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TMI Blog2010 (7) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Gaule, JJ. REPRESENTED BY : Shri S.S. Katiyar, SDR, for the Appellant. Shri V. Sridharan, Advocate, for the Respondent. [Order per : P.G. Chacko, Member (J)]. - This appeal filed by the Revenue is directed against the appellate Commissioner s order granting the benefit of Notification No. 48/2000-Cus., dated 25-4-2000 to the respondent in respect of processed cotton fabrics imported by them under Duty Free Replenishment Certificate (DFRC) No. 0410009541 dated 12-10-2000. The respondent had purchased the DFRC from the original licensee, viz. M/s. Texsyard International, Chennai, who had obtained it from the Joint Director General of Foreign Trade, Chennai, on the strength of two shipping bills covering export of cotton processed made-ups other than grey . The DFRC permitted import of processed cotton fabrics to the extent of 12 kg. in quantity and Rs. 19,933.80 in value. The respondent, as transferee of the DFRC, imported what was described as cotton fabrics (55% cotton and 45% polyester) in the relevant bill of entry. They also claimed the benefit of the above Notification. The bill of entry was provisionally assessed with the above benefit and accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. It merely described the import item as processed cotton fabric , which, according to the learned SDR, was not sufficient to determine whether fabrics of the same quality, technical characteristics and specifications as those of the fabric used in the export goods had been imported by the respondent. It is submitted that it was the burden of the respondent to ensure that the above condition of the Notification had been duly complied with. In this connection, he has referred to para 7.62 of the Handbook of Procedures 1997-2002, which provides that the licensing authority shall ensure that, while issuing the DFRC, the shipping bill numbers and dates, FOB value as per the shipping bills and description of the export products are endorsed on the reverse of the DFRC and that, before allowing imports against DFRC, the Customs shall verify that the details of the exports as given on the DFRC are as per their records. According to the learned SDR, implied in this provision of the Handbook of Procedures is the responsibility of the importer to get the details of the exports verified by the proper officer of Customs before making the import. Had this verification been done, the present i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of inputs used in the export product. Textile fabrics are also in the list of inputs added to para 4.31 ibid by the aforesaid amendment. It is argued that, as the respondent merely described the imported item as cotton fabrics (55% cotton and 45% polyester) and did not declare the technical characteristics, quality and specifications of the goods in the bill of entry to enable the proper officer of Customs to determine whether the same input as used in the export product had been imported, they would not be eligible for the benefit of the Notification. 3. The learned counsel for the respondent also refers to the relevant provisions of the EXIM Policy as also of the Handbook of Procedures (Vol. 1). At the outset, he submits that the DGFT s Public Notice No. 4 dated 1-4-2002 did not have retrospective effect inasmuch as it expressly stated that it should come into effect from 1st April 2002. It is submitted that, prior to 1-4-2002, there was no requirement that the technical characteristics, quality and specifications should be declared by the exporter in the shipping bill or that similar particulars of the input should be mentioned by the licensing authority in the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nasmuch as the description of the imported item tallies with that of the export goods (processed cotton made-ups and processed cotton fabrics). It is submitted that, when the shipping bills were filed by the exporter under the DFRC scheme, the proper officer of Customs was aware of prospective importation of inputs by the licensee or his transferee. The officer ought to have taken the necessary precautions against any prospect of undue benefit being claimed by the importer. This could have been done through sampling of the export product and getting the same tested in the department s laboratory. Having not done this, the Customs authorities cannot disentitle the importer to the benefit of the DFRC scheme. In this context, the learned counsel has relied on two decisions of this Tribunal, viz. Global Exim v. CC, Mumbai - 2010 (253) E.L.T. 417 (Tri.-Mumbai) and CC, Mumbai v. Matriaco (I) Ltd. - 1999 (114) E.L.T. 99 (T). While in the former case, this Tribunal held that the benefit of Notification 40/2006-Cus. was available to the importer on the strength of Duty Free Import Authorisation (DFIA) issued by the DGFT, the Tribunal in the latter case granted the benefit of Notification 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of other entries of the SION may not be correct. 6. We have given careful consideration to the submissions. The short question arising for consideration is whether the benefit of Notification 48/2000-Cus. (Serial No. 10) is admissible to the processed cotton fabrics imported by the respondent in the month of March 2001. This Notification was issued under Section 25 of the Customs Act to grant the benefit of the DFRC scheme to exporters/importers. As per condition No. 1 read with condition No. 3 of the Notification, the benefit was admissible to transferees of DFRCs also, subject, of course, to due compliance, by them, of other conditions of the Notification. The respondent is a transferee of the subject-DFRC. If they satisfy other conditions of the Notification, the Revenue is agreeable for granting them the benefit of the Notification. The relevant condition, which is in the centre stage of the controversy in this case, is condition No. 2(c) which stipulates that the DFRC should contain endorsements by the licensing authority specifying quality, technical characteristics, specifications and quantity of the materials used in the resultant product which are allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any