9911796707
TMI BlogCase of un-necessary litigation till Supreme Court on aspect of Export obligations.X X X X Extracts X X X X X X X X Extracts X X X X ..... Case of un-necessary litigation till Supreme Court on aspect of Export obligations. - By: - CA DEV KUMAR KOTHARI - Central Excise - Dated:- 11-4-2015 - - Commissioner of Customs, Visakhapatnam (AP) Versus M/s. Alsa Marin And Harvests Ltd., 2015 (4) TMI 237 - SUPREME COURT Notification No. 13/81 dated 09.02.1981. Notification 123/81 dated 02.06.1981. Notification (General Exemption No. 127). Chapter V-A of the Central Excise Rules, 1944 and Rule 173Q in particular. Export obligations: In trade policies, import and export policies, tax or duty -relief policy etc. certain export obligations as to minimum export of goods or services are imposed while allowing some relief, concession or benefit in other manner. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose: Generally speaking the purpose of imposing export obligations is to ensure that imports are affected with corresponding obligation for export and realisation of export dues in foreign currencies. This is to keep balance of trade and foreign exchange balances in controlled manner and to avoid wasteful or un-necessary expenditure in foreign currency. The purpose of export and realisation of export proceeds in foreign exchange is paramount. There should be flexibility in relation to manner of export- direct, or through other unit of manufacturer, or through other traders, export houses, merchant exporters etc. Therefore, ground realities must be kept in mind by authorities and achievement of ultimate purpose should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be seen and matters should not be looked in very technical manner so as to hold non-compliance. Recent case before the Supreme Court: In case of Alsa Marine (supra.) M/s. Alsa Marine Harvests Ltd., an E.O.U . has two undertakings - at Bimli, and Chennai. The 100% EOU has fulfilled its obligation under the relevant notifications under which benefits were allowed. The allegation of revenue was that Export Obligation has not been met for the unit directly. Goods manufactured at one unit at Bimli were sent to Chennai unit and therefrom ultimately goods were exported. The Supreme Court held that . w hether it is done from Bhimli (Visakhapatnam) or Chennai unit, would be totally irrelevant and immaterial. We, thus, do not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind any error in the order passed by the CESTAT. The appeal is, accordingly, dismissed. This case shows that authorities have worked in a highly technical manner about procedures and ignored ultimate result of achieving export obligations. In business, some factors need to be considered as to process and routes to be adopted for doing business. There cannot be hard and fast Rules. There must be consideration of ground realities and difficulties and contingencies in business. About company: Alsa Marine Harvests Ltd was a good company and doing good business of exports. It also issued shares to public which were listed on stock exchanges in India. The company is still active as per MCA website, There seems up to date filing in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to AGM held on 31.12.2014 and Balance sheet drawn up to 30.06.2014. However, there are non-compliances on Stock Exchanges. its shares are no more being quoted. Last quotes seems to be during 2002 summary of which is as follows as per BSE website: 52 Week High (adjusted) 4.70(02/07/2002) 52 Week Low (adjusted) 0.35(04/10/2002) It seems that highhanded ness of government authorities many times causes closure/ disruption of business. Threatening to cause closure of business / factories by coercive measures was very common during those days. Now-a- days a bit soberness is seen in attitude of tax authorities, however, ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgets for recovery, in any manner causes undue and untimely coercive measures being taken by authorities. The business community feels and expect that this should come to an end in regime of NAMO Government. Judgment of the Supreme Court: The judgment of the Supreme Court is reproduced below with highlights for easy referencing and analysis: 2015 (4) TMI 237 - SUPREME COURT Commissioner of Customs, Visakhapatnam (AP) Versus M/s. Alsa Marine And Harvests Ltd., Commissioner of Central Excise, Visakhapatnam Versus M/s. Alsa Marine And Harvests Ltd. Civil Appeal No. 10203 of 2003, Civil Appeal No. 6570 of 2004 Dated - 20 March 2015 Judgment / Order A. K. Sikri And Rohinton Fali Nariman,JJ. For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s : Mr Rupesh Kumar, Adv. Ms Binu Tamta , Adv. Mr B Krishna Prasad, Adv. For the Respondents : Mr P N Puri , Adv. Mr Rahul Sharma, Adv. Mr Shantanu Chaturvedi , Adv. Mr Shashank Raj, Adv. ORDER The assessee-respondent herein is a 100 per cent Export Oriented Undertaking engaged in the process of freezing and export of marine products as per the permission accorded by the Department of Industrial Development. The respondent herein imported goods valued at ₹ 37 ,10,164 /- without payment of customs duty by seeking exemption under the Notification No. 13/81 dated 09.02.1981. It had also obtained indigenous goods without payment of Central Excise Duty as per Notification 123/81 dated 02.06.1981. An investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was carried out and it revealed that the respondent herein in March 1994, and during 1994-1996 cleared goods with total value of ₹ 43 ,47,97,371 /- to the DTA and the total duty payable @ 10 per cent was ₹ 4,34,79,737 /-. Accordingly, show cause notice dated 12.12.1997 was issued for the above mentioned violations to the respondent herein and the demand was confirmed by the Commissioner. Aggrieved, the respondent herein filed appeals before the Customs, Excise Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT'). The Tribunal vide order dated 05.09.2003 has allowed the appeal filed by the respondent herein on the ground that penalty and confiscation as levied and ordered by the Commissioner unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 173Q cannot be upheld since Chapter V-A of the Central Excise Rules, 1944 apply to removal from an E.O.U . unit and hence the same is set aside. It is further observed that the goods manufactured and removed from the E.O.U . have been admittedly exported out of India and therefore, there cannot be any duty leviable under the Customs Acts and / or Excise Act as arrived by the learned Commissioner. This order of the CESTAT is under appeal. From the aforesaid, it cannot be denied that the respondent, which is an E.O.U ., had fulfilled its legal obligation of exporting the manufactured goods as per Notification (General Exemption No. 127). We have gone through the said notification. It lays down three conditions and on fulfillment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof, an E.O.U . becomes entitled to the exemption. These are as under :- (1) the importer has been granted necessary licence for the import of the goods for the said purpose; (2) the importer carries out the manufacturing operation in the customs bond and subject to such other conditions, as may be specified by the Assistant Collector of Customs in this behalf; (3) the importer exports out of India hundred per cent or such other percentage , as may be fixed by the said Board, of Articles manufactured wholly or partly from the goods for the period stipulated by the Board or such extended period as may be specified by the said Board; As mentioned above, it could not be denied by the appellant that the respondent-undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking had exported out of India 100 per cent of articles manufactured by it. The only argument which is sought to be raised is that the unit at Bhimli (Visakhapatnam) which was given the status of E.O.U . has not fulfilled this obligation and in fact, goods were sent to Chennai unit and it is from Chennai unit that the export was effected . We hardly see it to be a ground to deny the exemption. As mentioned above, it is the respondent, namely, M/s. Alsa Marine Harvests Ltd., which is an E.O.U . and it is this undertaking which has fulfilled its obligation under the aforesaid notification. Whether it is done from Bhimli (Visakhapatnam) or Chennai unit, would be totally irrelevant and immaterial. We, thus, do not find any error in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the CESTAT. The appeal is, accordingly, dismissed. CIVIL APPEAL NO. 6570 OF 2004 This appeal stands disposed of in terms of the aforementioned order passed in the Civil Appeal No. 10203 of 2003. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
