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2024 (11) TMI 1362
Classification of imported goods - Binding Material, Parts for Brake, disc brake pads, tool for mould, etc. - to be classified under CTH 38249090 / 38247900 or CTH 68138900? - benefit of N/N. 152/2009-Cus. dated 31.12.2009 and also N/N. 50/2017-Cus. dated 30.06.2017 - invocation of Extended Period of limitation.
As decided by CESTAT [2024 (10) TMI 17 - CESTAT CHENNAI] Respondent’s classification of the impugned goods under Chapter Heading 3824 9090/3824 7900 is rejected and the department’s classification under CTH 6813 8900 is upheld. Consequently, the appellant is not eligible for the benefit of the Notification No. 50/2017-Cus. dated 30.06.2017 and Notification no.152/2009-Cus dated 31.12.2009. However, the demand for the normal period along with interest is only upheld and the demand for the extended period is decided in favour of the Respondent importer - Appeal of Revenue is partly allowed.
HELD THAT:- After having perused the impugned judgment of the Customs, Excise and Service Tax Appellate Tribunal, we concur with the findings recorded by the Tribunal.
The Appeal is, accordingly, dismissed.
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2024 (11) TMI 1361
Challenge to the decision rendered by CESTAT - appellants right to question the enhancement made concerning the valuation of the imported goods, once the appellants had given up their right to seek issuance of a show cause notice and/or speaking order under Section 17 of the Customs Act, 1962 -
Decision to enhance the declared values relied exclusively on data from the NIDB - Declared values and the power of reappraisal - HELD THAT:- Section 17 (5) then proceeds further and constitutes the next fundamental step which the statute constructs in respect of reassessment. Shorn of unnecessary details, it prescribes that where the reassessment done under Section 17 (4) is at variance with the self-assessment of the importer, the proper officer would proceed to pass a speaking order in support of such reassessment. A combined reading of sub-sections (4) and (5) of Section 17 thus leads one to the irresistible conclusion that a reassessment, provisional or preliminary, would already exist and would have been formulated prior to sub-section (5) getting triggered.
It is also important to bear in mind that Rule 12 (2) is essentially concerned with the first limb of the reassessment exercise and is connected with Section 17 (4). This would clearly appeal to reason since the information or documentation that may be elicited from the importer would have to be concerned with the reasonable doubt which the proper officer harbours and thus obliged to communicate to the importer upon request the grounds on the basis of which it doubts the truthfulness or accuracy of the value declared. It is also pertinent to note that sub-section (4) of Section 17 is prefaced by the use of the expression “Where it is found on verification, examination or testing”. It is this verification exercise which would necessarily entail the importer being provided a reasonable opportunity to be heard before a final decision is taken. It is perhaps in the aforesaid light that Century Metal Recycling observed that neither the opportunity of questioning an opinion with respect to reassessment as formed nor an opportunity of hearing can be waived. In fact, it held that the aforesaid procedure would clearly be mandatory.
Exploring the concepts of abandonment and waiver - Whether that right itself can be said to have been abandoned? - As it becomes more than apparent that the assertion of abandonment and waiver of a right is clearly misconceived. The tone and tenor of the communications which were addressed by the appellants cannot possibly be interpreted or construed as amounting to a conscious waiver of a right to question the reassessment further. Not only do those documents appear to be the submission of a “without prejudice” request tendered in order to facilitate expeditious clearance of goods, the same cannot possibly be viewed or interpreted as amounting to an abandonment of the right to institute an appeal itself.
When we revert to the view expressed by the CESTAT in CUSAA 126/2022, we find that there is a clear absence of consideration of the various communications which had been addressed by the appellant to the customs authorities and which had preceded the finalization of re-evaluation of declared value. The CESTAT thus appears to have proceeded on the premise that the importer had all along agreed to the enhancement of the declared value and raised no protest. The CESTAT thus appears to have incorrectly proceeded on the basis that the communications addressed itself implied that the importers had willingly accepted the value as suggested by the customs authorities and consequently, the respondents being relieved of undertaking any adjudication as contemplated under Section 17 of the Act in light of the abandonment and waiver of the appellant’s right to challenge the reassessment.
The appellants had registered their protest on more than one occasion and had also sought expeditious clearance of goods subject to an exercise of provisional reassessment being undertaken. These facts and circumstances clearly detract from the argument of a conscious abandonment of the right to question the reassessment or to accept the re-evaluation exercise undertaken without reservation of a right to challenge.
Rejection of declared values: Assessing its validity - The proper officer could not be said to have been relieved of its obligation to pass a speaking order in terms of Section 17 (5). The process of rejecting the declared value and reassessing the transaction value is statutorily required to be preceded by the proper officer having drawn an opinion of why the declared value was not liable to be accepted before consequently proceeding to reassess the value. While the said reassessment may not be framed in elaborate terms, it would necessarily have to be reflective of the reasons which weighed upon the respondent to form the opinion that the declared value was not liable to be accepted.
Value enhancement on the basis of NIDB data - whether the enhancement or re-evaluation of the 'declared value' can be based solely on the data available in the NIDB, in Agarwal Foundries, the Hyderabad Bench of the CESTAT had held that the customs authorities would be unjustified in enhancing the declared import values solely on the basis of NIDB data? - Rule 10A of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 [1988 Rules], as analysed by the CESTAT in this decision, was similar to Rule 12 of the 2007 Rules. The CESTAT ruled in favour of the appellant, holding that NIDB data alone would be insufficient for value reassessment without corroborative evidence or contemporaneous import comparisons. This decision underscored the importance of comprehensive evidence and procedural compliance in customs disputes, cautioning against arbitrary reliance on NIDB data
Tribunal has consistently found that a valuation addition based solely on NIDB data would wholly unwarranted and that any such reassessment would have to be shored by independent and cogent evidence. The legal position so articulated would ensure fairness and transparency in the determination of import values. The body of precedent noticed above have in unison held that mere reliance on external data without corroborative evidence or clear justification would fail to meet the tests and principles underlying the provisions enshrined in the 1988 Rules and 2007 Rules. They correctly lay emphasis on the imperatives of a reasoned approach to customs valuation and a deviation from declared values being founded on tangible and justiciable material. A reassessment or rejection of declared value would thus have to necessarily be established as being compliant with the aforenoted requirements of pre-eminence. Relieving the respondents of this obligation would clearly lead to pernicious consequences.
