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TMI Blog2003 (11) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter. 2. The appellant is a private container terminal operator at Tuticorin Port. They had imported various types of gantry cranes, rail mounted quay side container cranes with accessories and two units of rail mounted quay side container cranes and two units of rubber tyred gantry cranes against EPCG Licence No. 0430000001, dated 20-8-99 and claimed the benefit of the said notification for clearance of the goods in terms of the said licence. 3. In terms of the conditions of the said licence they have to fulfil export obligation equivalent to 46 million US dollar. As per condition 2 of the Notification 28/97-Cus., dated 1-4-97 they were to execute a bond with surety or security as specified by the Assistant Commissioner undertaking to fulfil the export obligation as Nil%, 10%, 20%, 30%, and 40% during first, second, third, forth and fifth year respectively and accordingly they executed bond with Bank Guarantee equivalent to the concessional duty availed. 4. It is stated in Paras 4, 5, 6 and 7 as follows : 4. As per the condition No. 3, the importer has to produce evidence regarding the extent of export obligation fulfilled within 30 days of the expiry of each year fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... YES (a) Services connecting or disconnecting (b) Services on Board a vessel connecting and disconnecting, monitoring and supply of electricity at reefer yard 7. Shut out of containers YES 8. Stevedorage for transhipment containers YES 9. Storage of containers YES 6. Shri S.R. Ramakrishnan, Managing Director of M/s. PSA Sical vide his statements dated 21-2-2002 and 4-3-2002 stated that Dollar denominated charges collected for various services rendered as per the order of TAMP cited supra should he taken into account towards fulfilment of export obligation. He also accepted non-intimation of receipt of Indian rupees after conversion from US Dollar, to the Customs department. He was not able to give any specific reply to the explanation export obligation in relation to service providers (means realizing service charges for the various services rendered by the use of capital goods in freely convertible foreign currency) given for export obligation in Notification No. 28/97-Cus., dated 1-4-97. 7. Vide letter dated 5-2-2002, the importer infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d herein below : 16 M/s. PSA Sical Terminals Ltd., Chennai vide their reply dated 12-6-02 to the Show Cause Notice stated as follows (Para 16.1 to Para 16.15) :- 16.1 They are a joint venture between South India Corporation (Agencies) Ltd. of India and PSA Corporation Limited of Singapore (Port of Singapore); that the company was incorporated in 1998 for the purpose of executing a 30 year Build, Operate and Transfer (BOT) licence agreement for the development, Operation, maintenance and management of a container terminal at the 7th berth of the Tuticorin Port. The agreement with the Ministry of Surface Transport was on 15-7-98. They applied for EPCG licence under the supporting service for maritime transport as a service provider and obtained the approval from the Committee of Secretaries on 4-8-99. Following this, EPCG licence No. 0430000001, dated 20-8-99 was obtained as a producer of supporting services for maritime support for importation of two numbers of quay cranes and 4 numbers of rubber tyred gantry cranes at 11.5 million US Dollar. The TAMP approved their tariff on 29-12-99. Operation was commenced on 7-1-2000. The TAMP while fixing the tariff indicated the services w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into the picture. The department s contention is that physical earnings are in rupees and hence do not count for EPCG in terms of Notification 28/97. Number of letters written to the department explaining that no port service provider can function without the tariff being notified in the Government Gazette by TAMP, but the department does not accept this picture. 16.4 The following submissions are made in respect of allegations 1 and 4. As per EXIM Policy (Ch. 15 Para 15.2) service providers are eligible to avail EPCG scheme, the supporting service for maritime transport is one of the approved services under the EPCG scheme. In EXIM Policy 2002-2007, a service provider has been defined as a person providing a service in India relating to exports paid in free foreign exchange or for such services paid in Indian rupees, which are otherwise considered as free foreign exchange by RBI. RBI in their letter dated 28-4-2000 have clarified that such rupee earnings of the terminal operator are deemed to be earned in foreign exchange. The RBI s letter reads as follows :- Please refer to your letter, 7th April, 2000 on the captioned subject. In this connection, we advise that any such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is used is further proof that these payments to PSA Sical amounts to Dollar payments. 16.7 As regards the TAMP s role, as per Section 47A speaks about the constitution and incorporation of TAMP. Section 48 speaks about scale of rates for services performed by board or other person. Section 48 reads as follows :- 48. Scale of rates for services performed by board or other persons. - The authority shall from time to time by notification in the Official Gazette frame a scale of rates at which and a statement of conditions under which any of the services specified hereunder shall he performed by a board or any other person authorised under Section 42 at or in relation to the port or port approaches - (a) Transhipping of passengers or goods between vessels in the port or port approaches. (b) Landing and shipping of passengers or goods from or to such vessels to or from any wharf quay, jetty, pier, dock, berth, mooring, stage or execution land or building in the possession or occupation of the board or at any place within the limits of the board or post approaches. (c) Carnage or porterage of goods on any such place. (d) Wharfage, storage or demurrage of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para xviii (Page 16), it could be seen that it is Government of India which ordered the services at Sl. Nos. 3, 4, 5, 6 and 9 to Mumbai Port Trust in Dollar terms and the same policy has been adopted in respect of their case. RBI has also clarified that the Dollar denominated services provided to MLOs and VOs contribute foreign exchage earnings and hence Dollar denominated charges as approved the TAMP and collected from VOs and MLOs in rupees constitute foreign exchange earnings. Their services are integrated and recognized and duly approved by the designated authority of Government of India (TAMP). The jurisdiction of TAMP indicating the service which can be Dollar denominated should be appreciated otherwise the whole exercise by permitting EPCG facility to port sector will become a meaningless proposition making the efforts of Commerce Ministry and TAMP futile. 