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2021 (10) TMI 94 - AT - CustomsDenial of benefit of exemption under EPCG licience - N/N. 102/2009-Cus. dt. 11.09.2009 - duty credit scrips under SHIS scheme not issued - SHIS scrips which are not issued in a particular year for the reason that zero duty EPCG authorization has been issued in that year shall not be issued in future years also - HELD THAT - Whenever a scheme is formulated by the Ministry of Commerce/DGFT, a corresponding exemption notification is issued under Section 25 of the Customs Act to grant exemption from duties of customs. Such exemptions can be full or partial, conditional or unconditional. If goods imported under a promotion scheme of DGFT are exempted, evidently, the importer will have to fulfil the conditions laid down in the scheme which are mirrored in the exemption notification issued under the Customs Act. Many of these conditions are post import conditions, for example, that the licencee shall export goods worth so and so. If the licencee defaults in fulfilling such conditions, duty has to be recovered from it. The only way duties can be recovered under the Customs Act is by issuing an SCN under section 28 which lays down a time limit of two years (prior to 2016, it was one year). The demand can be raised during an extended period of five years if the short payment is on account of (a) Collusion; (b) Wilful mis-statement; or (c) suppression of facts. No demand can be raised beyond five years under any conditions - no demand can be raised under section 28 even in case of default. The effect of Public Notice No.30/2015-2020 dt. 08.09.2016 is that the exporters who have incorrectly availed simultaneous benefit of zero percent EPCG and SHIS have been provided an option to surrender one of the benefits subject to some conditions. Correspondingly, CBEC issued Circular No.45/2016-Cus. dt. 23.09.2016 directing that pending issues related to simultaneous issuance or availing of zero duty EPCG and SHIS shall be decided in terms of the above public notice - It is undisputed that the appellant has not utilised the SHIS scrips and returned them to the JDGFT, Hyderabad who had issued them and that they were cancelled by the JDGFT. Therefore, there is no dispute that the appellant had surrendered the benefits under the SHIS scheme as envisaged under the Public Notice. There are nothing to indicate that an exporter/importer has to apply for relaxation to the Policy Relaxation Committee or that there is form or manner in which it has to be applied for. Therefore, the impugned order has gone beyond the scope of the Public Notice and read into it additional words and came to conclusion that the appellant had to apply to the Policy Relaxation Committee and obtain relaxation in order to avail the benefit of the Public Notice. Undisputedly, the appellant surrendered the scrips to the JDGFT, Hyderabad who had issued the scrips and he confirmed having cancelled them. If the appellant had to apply to the Policy Relaxation Committee, he would have told them so. How the application of the appellant surrendering the scrips was processed by the JDGFT Hyderabad and whether he submitted it to the DGFT Delhi and obtained clearance from the Policy Relaxation Committee or this was not considered necessary are matters pertaining to the internal working between JDGFT Hyderabad and DGFT Delhi. Nothing has been brought on record by the Revenue to show that the Policy Relaxation Committee has refused to grant relaxation. The only allegation is that the appellant has not applied for and obtained a relaxation which is not the requirement either under para 2.58 of the FTP or under the Public Notice. Having surrendered that SHIS scrips to the JDGFT, Hyderabad, completely unused the appellant has completed his end of the responsibility. By cancelling the scrips, the JDGFT has done its job. Nothing else is required to avail the benefit of the Public Notice and nothing can be read into it. Once the benefit of the Public Notice is available, the allegation that condition no. 2(4) has been violated by the appellant by obtaining both EPCG and SHIS scrips cannot sustain. The Public Notice prescribed a procedure to be followed in such cases and the appellant has followed so. No demand can therefore sustain and nor can the consequential orders confiscating the goods and imposing penalties. Appeal allowed.
Issues Involved:
1. Denial of benefit under Exemption Notification No.102/2009-Cus. 2. Confiscation of capital goods under Section 111(o) of the Customs Act, 1962. 3. Demand of Customs duty foregone. 4. Imposition of penalty under Section 112(a) of the Customs Act, 1962. 5. Compliance with Public Notice No.30/2015-2020 and para 2.58 of the Foreign Trade Policy. Detailed Analysis: 1. Denial of Benefit under Exemption Notification No.102/2009-Cus: The appellant challenged the order denying the benefit of Exemption Notification No.102/2009-Cus for imports under twelve zero duty Export Promotion Capital Goods (EPCG) licenses. The Commissioner denied the benefit on the grounds that the appellant did not fulfill condition 2(4) of the Notification, which prohibits issuance of duty credit scrips under the Status Holder Incentive Scheme (SHIS) in the same year as the zero duty EPCG authorization. 2. Confiscation of Capital Goods under Section 111(o) of the Customs Act, 1962: The Commissioner confiscated the capital goods valued at ?141,02,93,240 under Section 111(o) of the Customs Act, 1962, for the wrongful claim of the exemption. The goods were allowed for redemption on payment of a fine of ?5 Crores under Section 125 of the Customs Act. 3. Demand of Customs Duty Foregone: The Commissioner confirmed the demand of Customs duty amounting to ?34,70,06,234, which was deemed evaded by the appellant through wrongful claims of the exemption. The duty was to be recovered by invoking and enforcing the bond and bank guarantee furnished by the appellant. 4. Imposition of Penalty under Section 112(a) of the Customs Act, 1962: A penalty of ?1 crore was imposed on the appellant under Section 112(a) of the Customs Act, 1962. The proposal to impose a penalty under Section 114A was dropped. 5. Compliance with Public Notice No.30/2015-2020 and Para 2.58 of the Foreign Trade Policy: The appellant argued that they had surrendered the SHIS scrips to the JDGFT, Hyderabad, as per the Public Notice No.30/2015-2020, which allowed exporters to return either the SHIS or zero duty EPCG benefits. The Commissioner held that the appellant did not fulfill the condition of obtaining a policy relaxation under para 2.58 of the Foreign Trade Policy, which was necessary for the surrender of SHIS. Judgment: The Tribunal examined the Public Notice and para 2.58 of the Foreign Trade Policy and found that neither required the appellant to apply for or obtain a policy relaxation from the Policy Relaxation Committee. The Tribunal concluded that the appellant had completed their responsibility by surrendering the SHIS scrips to the JDGFT, Hyderabad, and that the JDGFT had confirmed their cancellation. Therefore, the appellant was entitled to the benefit of the Public Notice, and the condition 2(4) of the Notification was not violated. Conclusion: The impugned order was set aside, and the appeal was allowed with consequential relief to the appellant. The stay application was also disposed of. The Tribunal held that no demand could sustain, and the consequential orders for confiscation and penalties were invalid.
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