We would answer the question framed in the affirmative and in favour of the importers. The appeals are consequently allowed and the impugned orders of the CESTAT set aside. The order of the Commissioner (Appeals) shall in consequence stand restored.
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2024 (11) TMI 1360
Partial rejection of benefit under Merchandise Exports from India Scheme (MEIS) - mismatch between the description of the goods in the shipping bills and the description in ITC (HS) 87085000 - HELD THAT:- No reasons are indicated why the Respondent’s case was accepted or why the Petitioner’s case was rejected. There is no discussion on the RA report or comments from PC-3 Divisions.
On perusing the minutes, it is impossible to understand whether there was any application of mind. This is an additional reason to interfere with the impugned decision.
In the reply filed on behalf of the Respondents, significantly, neither is the copy of the RA’s report, nor the copies of the comments received from PC-3 Divisions annexed. Based of the affidavit or, for that matter, other averments in the affidavit, we cannot uphold the impugned decision considering the serious defects in the decision-making process.
Therefore, we clarify that we are not addressing the merits of the decision but propose to interfere with it because the decision-making process was grossly defective. In this case, the principles of natural justice have been breached, and a case is made to set aside the impugned decision.
Accordingly, we quash and set aside the PRCs impugned decision in Meeting No. 22/AM22 held on 22.03.2022 and 29.03.2022. We direct the PRC to reconsider the Petitioner’s claim for benefits under MEIS as expeditiously as possible and in any event within two months from today. Before such a decision is taken, a copy of RA’s report and comments received from PC-3 Divisions must be furnished to the Petitioner.
This may be done within 15 days from today. If the PRC wishes to consider any other material, then copies of such material must be furnished to the Petitioner within two weeks from today. If the Petitioner wishes to file any response to this material, the Petitioner should file such response within a week of receipt of this material. The PRC must hear the Petitioner or its representative and pass a reasoned order.
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2024 (11) TMI 1359
Appeal filed against order of Commissioner (Appeals) remanding the matter to the original adjudicating authority - Sole ground mentioned in the impugned order for rejection of the request made by the appellant is delay of more than three months from the date of let export order - HELD THAT:- We find that the impugned order though signed by Deputy Commissioner (Exports), Customs House, Mundra has been rejected by the competent authority. In the instant case the competent authority was the Principal Commissioner of Customs, consequently the appeal has been filed before the Tribunal.
The said limitation of three months was introduced by the Circular 36/2010 dated 23.09.2010.
The Hon’ble High Court of Gujarat in the case of Messrs Mahalaxmi Rub Tech Limited [2021 (3) TMI 240 - GUJARAT HIGH COURT] has set aside the said requirement of filing the application for conversion within a period of three months as ultravirus, Article 14 and 19(1)(g) of Constitution of India as well as ultravirus section 149 of the Customs Act, 1962.
The special leave petition filed by the Revenue against the said order before Hon’ble Apex Court has been rejected as reported under [2023 (4) TMI 1272 - SC ORDER]. In the impugned order, the sole ground for rejection is the delay of more than three months in filing the application in terms of Circular No. 36/2010-Cus dated 23.09.2010. Since the said Circular itself has been set aside by Hon’ble High Court of Gujarat, reliance on the said Circular cannot be sustained. The impugned order, is therefore, set aside and appeal allowed.
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2024 (11) TMI 1358
Rejection of Refund claim of 4% SAD levied under sec. 3(5) of the Customs Tariff Act, 1975 for import of adapter plate, power and control cables and APC receiver - mandatory endorsement as required under Notification No. 102/2007-Cus dated 14.9.2007 has not been made - HELD THAT:- The issue is no longer res integra in the light of the Larger Bench decision in Chowgule & Company [2014 (8) TMI 214 - CESTAT MUMBAI (LB)] Tribunal examined a reference of a related matter as to ‘whether to avail the benefit of Notification No. 102/2007, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices.’ The judgment went on to examine the genesis and object of the levy and the role of the exemption notification, which is very useful in understanding the issue.
CA’s Certificate along with the reconciliation statement has been provided supports the appellants prayer for sanction of refund. The CA’s certificate and Reconciliation Statement prescribed in Boards Circular is to provide a ledger/ document-based scrutiny of the claim and should ordinarily be relied upon to sanction the claim. If a serious evasion of duty was suspected physical inquiry could have been conducted by revenue with the buyers or in any other manner and the CA’s Certificate along with reconciliation statement discredited, while taking action to deny the claims.
There would then be proper ground to reject the claim and take any other action deemed necessary. Regular cash inflows are the lifeline of a business and blocking legitimate claims on half-baked reasons, without examining the developments in law, does a great dis-service to business and the trade and should be avoided.
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2024 (11) TMI 1357
Refund application filed beyond the time limit specified u/s 11B - refund claim was filed which is beyond six months from the date of payment of duty and rejected the claim as being time-barred as well as holding that the assessment order was not challenged in a manner known to law - HELD THAT:- Amounts claimed were part of the export duty only and until final assessments are done, the excess duty paid cannot be quantified. This being so he should have remanded the matter back to the file of the Lower Authority to examine the claim after finalization of the assessment apart from the fact that the Original Authority had decided the matter ex-parte after a long delay thus violating the principles of natural justice. His action of rejecting the appeal was hence not in order. The judgments cited by revenue are not relevant to the facts of the case and are distinguished.
We find that this is a refund claim pertaining to Shipping Bill dated 06/08/2008. The claim was rejected by the said Lower Authority, after six years, without affording the appellant any hearing vide order dated 24/12/2014, on the ground that the appellant had not challenged the order of assessment. Such an action was not legal and proper when the assessment was provisional and the order was also passed violating the principles of natural justice.