16.10 The third allegation is that PSA Sical has requested Deputy DGFT to count Dollar denominated services towards fulfilment of export obligation and that Deputy DGFT has taken a stand that there is no such provision in the EXIM policy and hence directed PSA Sical to take up the issue directly with the Customs is contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of information. All information furnished was based on notified Government circulars. DGFT is statutory authority which will have to notify the Dollar services for export obligation and aware of the RBl s position to the effect that rupee earnings of terminal operators will be deemed to foreign exchange. Based on RBI s clarifications in their letter dated 28-4-2000 and 17-5-2002 the DGFT has accepted their export obligation. DGFT has not raised any issue regarding earnings of Dollar denominated services of PSA Sical and aware that similar EPCG licence has been given to NSICT. However, to remove even the slightest confusion, the Commerce Ministry has clarified the matter in the EXIM Policy 2002-07. The Show Cause Notice questions the authority of several statutory organizations of Government of India such as TAMP, Ministry of Surface Transport, RBI and DGFT. 16.13 The sixth allegation is that M/s. PSA Sical has persuaded TAMP to fix service charges in Dollar and in order to meet their complete export obligations amounting to 4 times the value of imports, PSA Sical approached TAMP to include several services other than storage charges and vessel hatch charges in US Dollar to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation and have issued a clear clarification in EXIM Policy 2002-07 as to what amounts to foreign exchange earnings for a service provider. In matters of foreign exchange, RBI is the final authority and requested the department not to go against those orders. They are a joint venture between two reputed organizations and all their statements and activities are transparent and within the parameters of various laws. They have obtained EPCG Licences in a bona fide manner and fulfilled their export obligations as per law. The allegation in the Show Cause Notice are baseless and due to misconception of the functioning of the port sector and various statutory authorities governing it as well as an in complete reference of various orders related to the matters. They requested to drop the proceedings and accept their export obligation. Finally, they wanted to be heard in person. 7. The appellants in their personal hearing before the Commissioner referred to the expression freely convertible foreign currency appearing in Notification No. 28/97 and stated that the said expression has been defined in the notification. They stated that the said expression is required to be interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding on customs. It was stated that customs have no legal authority to place an interpretation on the expression freely convertible foreign currency in a manner which is repugnant to what is provided in clear terms in the EXIM policy as that would frustrate the very objective of providing facility of importing capital goods by port related service providers under EPCG scheme. It is also stated that in December, 1991 Ministry of Surface Transport issued a policy direction to all major ports for notifying vessel related charges in US dollars but to collect the same only in Indian rupees. It was stated that with the setting up of TAMP under Major Ports Trust Act, the power for fixing scale of tariff and conditions is exercised by this body and its order is legally binding on the appellant i.e. company. The said order in continuation of earlier Government policy categorically states that all payments irrespective of denomination would be received by the company only in Indian rupees. Therefore it was stated, that the clarification given by RBI is legally permissible for the customs to assign their own meaning to the expression freely convertible foreign currency , in Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.T. 81 (T)] wherein it was observed that it is well settled proposition that where a fiction is created by a provision of law, the Court must give full effect to the fiction and it should not allow its imagination to be bogged by any other consideration. They also stated that there was no suppression or misstatement on their part in its dealing with either customs or TAMP or DGFT for that matters before any authority in the matter relating to import of subject capital goods as has been elaborately explained by them. They submitted that larger period is not extendable in terms of the provisions of Section 28 of the Act nor penalty is imposable. He relied on the judgment rendered by the Madras High Court in the matter of UOI v. Oceanic Export Corporation as reported in 2000 (116) E.L.T. 19 (Mad.). The Commissioner after due consideration of the written submissions and oral submissions submitted before him did not agree with the contentions and held that they were required to comply with the terms of the notification in US dollar denominations only. The findings given in Paras 22 to 26 are extracted herein below : 22. In the case of service providers, the EPCG licence holder is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year from the date of issue of licence from second year onwards. The export obligation claimed to have been fulfilled was filed on 12-1-2001 in Appendix 10C of the Handbook of Procedures wherein vide Column (h), the importer have claimed that they have achieved cumulative export of US Dollar 65,98,842.76 and the Canara Bank, Tuticorin has also certified that all service exports as shown above were denominated in US Dollar and payment of the same had been realized. But, the fact of receiving the payments in Indian rupees which have been confirmed by the Manager, Canara Bank, Tuticorin vide their letter dated 9-1-02 have been suppressed from the Customs Department. 