2020 (9) TMI 854 - AT - Customs

DFIA Scheme - Actual user condition - Benefit of exemption in notification no. 40/2006-Cus dated 1st May 2006 - - the impugned order finds that float glass was not amenable to use in the manufacture of finished leather from hide of cow/buffalo , that the intent of the policy had been violated as the flexibility of importing alternative inputs, allowed in circular dated 24th March 2009, did not extend to goods that were not capable of being used in the industry, and that clarification dated 14th February 2002 on use of float glass as glazing glass stood withdrawn by the advisory of 15th January 2013. HELD THAT - It is clear from the narration in the impugned order that the item permissible for import in the norms relating to finished leather from hide of cow/buffalo , as well as in the impugned licences, was glazing glass and, in the former, continues to be so. It is also on record that the clarification of the Advance Licensing Committee issued in 2002 was withdrawn by the Norms Committee in 2013. The foundation of the impugned order is the attribution of retrospective effect to the subsequent withdrawal so as to render the impugned imports to be contrary to the list appended to the licence. With the description in the norms continuing to remain unamended, the deemed insertion of the specific description, embodied in the advisory of 2013, may not find ready acceptance. The adjudicating authority has appeared to stretch the proposition for retrospective application of withdrawal of clarification on the basis of cited decisions which, as we have pointed out, were made in an entirely different context. Furthermore, to permit any individual acting on deliberated decisions of an authorized body to be subject to any detriment subsequently is tantamount to incentivizing the irresponsible decision-making by designated authorities. Indubitably, passage of time and hindsight tend to promote wisdom and the perception of errors of the past, in the light of such wisdom, does not erase an assurance offered. If the test of validity for retrospective effect of notifications, it surely must be no less applicable to clarifications. Imports, if any, made against the impugned licences after issue of clarifications of 2013 are on a footing entirely different from those made before - The impugned order, thus, stands on weak foundations in penalizing past imports. Accordingly, the confiscation as well as imposition of penalties under section 112 and 114AA of Customs Act, 1962 fails. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Eligibility for exemption under notification no. 40/2006-Cus dated 1st May 2006.
2. Invocation of the extended period under section 28 of the Customs Act, 1962.
3. Retrospective application of the withdrawal of clarification by the Directorate General of Foreign Trade (DGFT).
4. Demand of duty and imposition of penalties under sections 28, 114A, 112, and 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Eligibility for Exemption:
The appellant-assessee imported 'float glass' and 'ultra float glass', seeking exemption from customs duties, including anti-dumping duty, under notification no. 40/2006-Cus dated 1st May 2006. The adjudicating authority denied this exemption, holding that the imports were not permissible under the 'duty-free import authorization (DFIA)' scheme as 'glazing glass' was specified in the licenses for import, which was interpreted to mean a specific type of glass used in leather manufacturing.

2. Invocation of the Extended Period:
The appellant argued that none of the pre-requisites for invoking the extended period under section 28 of the Customs Act, 1962 were in evidence. The adjudicating authority, however, confirmed the demand of duty and penalties, asserting that the imports were in violation of the policy prescriptions and that the extended period was applicable due to the alleged misrepresentation by the importer.

3. Retrospective Application of Withdrawal of Clarification:
The adjudicating authority held that the withdrawal of the 2002 clarification by the DGFT in 2013 had retrospective effect, thereby rendering the imports contrary to the list appended to the license. The authority relied on various judgments to justify the retrospective application, including Government of India & Ors v. Indian Tobacco Association and Aspi Rustomji Balsara v. Commissioner of Central Excise, Vapi.

4. Demand of Duty and Imposition of Penalties:
The demand of ?60,90,389 as customs duties and ?3,41,278 as anti-dumping duty was confirmed along with applicable interest under section 28AB of the Customs Act, 1962. Penalties were imposed under sections 114A, 112, and 114AA of the Customs Act, 1962 on the importer and other associated entities and individuals. The appellant contested these penalties, citing the absence of misrepresentation or suppression of facts, as the imports were made based on the valid 2002 clarification.

Judgment Analysis:

Eligibility for Exemption:
The tribunal found that the appellant had imported the goods based on a valid clarification from the Advance Licensing Committee in 2002, which included 'float glass' within the description of 'glazing glass'. The subsequent withdrawal of this clarification in 2013 could not be applied retrospectively to imports made before this date.

Invocation of the Extended Period:
The tribunal noted that the existence of the 2002 clarification at the time of import negated any allegation of suppression or misrepresentation. Therefore, the extended period under section 28 could not be invoked.

Retrospective Application of Withdrawal of Clarification:
The tribunal rejected the adjudicating authority's reliance on retrospective application, emphasizing that the withdrawal of the 2002 clarification in 2013 could not affect imports made prior to this date. The tribunal referenced the Hon’ble Supreme Court's decision in Union of India & another v. VVF Limited & another, which held that subsequent notifications or clarifications could not retrospectively affect rights accrued under earlier notifications.

Demand of Duty and Imposition of Penalties:
The tribunal set aside the demand of duty and penalties, stating that the appellant had acted based on a valid clarification at the time of import. The tribunal also dismissed the adjudicating authority's reliance on decisions that were contextually different.

Conclusion:
The tribunal set aside the impugned order, allowing the appeals and ruling in favor of the appellant. The confiscation and penalties under sections 112 and 114AA of the Customs Act, 1962 were also nullified. The judgment emphasized the importance of adhering to the clarifications and policies in effect at the time of import, rather than applying subsequent changes retrospectively.

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