9911796707
TMI Blog2014 (2) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court and thereafter the said interim order made absolute by order dated 15th November 2010. Background facts 3. The background to the present appeals is that PRIPL, earlier known as Seagram India Pvt. Ltd. ('SIPL'), a subsidiary of Seagram Company Ltd., Canada ('SCL'), was permitted by the Government of India by a letter dated 20th July 1993 to set-up a wholly owned subsidiary for the establishment of a non-molasses based spirit manufacturing/blending facility to make potable spirit. The letter noted that the project would involve import of scotch whisky and malt to be used in upgrading locally manufactured liquor products through blending. It is stated that, in terms of the Excise laws prevalent in India, the potable liquor that is permitted to be sold for consumption cannot have alcoholic strength in excess of 42.8% V/V. 4. Seagram Manufacturing Ltd. ('SML') was incorporated as a wholly owned subsidiary of SIPL. SML, with effect from 5th November 2001, became a private limited company, Seagram Manufacturing Ltd. (SMPL). On 20th September 1994 SMPL applied to the Director General of Foreign Trade ('DGFT') for import of scotch whisky concentrate/malts for upgrading the loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962 (in short the Act) is assailed in this writ petition. Learned Solicitor General, on instructions, submits that the notice may be treated to be one for the purpose of finalization of the assessment in terms of Section 18(2) of the Act. It is further submitted that if it is so thought proper, notice in terms of Section 111 read with Section 124 shall be issued. Learned counsel for the petitioner, on the other hand, contends that the stage for initiation of action under Section 111/124 has not yet taken place. According to the petitioner, Section 28 of the Act has no application to the facts of the case because a final assessment in terms of Section 18(2) has not yet been made. In view of the statement of the learned Solicitor General, we need not go into that question. Obviously, the authorities are free to decide as to whether at the present juncture any notice in terms of Section 111/124 is warranted or is called for. In case the authority decides to initiate action under the said provisions, it shall be open to the petitioner to approach the appropriate forum for its remedy. It goes without saying that if such a notice is issued, the petitioner can, in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L have violated Section 8(1) of FERA." 11. The Memorandum asked SMPL and its executives to show cause why proceedings under Section 51 FERA could not be initiated against them. The relied upon documents included the SCN dated 19th December 2000 of the DRI, the statement recorded by the DRI, the letters obtained by the DRI from the Indian High Commission in London and the statement dated 18th March 2002 of one Mr. Mukesh Narain recorded under Section 40 FERA. The Adjudication Order 12. In the adjudication order dated 21st September 2004, the SD held that the pending provisional assessment proceedings under the CA would hold good only for the "assessment by the customs for levy of customs duty." It was held that the FERA provisions would be attracted once there was misdeclaration of the consignments "in terms of quality, description and quantity based upon which foreign exchange was acquired and remitted." The SD stated that, in the absence of any other document, in order to ascertain whether SMPL had misdeclared the imported goods "the only available option is to examine the import documents submitted by the company to the customs at the time of clearance of the consignments and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector of SMPL by the common impugned order dated 30th October 2007. 15. In the impugned order, the AT referred to an order dated 25th March 2003 passed by the Customs, Excise and Gold (Control) Appellate Tribunal ('CEGAT'), New Delhi disposing of the appeal filed by SMPL against the order dated 31st May 2002 and 4th June 2002 passed by the Commissioner of Customs, New Delhi adjudicating two SCNs, one issued by the DRI dated 19th December 2000 covering the imports of alcoholic beverages from the period January 1995 to June 2000 and the second issued by the Commissioner, ICD, Tughlakabad, New Delhi dated 16th August 2001 covering the imports during the period July 2000 to May 2001 and confirming the extra duty payment of Rs. 41,70,49,724. The AT held that scotch whisky was also CAB having strength of 42.8% V/V and that SIPL had not brought on record any material to show the correct concentrate strength of the CAB imported by it. Relying on Section 106 of the Evidence Act 1872, the AT observed that "the true nature of the imported goods is within the special knowledge of the appellants who did not prefer to disclose." It was accordingly held that the DoE had succeeded in proving tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired otherwise than for the purposes for which it was acquired." 