25. Though all the service charges were denominated in Dollar by TAMP, the service charges were received in Indian rupees. The Charges for services as notified by the TAMP on 28-12-99 are listed in Para 4 of this Order for easy understanding. The Sl Nos. 3, 4, 5, 6 and 9 of the list were recovered from the importer or the exporter as terminal handling charges. They are not a part of freight charges collected either by the VOs and MLOs from the shipper and hence the contention that the MLOs and VOs pay this out of dollar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Major Port) which is gazetted on 29th December, 1999. It was also pointed out that the Central Board of Excise were privy to the said fixation of prices by statutory authority and therefore it cannot be said that the customs authority was not aware of the fixation of the charges to be paid in rupee and all the statutory provision which have been gazetted. In the light of the gazetted tariff provisions and the terms which are gazetted therein, the customs authority cannot take their own stand in contra to the other bodies who also dealt with the said provisions of law. It was argued that the service rendered by the appellant is an integrated activity and all its services are necessary including the incidental and ancillary services. Hence the service charges for all those services denominated by TAMP in US dollars from the beginning till the end of a container handling cycle go towards fulfilling the export obligation in the light of the language used in the said notification in Explanation (iv). It was argued that the said notification in the context of definition of export obligation uses the words for services rendered through the use of such capital goods . It was stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty or to confiscate the goods. It was argued that the activity was regulated by the RBI and TAMP and clarifications were received from them and hence there was no suppression in the matter. Further reliance is made on the judgment rendered in the case of Bombay Chemicals Pvt. Ltd. v. UOI 14 Others as reported in 1982 (10) E.L.T. 171 wherein a similar proposition was upheld that the customs authorities are bound by the certificate issued by the D.G.T. D under Notification dated 1-3-1968 and cannot ignore or bypass it on the ground that it was issued under mistake or misrepresentation. 11. Jt. CDR Shri V.K. Nayanar argued along with SDR Smt. Bhaghya Devi. Both reiterated the written submissions filed by the Commissioner in the matter. The written submission reiterates the findings given by the Commissioner inasmuch as to the clarifications given by the RBI and the rate fixation by TAMP has no relevance. Commissioner does not dispute, the clarification given by the RBI for having effective the EXIM policy 2002-2007 but states that the said clarification is not applicable for the previous policy 1997-2002. They have stated that there is a deliberate suppression with regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 665330 022-2654092 022-2611427 (1st Flr.) 022-2632088 (3rd Flr.) 022- 2654121(3rd Flr.) 022-2694933 (Pa`Saasana/Admn.) saM M[- saI. -----------------199 Sak No. EC _____CO EPD 2411/21-8-02/99-2000 April 28, 2000 (SAKA) The Commercial Manager, Nhava Sheva International Container Terminal Ltd., Darabshaw House, Level-I, Narotham Morarji Road, Ballard Estate, Mumbai - 400038 Dear Sir, Clarification and confirmation that charges recovered by Terminal Operator are remittable in Foreign Exchange and is treated as foreign earnings. Please refer to your letter dated 7th April 2000 on the captioned subject. In this connection we advise that any such payment which would have been otherwise received in foreign exchange but paid in Indian rupees out of the amount remittable to overseas Principal, thereby reducing outgo of foreign exchange can be considered as (i) deemed to be received in foreign exchange ; (ii) deemed to be earned in foreign exchange. Yours faithfully Sd/- (C.K. Shah) Assistant General Manager Tinku, Srt. 4 14. We have gone through the tariff fixation adopted by Tariff Authority for Major Ports (TA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner has also not disputed its applicability with regard to the explanation given by the RBI to the term appearing in the EXIM Policy 2002-2007. The spirit of the notification is thereby satisfied when RBI has clarified the issue on savings and earnings of foreign exchange. This term was available in the previous policy as well as has been seen by us in the copy of the EXIM policy 1997-2002, placed before us. Clause (iv) has been added to 3.48 before the close of the period of the EXIM policy. Therefore the clarification be said to be not a binding effect on the customs authorities. The appellants have also explained that services to vessel operators and MLO s and freight charges and other container related charges by MLOs from the shipper constitute the dollar earnings and so dollar earned are paid to them. They have received payments in Indian Rupees after conversion of dollar as per exchange rates. This has not been disputed by the Commissioner in the order. The ld. Commissioner has relied on the Managing Director s statement that the services in India relates to free foreign exchange. It is an erroneous interpretation placed by the Commissioner in the light of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing ascribed to that word in other statutes. As Lord Loreburn stated in Macbeth v. Chislett, [1910 AC 220 at p. 224] it would be a new terror in the construction of Act of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone . The strict sense in which such a word is to be found in another statute may mean the etymological or scientific sense and would not in the context of another statute be applicable. From the Colliery Control Order, 1945 or the other provisions to which our attention was drawn to, it would neither be possible nor safe to adopt the meaning of the word coal we infer that there is a Legislative merely because the word coal has been used as meaning a mineral product in the context of these statutes. It would not, therefore, be possible to discard the meaning of the word coal in this statute as understood in its commercial or popular sense and to adopt its connotation from other statutes passed for different purposes or in context of different objects. This citation is applicable to the facts of the case. It imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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