As held by Constitutional Courts, whenever an order is struck down as invalid being violation of principles of natural justice, there is no final decision of the case and, therefore, proceedings are left open. All that is done is that the order assailed by virtue of its inherent defect is vacated but the proceedings are not terminated. [See Guduthur Bros. Vs Income Tax Officer, Special Circle, Bangalore [1960 (7) TMI 5 - SUPREME COURT] and Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and Ors. Vs Pratap Rai[1978 (4) TMI 97 - SUPREME COURT]].
The impugned order has also been found defective as stated above. This being so the appeal succeeds. However, the fact of final assessment of the SB is not available and hence the matter needs to be remanded back to the file of the Original Authority to examine the matter on the basis of the finally assessed SB on merits.
Considering the considerable delay involved and the improper application of law and procedure in the matter, it is desirable that the matter be monitored by the jurisdictional JC / ADC of Customs, Custom House, Chennai, to ensure that there is no further delay in the matter by the Original Authority and that the issue is finalised within 90 days of receipt of this order.
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2024 (11) TMI 1356
Refund claim - rejection of refund claim for non-fulfillment of conditions 2(e)(iii) since the date of sales invoice being prior to out-of-charge and he also rejected the claim for non-fulfilment of condition 2(c) of Notification No. 102/2007 dated 14.9.207, since the refund claim pertained to Kolkata Port.
Whether the degree of negligence is so high that a substantive matter of refund is to be denied due to a procedural lacuna? - HELD THAT:- As since the refund was filed on time albeit in the wrong jurisdiction the claim could not have been rejected on the ground of time bar but should have been transferred to the Competent Authority. That being the case, the claim has to be examined and decided by the proper officer having jurisdiction over the matter, since any order passed without jurisdiction would be void ab initio, as such a defect cannot be correct even by consent of parties (See Kiran Singh & Ors. Vs. Chaman Paswan & Ors.[1954 (4) TMI 48 - SUPREME COURT].
In the circumstances the appeal is allowed by way of remand with a direction that the preferred claims may be placed before the jurisdictional authority by the respondent within 30 days of receipt of this order, who shall then examine and finalize the matter within 60 days of receipt of the claim paper from the respondent. The appellant shall also cooperate in ensuring the same.
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2024 (11) TMI 1355
Classification and duty liability - Import of ‘diagnostic reagents’ on which liability to duties of customs was determined, under section 17 of Customs Act, 1962 - denial of benefit of notification no. 50/2017-Cus dated 30th June 2017, as also recourse to serial no. 453 of Schedule III of IGST notification no. 01/2017 (Integrated Tax Rate) dated 28th June 2017 for discharge of ‘integrated tax’ for the purpose of section 3(7) of the Customs Tariff Act affirmed the detriments to them - claim for assessment at rate of duty corresponding to tariff item 3822 0090 of First Schedule to the Customs Tariff Act has been wrongly denied and that observance of the essence of assessment, in accordance with section 17(5) of the Customs Act for disputed classification to warrant issue of ‘speaking order’ in its breach was not considered at all.
HELD THAT:- Claim of the appellant herein for classification, with lower duty liability in consequence, had been preferred in the bill of entry is not in dispute; such are entered in the ‘check list’ which, upon discharge of duty liability, is transformed as assessed bill of entry for clearance from customs control under section 47 of the Customs Act. The revision occurred between filing of bill of entry and the conclusion of mandate under section 17 of the Customs Act and, all this while, except by foregoing release of goods, albeit temporarily, the importer is under the absolute power of ‘proper officer’ which appears to have caused them to acquiesce in the determination of higher duty burden.
Such misdirection of ‘self-assessment’ is inappropriate exercise of statutory authority and it is but proper for superior authorities to set right such travesty of law. A copy of this order may, therefore, be placed before Chairman, Central Board of Indirect Taxes & Customs (CBIC) for his attention.
Affirmation of re-assessment without any material to go by invalidates it ab initio. The lack thereof should have prompted the first appellate authority to enforce compliance with consequence of revision. Not having done so invalidates the impugned order.
Accordingly, we set aside the impugned order and restore the bills of entry before the original authority for disposal in the manner set out in section 17 of the Customs Act. These appeals are allowed by way of remand.
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2024 (11) TMI 1354
Rejection of cross-examination of six DRI officers and one co-noticee by the competent authority - HELD THAT:- Main objective of cross-examination is to challenge the accuracy, credibility, and reliability of the testimony provided by any witness in a proceedings before the Original Authority. Cross-examination of a witness can be requested when his statement is used against the appellant in adjudication proceedings which is not the situation in this case.
This is a case where cross examination is sought mainly of DRI officials who have recorded statements of individuals. The officers have no personal interest in the matter. It is not the case of the appellant that any statement relied upon by the revenue in the SCN, has been made / taken from the said officers / persons and hence an opportunity of cross-examining the maker of the statement should be given.
The reason given for the request to cross examine the said officials is to ascertain facts relating to the alleged absconding of the said Sheikh and Jamal and as they have doubts regarding the efficacy and integrity of the investigation conducted. It is also not shown that the said persons are the officers investigating the where abouts of the said Shri Sheikh and Jamal or have merely recorded the statements of the individuals. In any case the officers are not a material witness in the lis.
Further the appellant cannot direct the manner in which the investigation should be conducted by an investigative agency as it would tantamount to interference with the functioning of the agency. Any facts noticed regarding the efficacy and integrity of the investigation conducted can be brought out in their reply to the SCN, so as to seek a favorable order.
Section 24 of the said Act, which deals with matter relating to criminal proceedings and has more stringent safeguards, makes it clear that mere retraction of a statement is of no avail, unless the conditions stated therein are demonstrated, otherwise the confession does not loose its evidentiary value. Hence the decision of the Ld. Adjudicating Authority cannot be faulted for not permitting the cross examination of the impugned persons, when no statement has been recorded from the officers incriminating the appellant and the appellant had himself made a confessional statement that is valid evidence. It cannot be held that the decision was unreasonably or capriciously or vague etc. In fact admission is the best piece of substantive evidence that can be relied upon. [See United India Insurance Co. Ltd. and Anr. Vs Samir Chandra Chaudhary [2005 (7) TMI 701 - SUPREME COURT]]. Though not conclusive, it is decisive of the matter, unless shown to be obtained by inducement, threat, or promise or is proved erroneous.
