2024 (10) TMI 1072 - AT - Customs

Refund of integrated goods and service tax (IGST) - contravention of N/N. 29/2015-20 dated 21st September 2017 - onus to prove - specific pleas taken before the original authority that were found to be unacceptable in the impugned order are that the SCOMET regime is intended to cover fermenters of particular specifications as well as certain specified components thereof which theirs were not - HELD THAT - The adjudicating authority has taken a superficial view of the impugned goods to hold those to be subject to restrictions under the Foreign Trade Policy (FTP). The Foreign Trade Policy (FTP) is designed by the Directorate General of Foreign Trade (FGFT) under the authority of Foreign Trade (Development and Regulation) Act, 1992 with the customs authorities playing an agency role in enforcement thereof. In matters such as SCOMET regime, which, if wrongly applied and indiscriminately, could defeat the purpose of trade promotion and, involving technologies specified in international conventions, customs authorities should necessarily have obtained authoritative opinion from the licensing authority. The assumption of the adjudicating authority that the restrictions were amenable to broadbanding, and that too in a restrictive regime, is an incorrect perspective on licensing rules and regulations - It is unable to fathom the scope for preponderance of probability , which relates to discharge of onus to establish goods as not smuggled or in application of evidence, for varying the requirements of customs law to goods which, admittedly, had been declared and made available for examination at the time of export. From the manner in which the adjudicating authority has dealt with the proposition in the show cause notice, as well as disregard of the defence put up by the noticees, it would appear that the requirements of factual ascertainment in adjudication and pre-requisite for visiting penalties has not been followed. In view of the failure to discharge such responsibility, the impugned order is set aside and the matter remanded back to the original authority for reference to the licensing authority for their opinion on applicability of the SCOMET regime and to dispose off the show cause notice in accordance with such reports after considering the defence if any, put up by them. The appeals are allowed by way of remand.

Summary

Issues:
1. Alleged contravention of notification no. 29/2015-20 dated 21st September 2017 regarding SCOMET regime.
2. Confiscation of exported goods and imposition of penalties under Customs Act, 1962.
3. Interpretation of notifications and applicability of Supreme Court judgments.
4. Burden of proof in customs proceedings.
5. Compliance with SCOMET regime and licensing requirements.
6. Role of customs brokers in export transactions.

Analysis:
1. The case involved allegations of contravening notification no. 29/2015-20 dated 21st September 2017, which restricted cross-border transactions under the SCOMET regime. The exports of 'fermenters and parts thereof' were scrutinized for non-compliance with licensing requirements for such goods.

2. The Customs Act, 1962 was invoked to confiscate the impugned goods and impose fines and penalties. The original order imposed significant fines and penalties on the exporter, individual directors, and customs brokers involved in handling the exports.

3. The adjudicating authority relied on the descriptions in shipping bills matching the restricted goods under the notification. The authority dismissed defenses based on Supreme Court judgments, emphasizing that the SCOMET regime governed trade policy, not tax exemptions as in the cited cases.

4. The burden of proof in customs proceedings was discussed, emphasizing the need for establishing charges by a preponderance of probabilities rather than mathematical precision. The department was not required to unravel every detail but establish the case to a reasonable degree.

5. Compliance with the SCOMET regime and licensing requirements was a focal point. The exporter's subsequent actions in obtaining licenses were considered indicative of coverage under the restricted regime. The appellate tribunal highlighted the need for authoritative opinions from the licensing authority in such cases.

6. The role of customs brokers in the export transactions was also scrutinized. The appellants argued that their role was limited to filing shipping bills and complying with assessment procedures, deflecting allegations of infractions under the Customs Brokers Licensing Regulations.

In conclusion, the appellate tribunal set aside the impugned order and remanded the matter for reference to the licensing authority to determine the applicability of the SCOMET regime. The tribunal emphasized the need for factual ascertainment in adjudication and adherence to established law to ensure a fair and accurate resolution of the case.