item in the ITC (HS), Handbook of Procedures (Vol. 1 or Vol. 2) and which was referred to him. If any question or doubt arises touching upon the scope and content of the licence and the same was referred to the DGFT, his decision shall be final and binding as per para 4.13 ibid. In the present case, it appears, the question which was referred to the DGFT by the Deputy Commissioner of Customs and the respondent touched upon the scope and content of the DFRC inasmuch as both the Deputy Commissioner of Customs and the respondent wanted to know as to whether cotton fabrics composed of 55% cotton and 45% polyester covered by the subject-bill of entry would come within the scope of processed cotton fabric mentioned as import item in the DFRC. In the reference made by the Deputy Commissioner of Customs, the DGFT offered contradictory clarifications, one of these being in favour of the importer. In the reference made by the party through the Deputy Commissioner, the DGFT s clarification was against the party. The authority given to the DGFT under para 4.13 ibid. was not to be exercised in a trifling manner inasmuch as it is an authority conferred exclusively on the DGFT for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification issued with reference to the provisions of the EXIM Policy by any other authority could not be binding or final. The learned counsel has argued that the finality and binding nature of the DGFT s clarification cannot extend beyond the horizons of the Ministry of Commerce. This submission is not acceptable inasmuch as the burden of implementing the EXIM Policy provisions is not merely on authorities working directly under the Ministry of Commerce. Some of the Policy provisions may have to be carried into effect by authorities working under other Ministries as in the present case. The benefits of the DFRC scheme are meant for exporters and importers. In so far as importers are concerned, such benefits are administered by Customs authorities in terms of Notifications issued under Section 25 of the Customs Act and that is how the present dispute arose before the lower authorities. The question/doubt which arose in this case, as we have already noted, directly touched upon the scope of the expression processed cotton fabrics used in the DFRC issued by the DGFT. The respondent interpreted this expression in such a way as to claim the benefit of Notification 48/2000-Cus. befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le cover . Both the input and output items mentioned against entry J125 are found to be qualified by the figure 100% , the input being 100% natural silk fabric and the output being 100% natural silk made-ups/garments. Against entries J257 to 265, we come across 100% cotton fabric as the input item while the output items are various garments meant for boys. It thus appears that, wherever the textile material was intended to be 100% and not intended to be blended, it was qualified by the figure 100% in the SION. In the instant case, the DFRC mentioned the input item as processed cotton fabrics and the output item (export goods) as processed cotton fabric made-ups other than grey. Therefore, we are of the view that both the input and output items mentioned in the DFRC could be a blend of cotton with a different textile material, cotton, of course, having to be the predominant constituent. The Revenue, in this case, has accepted the importer s declaration as cotton fabrics (55% cotton and 45% polyester). Obviously, what was imported by the respondent was a consignment of fabrics composed predominantly of cotton. Considering the basis of classifying inputs and outputs in the SIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, as held by this Tribunal in the case of Global Exim (supra), on a comparable set of facts, we hold that it was not justifiable for the Customs authorities to have found fault with the importer with reference to the description of the import item given in the bill of entry. The relevant provisions of the EXIM Policy and of the Handbook of Procedures indicate that both the DGFT and the Customs authorities have the responsibility of ensuring that the exporter/importer has complied with the requirements of the DFRC scheme. Before issuing the DFRC, the DGFT shall ensure that the shipping bill particulars including the description of the export product are endorsed on the reverse of the DFRC. On the part of the Customs authorities, there should be verification of records to ensure that the details of the exports given on the DFRC tally with the Customs records. The Customs verification should be made before allowing any import against the DFRC. These provisions of para 7.62 of the Handbook of Procedures 1997-2002 would indicate that sufficient safeguards should be taken by the licensing authority and the Customs authorities to ensure that any import made against a DFRC issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which permitted import of cotton fabrics. The party claimed the benefit of Notification 203/92-Cus. Advance licence had originally been issued to M/s. Hindustan Lever Ltd. and the same was subsequently transferred to the importer. The goods exported under the DEEC scheme were gents cotton shirts. The question arose whether the cotton denim fabrics were permitted to be imported against the advance licence which required export of gents cotton shirts. This Tribunal found no evidence to show that the shirts, which were exported, were not manufactured out of denim cotton fabrics. The learned counsel for the respondent has told us that the expression denim stands for a weaving pattern. We have found this expression in the present tariff also. It appears to us that, under the DEEC scheme, gents cotton shirts must have been exported in fulfilment of export obligation vis-a-vis import of cotton fabrics. The cotton fabrics imported by the party were of denim pattern but the cotton shirts exported in the case were described only to be cotton shirts. The question, therefore, arose as to whether the exported goods were also of the same weaving pattern (denim). This Tribunal found no evide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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