Section 122A of the Customs Act which deals with ‘Adjudication Procedure’ does not mention that an opportunity of cross-examination should be given, let alone that a reply to the Show-Cause Notice should be given after cross-examination if any. The permission for cross-examination has evolved as a part of the principles of natural justice. But it is not a straight jacket formula, and grant of cross examination is dependent on the discretion of the Adjudicating Authority to be exercised in a judicious way. The appellant is free to make his written submissions to the SCN both prior and post the cross-examination or further, during the personal hearing. So the lack of an opportunity of cross examination should not incapacitate the appellant from submitting his reply to the issues raised in the notice.
When the impugned decision denying cross-examination was taken by the officer acting within the scope of his powers. It has been taken judiciously and can’t be said to be arbitrary, vague or fanciful. It cannot hence be substituted just because the appellant feels that another view may be possible.
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2024 (11) TMI 1353
Chargeability of Clean Energy Cess on Metallurgical Coke imported - Rejection of appeal filed by the appellant on the ground of time bar and maintainability - HELD THAT:- We observe that the Bills of Entry were filed in the months of January and February 2015. The appellant has not raised the issue for more than a year. The appellant raised the issue of non issue of order u/s 17(5) of the Customs Act, 1962, after more than one year from the date of clearance of the goods. A perusal of the Bills of Entry shows that the Bills of entry were finally assessed and there was no re-assessment. Thus, we do not find any merit in the claim of the appellant that there was re-assessment of the Bills of Entry done by the assessing officers and they are required to issue order under section 17(5) of the customs Act, 1962.
The appellant filed a grievance letter in the CPGRAMS portal, for which a reply dated 12.09.2018 was given indicating the factual position and why no order was required to be issued under Section 17(5) of the Customs act, in this case. Thus, we observe that the Ld. Commissioner (Appeals) has rightly rejected the appeal filed by the appellant on the ground of time bar and maintainability. As the letter dated 18.09.2018, is not an order issued under Customs Act, 1962, we do not find any infirmity in the impugned order issued by the Ld. Commissioner (Appeals), rejecting their appeal.
Uphold the impugned order passed by the Commissioner (Appeals) and reject the appeal filed by the appellant.
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2024 (11) TMI 1291
Non-payment of interest on refund u/s 18(4) of the Customs Act 1962 on account of finalization of provisional assessment - on completion of the specified quantity of import under the contract, the provisional assessments were finalized and an amount was ordered to be refunded - No interest was paid to the appellant on such delayed payment which is payable as per Section 18(4) read with Section 27A of the Customs Act 1962
HELD THAT:- From the Section 18(4) read with Section 27A of the Customs Act 1962, we observe that upon finalization of provisional assessment, if there is a refund liable to be paid, then it is to be paid within 3 months from the date of final assessment. If there is any delay in payment of the refund, then interest is liable to be paid for the delay in refund.
We observe that this section does not talk about filing of the refund application. As per section 18(4), if the refund is not paid within 3 months from the date of final assessment, then interest is payable. Accordingly, we hold that the department is liable to pay interest for the delay in payment of refund, beyond 3 months from the date of final assessment. Thus, allow the appeal filed by the appellant.
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2024 (11) TMI 1244
Classification of imported goods - Clear Float Glass (CFG) - to be classified under Tariff Item 7005 10 90 or under CTH 7005 2990 of the Customs Tariff Act (CTA) or not - benefit of exemption under Sl.No.934 (I) of Notification 046/2011-CUS dated 01.06.2011 -
As decided by CESTAT [2023 (11) TMI 485 - CESTAT KOLKATA] Clear Float Glass imported by the appellant are absorbent and having non-reflecting layer, in that circumstances, the appellant has qualified the merit classification under CTH 7005 1090, therefore, the correct classification of the Clear Float Glass imported by the appellant under the impugned Bills of Entry is classifiable under CTH 7005 1090. Consequently, the appellant is entitled for benefit of Serial No.934 (I) of Notification No.046/2011-CUS dated 01.06.2011.
HELD THAT:- Issue notice on the application seeking condonation of delay as well as on the Civil Appeal(s). Application for stay is dismissed.
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2024 (11) TMI 1243
Classification of ‘BAYLAN’ branded water meters - Tariff Item No. 9026 10 10 subject to ‘nil’ rate of Customs duty v/s Tariff Item No. 9028 20 00 subject to pay Customs duty at the rate of 7.5% - HELD THAT:- On going through the parameters set by the Indian Standards [IS 2401:1973 and ISO 4064] we find that all these parameters are required to be followed for import of ‘water meters’.
From the brochure submitted by the Appellant, it is clearly seen that the equipment pertains to water meters only. When the factual details and the documentary evidence produced very clearly point out that the goods are water meters only, we do not see the reason as to why the lower authorities have ignored these documentary evidence and taken the view that the goods would be classifiable under the heading 9028.
Therefore, we set aside the impugned order and allow the appeal on merits. The Appellant would be eligible for consequential relief, if any, as per law.
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2024 (11) TMI 1242
Levy of penalty - Customs Broker - Import w/o payment of Customs duty under Advance Authorization - sale of consignments on High Sea Sale basis - confiscation of goods when any goods do not correspond in respect of value or any other particular - On the basis of information received from the DRI, Pune that the imports made by M/s Blazeing Star Trade Pvt. Ltd. under Advance Authorization appears to be suspicious, enquiry was initiated and on being reported by CGST, Dehradun that the said importer firm is non-existent at the declared address
Whether the Appellant and its proprietor are liable to pay penalty u/s 112(a)(ii) and 114AA of the Act, respectively, along with redemption fine on alleged premise that the Appellant in connivance with High Sea Buyer i.e M/s Blazeing Star Trade Pvt. Ltd. facilitated the import of PVC resin to non-existent entity i.e Blazeing Star on the basis of fake Advance Authorisation and GST certificate and whether penalty under Section 117 of the Customs Act is imposable on M/s Saarthee Shipping Co. (Custom Broker)? - HELD THAT:- We find that Appellant and Blazeing Star entered into a High Sea Sales agreement wherein Blazeing Star imported the said goods vide Bills of Entry No. 5440564 dtd. 14.09.2021 under Advance Authorisation and another Bill of Entry No. 5548138 dtd. 22.09.2021 without duty under Advance Authorisation.
