2017 filed by M/s. Ravi Foods Pvt Ltd is partly allowed, confirming the duty demand but setting aside fines and penalties. (ii) Appeals Nos C/86657/2017 (filed by Shri Ramesh Kumar Agarwal) and C/86658/2017 (filed by Mr. G.U.S.R. Subba Rao) are allowed. (iii) Appeal filed by Revenue C/87192/2019 is allowed, holding that the respondents are not eligible for the exemption claimed. (iv) Appeals filed by Revenue (Nos C/87944/2017 to C/88001/2017) are rejected on the grounds of limitation. (v) Miscellaneous applications are disposed of accordingly. Pronounced in Court on 26/02/2020.
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