18. As noted by the AT, for potable alcohol to be sold in India, the permissible level of concentration is 42.8% V/V. Whether it is scotch whisky or vatted malt, any concentration higher than the above permissible strength of 42.8% would have to be classified as CAB. In this context, reference has been made to the classification of alcoholic beverages under Heading No. 22.08 of the Customs Tariff, which at the relevant point in time, read as under:- Heading No. Sub-Heading No. Description of article Rate of duty Standard Preferential Areas 22.08 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol; spirits, liqueurs and other spirituous beverages; compound alcoholic preparations of a kind used for the manufacture of beverages. 2208.10 Compound alcoholic preparations of a kind used for the manufacture of beverages. 200% 2208.20 Spirits obtained by distilling grape wine or grape Marc 290% 2208.30 Whiskies 290% 2208.40 Rum and tafia 290% 2208.50 Gin and Geneva 290% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly described the goods as falling under Heading No. 2208.10. Once that sub-heading stood removed, the goods could be classified under Heading No. 2208.90. 21. In Bussa Overseas and Properties v. Union of India 1991 (53) ELT 165 (Bom), the issue was whether whisky or gin with concentration of 60% and 61% V/V ought to be classified as CAB. The Bombay High Court accepted the contention of the importers that since the concentrate was not consumable as such, the correct classification was under Heading No. 2208.10 as contended by them and not 2208.30, as contended by the Department. The CEGAT in its order dated 25th March 2003 in the assessment proceedings in this case, set aside the order of Commissioner of Customs finding it to be contrary to the aforementioned decision of the Bombay High Court. The CEGAT observed that no material had been placed before it by the Revenue to contradict the contention of SMPL that for marketing potable whisky in India, the ethyl alcohol concentration had to be 42.8 V/V. The CEGAT noted that the imported product was whisky of 60% strength which could not be sold to the consumer directly but only after converting it into whisky that was potable. The or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Appellants, the above submission overlooks the fact that much turns on the strength of the spirit that is sought to be imported. By a letter dated 20th July 1993, SCL Canada was permitted to set up a subsidiary for manufacturing and marketing non-molasses based potable spirit. The said letter noted that "project will involve import of scotch whisky and malt to be used in upgrading locally manufactured liquor products through blending." SCL was asked to obtain an import licence as per the prescribed policy and procedure under EXIM Policy. CAB is mentioned place at Sl. No. 30 in the list of restricted items in Appendix 2, Part B of the 1988-1991 Import and Export Policy. SMPL applied for and was granted an import licence permitting it to import CAB. The import licence dated 20th December 1994 indicates the end product as alcoholic beverages. In the form submitted by SMPL for obtaining permission for remitting foreign exchange for the import, the description of the goods is "concentrate of alcoholic beverages." Clearly, therefore, there is a distinction drawn between CAB and alcohol for potable use. If what was imported was alcohol of a concentration of higher than 42.8 V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a value representing the foreign exchange acquired. Third, where he brings goods of a kind, quantity and quality different from that which is specified while acquiring the foreign exchange. 28. As already noted hereinbefore, the DoE has been unable to show that SMPL imported goods different in quality or quantity from that declared at the time of acquiring foreign exchange for the import. The DoE has also been unable to show that the invoiced value of the goods imported by SMPL was not equivalent to the foreign exchange remitted by it. In this connection, the decision of the Bombay High Court in The Tata Engineering and Locomotive Company Ltd. v. Director of Enforcement (decision dated 20th March 1999 in First Appeal No. 918 of 1982) would be relevant. There it was held that as long as the foreign exchange was acquired for the import of spare parts and the same was utilized for the import of the said items and not any other items, there would be no violation of Sections 8 (3) and 8 (4) FERA. In the present case also, the foreign exchange acquired has been used entirely for the goods imported and, therefore, there was no violation of Sections 8 (3) and 8 (4) FERA. 29. Finally, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