After the investigation, revenue alleged that Blazeing Star is fictitious and non-existent entity. Appellant vide its letter dtd. 17.01.2022 and 18.02.2022 requested to cancel the High Sea Sales Agreement and requested to allow to amend the Bill of Entry dtd. 14.09.2021 and 22.09.2021.
Deputy Commissioner of Customs House, Mundra vide letter dtd. 07.06.2022 accepted the request of the Appellant and directed them to make payment of duty, execution of Bond/ Bank Guarantee etc., and on payment of duty and on furnishing of Bond/Bank Guarantee, the Bills of Entry were amended. The said goods were released provisionally, and value was reduced on account of deduction of 2% High Sea Sales charges.
We find that by allowing amendment, obviously under Section 149, the authority had no rationale to deny having allowed said amendment under Section 149. In the present matter in terms of Section 149 of the Customs Act, the importer’s name was substituted in the Bill of Entry and department allowed him to clear the imported goods with payment of customs duty without taking benefit of disputed advance authorization. So after allowing such amendment the Department had no ground to confiscate the goods and impose fine and penalty.
The revenue has not challenged the said amendment. Further we also find that Revenue did not appeal against the order passed by Original Authority under Section 149 of Customs Act, 1962, allowing the amendment to the Bills of Entry. Section 111(m) deals with confiscation of goods when for any goods information given is not correct in respect of value or any other particular, however after amendment in Bills of Entry, in the present disputed matter, there is no mis-declaration in Bills of Entry. After the amendment, the goods in dispute are not imported under Advance Authroization and there are no discrepancies in relation to value, quantity of the goods. In these circumstances, we find no reason to sustain the confiscation of goods and imposition of penalties on Appellant.
We also find that appellant has, prior to issuance of show cause notice dtd. 17.05.2023, deposited the entire duty, without taking benefit of Advance Authorization, alogn with interest. This shows that the intention of Appellant was always bona fide. Further revenue has not brought any evidence to show that the Appellant in any way abetted Balzeing Star in importing the said goods under fake Advance Auhorisation or that the Appellant was aware about the fictitious nature of Blazeing Star. Further it is also not the case of the revenue that the Appellant had any stake in the firm or business of Blazeing Star.
It is also not the case that the Appellant –Proprietor had any connection with Blezeing Star. Importantly, the Appellant on realising that the original importer may be fictitious, paid entire duty along with interest. We also agree with the argument of Ld. Counsel that for imposition of penalty mens-rea has to be established about the wrongful act. In the present case, the only document made/signed by the Appellant are High Sea Sales agreements which are not alleged to be fake/incorrect.
From the plain reading of Section 114AA it is evident that penalty under this section can be imposed on a person who intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular for the transaction of any business under the Customs Act, 1962.
In the present case nothing has been brought on record by which it can be said that the appellant had made or caused to be made any declaration/used or caused to be used any statement or document which is false or incorrect. No document etc., which has been produced by him was found to be materially wrong. As the ingredients for invocation of provisions of Section 114AA are absent in the present case penalty under the said section is not justified.
As it is clear, penalty under Section 117 are for contravention, not expressly mentioned. But, there should be sufficient evidences to show mala fide intention resulting in contravention of any provisions warranting penalty. There is no material on record to conclude that the appellant facilitated misdeclaration of imported goods. Penalty under Section 117 of the Customs Act, 1962 can be imposed only if abetment on the part of the appellant is brought out which means that the appellant should have knowledge or reason to believe that the provisions of the Customs Act relating to correct valuation of the goods were being contravened. No such evidence is forthcoming; therefore, penalty upon the appellant cannot be sustained. Further in the present matter being a customs broker appellant only performing his duties. He is not aware about the fictitious status of High Sea Buyer. We do not find any justifiable ground to impose penalty on the Appellant.
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2024 (11) TMI 1241
Undervaluation of imported goods - reliability of statement of the co-accused - Penalty on the appellant u/s. 112(a)(i) & 112(a)(ii) the Customs Act, 1962 and another penalty u/s. 114AA of the Customs Act, 1962 - as alleged for the purpose of clearing the disputed consignments, Appellant/Superintendent of Customs, SIIB, Mundra had demanded gratification - as alleged Appellant, Superintendent, working then at SIIB, Customs House, Mundra had deliberately misguided his superior officer to aid in clearance of subject consignment illegally and that he handed over customs file to a private person and used a fabricated panchnama in clearance of goods
HELD THAT:- We find that in the impugned order, the Ld. Commissioner noted that Shri Ankit S. Travadi has affirmed in his statement that he offered amount to accused Customs officers for clearances of disputed goods and he was also actively involved in negotiation with the Customs Officers. The amount is seen to have been arranged through Anagadia and had reached Mundra. In addition to the statement of Shri Mayur Mehta, Shri Ankit Travadi, Shri Chirag Taavadi and Shri Nasir Khan, there are some Audio clips/voice message retrieved from the mobile phone of Shri Nasir Khan which show that Shri Nasir khan and Shri Mayur Mehta sent big amount of illegal gratification to the Customs Officers at Mundra.
We find that in the present matter even after the request of appellant for cross-examination of these persons/witnesses and panchas, were not offered. In such circumstances we find that their statements are not reliable evidence against the Appellant.
The adjudicating Authority has not examined the persons who have given the statements which have been relied upon to implicate the appellant. Also, no opportunity of cross-examination was given to the appellant to question the basis on which the co-accused has implicated the appellant in this case. When the procedure set out in Section 138B is not followed, the statement of the co-accused has no evidentiary value. Also, in this case the statement of the co-accused has not been corroborated by any other evidence.
Except the bald allegation that Appellant had demanded illegal gratification, there is no specific allegation against the appellant to prove that Appellant have done or omitted to do any act which itself rendered the goods liable to confiscation. We also observed that as evident from show cause notice, Shri Ankit S. Travadi reiterated in his statement dtd. 29.09.2017 recorded u/s 108 of the Customs Act, 1962 that the amount of Rs. 8 lakhs arranged through angadia and collected by his younger brother Chirag from Bhuj; that the said amount was given by him to Shri Rajdeep Sinh and Shri Vaibhav Dholakia from whom he had borrowed earlier. Shri Rajeepsinh Jadega and Shri Vaibhav Dholakia have in turn confirmed this fact in their respective statement dtd. 01.11.2017. None of these persons has ever stated that they have paid any money to Appellant.
We find that for Customs Act, irrespective of the fact whether the person is an officer of Customs or any other person, penalty for an offence of abetting can be imposed only on establishing a positive act on abetment of another person’s act or omission which will make the connected goods liable for confiscation. On careful consideration of the evidence on record and submission made by the appellant, we find that there is no sustainable ground to impose penalties u/s 112 on the appellants in the present case.
We also find that section 114AA (supra) is attracted when a person knowingly or intentionally makes, signs or uses or causes to be made, signed or used, any declaration, statement or document which is false or incorrect. Needless to mention that when the appellant had no personal interest in the transaction or that the charge of demand of illegal gratification fails, then automatically it is concluded that there was no knowledge or intention on part of the appellant. Therefore, no penalty could be imposed on the appellant u/s 114AA also.
Thus, it is difficult to uphold the orders passed by the Ld. Commissioner imposing penalties on the Appellant.
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2024 (11) TMI 1240
Refund claim for refund of 4% SAD paid on the imported goods under 48 bills of entry - partial rejection of refund for three bills holding that two Bills of Entry were time-barred and one Bill of Entry was rejected as the duplicate copy of Bill of Entry and original copy of TR6 challan were not submitted - HELD THAT:- From the facts of the case it is seen that the appellant received OIO 14284/2011 dated 25.01/2011 which was unsigned. An un-signed document looses its efficacy.
As in SRK Enterprises Vs Assistant Commissioner (ST) [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT], held that an unsigned order cannot be covered under any provision of law dealing with mistake, defect or omission therein, hence affecting the validity of the order and set aside the same with direction to the Competent Authority to pass fresh order in accordance with law.
In the present case find that a signed order was subsequently issued on 30/11/2011 whereas the appeal was filed on 16/02/2012 involving a delay of 18 days which is within the condonable period as per proviso to Sec. 128 of the Customs Act, 1962. We, feel that the ends of justice would be served by remanding the matter back to the file of the Ld. Commissioner Appeals to be decided afresh on merits.
The appeal is hence allowed by way of remand to the Ld. Commissioner Appeals, Custom House, Chennai, for a decision on merits and is disposed of accordingly.
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2024 (11) TMI 1239
Classification of waste arise from the pulses - Classifiable under 2302 5000 as claimed by the department or under chapter heading 0713 as claimed by the appellant - HELD THAT:- From the plain reading of the chapter heading 2302, it is found that the same is applicable for the goods such as Bran, Sharps and others residues whether or not in the form of palates derived from the sifting, milling or other working cereal or of leguminous plants. That means it applies to the goods namely, cereals of leguminous plant.
In the present case the waste arise from the pulses and pulses are not covered either as cereals or leguminous plant. Therefore, on this basis, it is clear that the appellant’s product being a waste arise from the pulses does not cover under the tariff heading 2302. It is a settled legal position that irrespective of the position whether the assessee’s claim of classification is right or wrong but if the classification proposed by the department fails than the entire proceeding is vitiated and no consequential demands will sustain.
Therefore, in the present case, since, it could not be established that the goods in question is classifiable under tariff heading 2302. The impugned order is not sustainable.
Classification of goods i.e. waste of pulses under 0713 - The entry of the same reads as “DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHER OR NOT SKINNED OR SPLIT”. We find that as against the cereal and vegetable plants, the goods is appropriately classifiable as dried leguminous vegetables. Therefore, in our considered view, we hold that the appellant have correctly classified the goods under 0713.
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2024 (11) TMI 1238
Enhancement of value and additional duty - re-determine the value of the goods - appellant had imported Fuel Filters and other filters from China - consignment was ordered for examination and thereafter, it was found that the goods were of a much better quality i.e., made in Germany, South Korea, etc. - HELD THAT:- We find that there is no dispute as to the fact that the filters carried the brand names of reputed parties such Komatsu, Deutz, Volvo, etc., along with the countries of origin embossed as ‘Germany’, ‘Korea’, etc. This basically would allow the importer to sell these filters to buyers who want to replace these filters with the original branded filters. Hence, we find that the value as shown in the invoice of the Chinese exporter cannot be accepted prima facie.
The importer himself had volunteered to pay the differential Customs Duty as per the enhanced value arrived at by the Customs officials, but subsequently appears to have changed their stand and sought re-examination of the goods by the Chartered Engineer. There is nothing on record to indicate that the Chartered Engineer, who was also duly approved by the DGFT, has committed any mistake in examining the subject consignment and arriving at the value. Therefore, we do not find any merit in the arguments adduced by the appellant that the Revenue has not followed the proper procedure while enhancing the value.
Therefore, we hold that the lower authorities have correctly arrived at the value as per which the appellant would be required to pay Rs.25,23,360/- (as per the original estimate of the Customs officials).
Since it was not a very serious contravention by the appellant and initially, they were even ready to pay the differential duty arising thereon and further were also ready to re-export the consignment for which they had given a written request, we find that confiscation of the goods is not warranted. Accordingly, we set aside the said order of confiscation and consequently, the redemption fine imposed also stands set aside. We also set aside the penalty of Rs.2,50,000/- imposed on the appellant.
We give an option to the appellant to pay the differential Customs duty along with interest, to clear the consignment.
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2024 (11) TMI 1237
Enhancement of Composite penalty - appellant did not submit the documents with regard to 6 Bills of Entry - penalty of Rs. 40000/- has been enhanced to Rs. 3,00,000/- - Adjudicating Authority imposed a penalty under Regulation 5 of Customs (Provisional Duty Assessment) Regulations, 2011 - appellant submits that although they have not filed the documents in time but later on the documents were filed - HELD THAT:- As relying on the decision of Shyam Steel Industries Ltd. [2024 (1) TMI 473 - CESTAT KOLKATA] wherein held reduced penalty can be imposed for such procedural violations.
Thus penalty of Rs. 40,000/- imposed by the Adjudicating Authority shall meet the end of justice.
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2024 (11) TMI 1150
Classification of handcrafted articles of stone popularly known as ‘Chakla Belan’ (Rolling Board and Rolling Pin), mortar and pestle and other allied articles - petitioners were classifying the exported article specifically under ITC(HS) 68159990 and which constituted the residual clause and read as “others”. By virtue of the inclusion of articles falling within the ambit of ITC(HS) 68159990, those products became entitled to claim MEIS rewards @ 5%. The aforenoted Public Notice No. 02/2015 was thereafter amended from time to time including by way of Public Notice No. 44/2015-2020 dated 05 December 2017 in terms of which the MEIS reward was increased from 5% to 7%.
Scope of the assessment power that stands conferred upon the competent authorities under the FTDR Act and the Customs Act - HELD THAT:- A process of ‘self-assessment’ was ordained to form part of an ‘assessment’ as contemplated under the Customs Act. This change had essentially come to be introduced in 2011 and pursuant to which self-assessment was acknowledged to be one of the modes of assessment as contemplated under the Customs Act. The procedure for assessment of duty is prescribed in Section 17 of that enactment.
Prior to the amendments which came to be introduced in Section 17 by virtue of Finance Act, 2018, the Proviso to Section 17(2) while identifying the criteria relevant for selection of cases for purposes of verification, had recognised that power being guided by factors such as the valuation of goods, classification, exemption or concessional duties availed in terms of a notification issued under that Act. The Proviso had at the relevant time and prior to the passing of Finance Act, 2018 included the following phraseology “regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification issued therefore under this Act”.
Section 17 also included a sub-section (6) in terms of which a proper officer was empowered to undertake an audit in respect of duty in case it had failed to undertake a reassessment or pass a speaking order in respect thereof. The aforesaid sub-section (6) as it existed in Section 17 came to be omitted by Finance Act, 2018.
The observations appearing in ITC Limited 2019 (9) TMI 802 - SUPREME COURT (LB)]] and BT India [2023 (11) TMI 478 - DELHI HIGH COURT] assume significance when viewed in light of the various Bills of Entry as submitted by the writ petitioners on a self-assessment basis having been duly accepted and no questions in respect thereof having been raised. The Bills of Entry would thus be liable to be viewed as having been duly assessed and accepted. Undisputedly, it is decades after those exports had been affected and assessments completed that the respondents now seek to reopen those transactions and seek to question the benefits claimed by the writ petitioners.
Undisputedly, consequent to the self-assessed Bills of Entry having been accepted and thus liable to be viewed as assessed, the stage of enquiry contemplated in terms of Section 17 of the Customs Act has clearly passed. That then leaves us to identify and determine the avenues which would otherwise be available to the customs authorities to reopen or review an assessment duly made.
Recovery of duty u/s 28 and 28AA - The provisions of Section 28AAA are attracted where it is found that an instrument issued to a person under the FTDR Act was obtained by means of collusion, wilful misstatement or suppression of facts. While Section 28AAA does undoubtedly statutorily empower the respondents to recover duty benefits illegitimately claimed by virtue of an instrument, the larger question which merits consideration is of identifying the authority which could be recognized in law to undertake a determination with respect to whether an instrument could be said to have been obtained by way of collusion, wilful misstatement or suppression of facts.
While we propose to return to this principal question a little later and in the subsequent parts of this decision, suffice it to note that Section 28AAA is a provision which stands at the crossroads of the Customs Act and the FTDR Act. It constitutes, in that sense, a junction or an intersection where the two statutes meet. Section 28AAA deals with situations of convergence and where a demand of duty is predicated upon a doubt being raised with respect to an instrument issued under the FTDR Act. Of critical significance, therefore, would be the issue of which authority should be recognised to have the jurisdiction to undertake the adjudication contemplated under that provision.
An adjudication is warranted for the purposes of invoking Section 28AAA cannot possibly be doubted. The usage of the expression “proper officer”, and which is defined in Section 2(34) of the Customs Act to mean an officer of customs, also cannot be accorded undue significance when one bears in mind Section 28AAA (1) speaking of an instrument issued to a person "for the purposes of this Act” or the FTDR Act. The former undoubtedly is a reference to the Customs Act. Thus, Section 28AAA is clearly intended to encompass all contingencies arising out of or relating to an instrument issued for the purposes of the Customs Act or the FTDR Act as the case may be.
Scope of the audit power which came to be independently incorporated in the Customs Act - As we read Audit Regulation 5, it becomes apparent that it is only after the disposal of any such objections that may have been invited that a final report containing the audit findings would come to be drawn. What however needs to be borne in mind is that the family of provisions pertaining to audit do not, at least in explicit terms, include a power to review, suspend or cancel an instrument issued either under the Customs or the FTDR Act. While hypothetically speaking an audit could contain findings or observations doubting a benefit or exemption claimed, we find ourselves unable to construe those provisions as enabling the customs authorities to suspend or cancel an instrument itself, be it under the Customs or the FTDR Act.
Powers of DGFT - The Director-General or the licensing authority may by an order in writing suspend the operation of any 62[licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] granted under these rules, where proceedings for cancellation of such [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] has been initiated under rule 10.
FDTR Rules thus confer a power on the DGFT or the licensing authority to regulate the grant, renewal, suspension and cancellation of licenses, certificates, scrips or any other instrument “bestowing financial or fiscal benefits”. The MEIS certificate would undoubtedly be an instrument which bestows a fiscal benefit. What we seek to emphasize and highlight is Rules 7, 9 and 10, embody in clear and unequivocal terms, a conferral of jurisdiction and power to commence an adjudicatory process that the DGFT could undertake while evaluating whether a license, certificate, scrip or instrument was liable to be suspended or cancelled.
Validity of Audit objection letter - As the audit objection letter teems with definitive and predetermined conclusions and would not sustain when tested on the principles enunciated by the Supreme Court in Oryx Fisheries.
We then find ourselves unable to sustain the audit objection letter even when tested on the anvil of the Audit Regulations which may be said to have been applied or invoked. As is evident from a reading of Regulation 5, the proper officer, after having apprised the exporter or the importer, as the case may be, of its intent to initiate an audit, is obliged to apprise the auditee of the objections before preparing the audit report. In case the auditee disagrees with the findings that appear in that report, a demand could be validly raised or created. Undisputedly, no such procedure appears to have been followed by the respondents in the facts of the present case. In fact, and contrary to the mandate of Regulation 5, the Assistant Commissioner has required the petitioners to pay sums representing amounts which according to that authority had been wrongly claimed under the MEIS and having clearly failed to abide by the statutory procedure prescribed.
Purview of Sections 28(4) and 28AAA of the Act to sustain the direction for deposit as framed - Section 28(4) of the Act, as noted above, could have been invoked only if the Assistant Commissioner had come to the conclusion that the goods had escaped duty by reason of collusion, wilful misstatement or suppression of facts. It is only in those contingencies that Section 28(4) could have enabled the proper officer to reopen an assessment. However, all that is alleged in this respect is that the petitioners had failed to make a correct and truthful declaration and thereby mis-classified the goods with the avowed objective of claiming benefits under the MEIS.
Unable to appreciate how the petitioners could have been charged of having failed to make a “correct and truthful” declaration when the imports were affected under the cover of MEIS certificates granted by the DGFT and which had never been questioned. In fact, the DGFT has not even and till date initiated any action against the writ petitioners alleging that the MEIS Certificate had been wrongly obtained. This too leads us to conclude that the impugned action is rendered wholly illegal, arbitrary and unsustainable.
We then proceed to consider whether the action of the respondents would sustain under Section 28AAA - Section 28AAA is principally concerned with the right vested in the respondents to initiate action for recovery of duty and interest where an instrument issued to a person is found to have been obtained by means of collusion, wilful misstatement, or suppression of facts. The word “instrument” is defined by Explanation 1 to Section 28AAA to include any scrip, authorization, license, certificate, or any other document by whatever name called issued under the FTDR Act. We have already held that the MEIS certificate would clearly fall within the ambit of that expression in the preceding parts of this decision.
Custom and DGFT Crossroad - It would be impermissible for the customs authorities to either doubt the validity of an instrument issued under the FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by the DGFT. An action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained. We have already held that the reference to a proper officer in Section 28AAA is for the limited purpose of ensuring that a certificate wrongly obtained under the Customs Act could also be evaluated on parameters specified in that provision. However, the said stipulation cannot be construed as conferring authority on the proper officer to question the validity of a certificate or scrip referable to the FTDR Act.
Invocation of Section 28AAA on a more fundamental ground - The controversy with respect to classification appears to have been raised for the first time in December of 2018 when the respondent no. 6 raised a doubt as to whether the stone and marble handicraft articles were liable to be placed under ITC(HS) 68159990. As was noted hereinabove, the sine qua non for Section 28AAA getting attracted is the triumvirate of collusion, suppression and wilful misstatement which are spoken of in sub-section (1) being attracted. Even if it were assumed for the sake of argument that the writ petitioners had wrongly classified or placed articles in question under ITC(HS) 68159990, the same would clearly not amount to it being ipso facto assumed that the same amounted to an act of suppression or wilful misstatement.
Rendering of a finding in favour of the respondents on the issue of collusion would have far greater ramifications. A finding on that score, if returned against the writ petitioners, would essentially require us to hold that the MEIS certificates had been obtained by the writ petitioners in collusion with the officers working under the DGFT. That too is not the allegation which is levelled by the respondents against the writ petitioners. The controversy, therefore, as to whether the subject articles were liable to be classified under CTH 6802 or 6815, would clearly not qualify the tests constructed by Section 28AAA.
Classification - handicraft articles being liable to be classified as falling under HSN 6815 or not? - The issue of classification was indelibly connected with the right of the writ petitioners to avail benefits under the MEIS. The MEIS scrip was issued by the office of the DGFT. The issuance of the MEIS scrip was dependent upon the exported article falling in the detailed list of products which came to be published by the DGFT on 01 April 2015. Table 2 set out the code wise list of products, as well as corresponding reward rates under the MEIS Scheme. There was undisputedly a reference to CTH 6815 as well as ITC(HS) 68159990 in that table.
Once the DGFT had proceeded to issue the MEIS scrip to the writ petitioners, they would have been justified in assuming that the issue of classification was neither questioned nor doubted. It is on the aforesaid basis that exports were affected between the period 1991 to 2018.
In the absence of the DGFT having ruled upon the issue of classification or having expressed any doubt with respect to the eligibility of the writ petitioners to claim benefits under the MEIS, it would be wholly impermissible for the respondents to take punitive action against the writ petitioners. The subject of classification stands explicitly reserved for the consideration of the DGFT in terms of Para 2.57 of the FTP. This too convinces us to conclude that the action as initiated by the respondents is rendered arbitrary.
Determination - As we allow the present writ petitions hereby quash the audit objection letters and summons issued - direct the respondents to refund the amounts collected from the writ petitioners
Since we have desisted from rendering any final opinion on the aspect of classification, the present decision shall be without prejudice to the right of the DGFT to initiate proceedings pertaining to the validity of the MEIS certificates issued to the writ petitioners if so chosen and advised and if otherwise permissible in law.
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