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TMI Blog2015 (9) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... .2004. It was alleged that as per para-3.6.4.5 of Foreign Trade Policy (FTP), 2004-09 (w.e.f 1.4.2006) SFIS certificates can be used for import of any capital goods including spares, office equipments etc. related to any service sector business of the service provider which are otherwise freely importable under ITC (HS) Classification of EXIM code. Whereas the appellants imported the above equipments which are restricted items and not eligible for utilization of SFIS scrips for customs duty to the extent of Rs. 10,44,94,796/-. The ADG DRI, New Delhi after detailed investigation and recording various statements from persons issued a SCN dt. 31.1.2008 answerable to Commissioner of Customs (Exports), Chennai, Bombay and New Delhi demanding customs duty of Rs. 9,46,01,417/-, Rs. 1,34,14,918/- and Rs. 93,995/- for the imports made through Chennai, Mumbai and Delhi respectively. SCN also proposed for confiscation of the goods under Section 111 (d) and also proposing for penalty under Section 112 (a) and (b) of Customs Act, 1962. SCN also proposed for appropriation of entire Customs duty already paid by them in respect of all the three imports. The Ministry had appointed the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SIFS licence and the DGFT issued 25 SFIS scrips on 4.7.2006. Accordingly, they have imported Radars, Navigational Equipments etc. He submits that these items are restricted for import and require a licence in terms of ITC (HS) and they have applied and obtained licence from Ministry of Communication and Information Technology from the Department of Telecommunications - Wireless and Planning Coordination Wing. He also submits that there is no dispute on the importation of goods under the licences annexed at pages 17 to 21 of appeal paper book-Vol-II. Copy of Grant of Authorization from DGFT for 25 SFIS are annexed at page 12,13,14 and they have correctly used SFIS scrips for payment of customs duty on the said goods and the goods were allowed for clearance after debiting SFIS scrip in terms of Notfn 92/04-Cus. whereas the department issued SCN and demanded customs duty on the ground that the goods are not freely importable as per the policy provisions prevailing on the date of import and the SFIS scheme permitted only goods which are otherwise freely importable under ITC (HS) classification. He submits that they have paid the customs duty at the investigation itself. 4. He s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ELT 496 (Bom.) 2. CC Vs Oswal Agro Mills Ltd. 1989 (41) ELT 104 (Tribunal) 3. Adani Exports Ltd. Vs ACC Cochin 2006 (199) ELT 613 (Tri.- Bang.) In the above cases, it is held that the benefit given by DGFT cannot be denied by customs. DGFT and Customs are two wings of the Govt of India and cannot take contradictory stand. 6. He further submits that in their case promissory estoppel is attracted and submits that SFIS scheme is post-export incentive scheme on the promise that benefit of 10% of foreign exchange can be used for import of goods and the customs cannot deny the benefit by holding that policy provisions of 2006-07 is applicable at the time of import. Therefore promissory of estoppel is applicable. In support of this, he relied the following decisions :- 1. Sanjaya Sales Corporation Vs Dy.CCI 1992 (57) ELT 579 (A.P.) 2. Indu-Nissan Oxo Chemicals Pvt. Ltd. Vs CC Kandla 2000 (120) ELT 625 (Tribunal) 3. UOI Vs Himsheel International 2011 (273) ELT 495 4. Jindal Aluminium Ltd. Vs JDGFT 2009 (243) ELT 651 (Kar.) 5. UOI Vs Hindustan Platinum (P) Ltd. 1989 (44) ELT 443 (BOm.) 6. Rizwan International Vs UOI 1994 (73) ELT 804 (Mad.) 7. On the confiscation and impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly import of vehicles not pertaining to import of restricted items. Therefore, clarification is not applicable to the present case. He further submits that DGFT clarification was not produced or submitted before the adjudicating authority during the adjudication proceedings. Granting exemption of customs duty is strictly governed by any exemption issued under section 25 of Customs Act. Therefore, the customs have clearly followed as per the Notfn 92/04-Cus. and the Customs notification stipulates the policy in force and the exemption was correctly denied on the restricted goods. On the confiscation, section 111 (d) covers not only policy provisions but any contraventions of provisions under the Customs Act which attracts confiscation of goods. Therefore, the goods are rightly confiscated and redemption fine has been imposed and penalty is rightly imposed under section 112. 9. The counsel for the appellant in rejoinder countered and drew attention to para-30 of the order wherein the adjudicating authority has clearly stated that licence requirement is not under dispute. The only dispute is utilization of SFIS scrip for customs duty as per Notfn 92/2004. 10. We have carefully consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Imports Allowed 3.6.4.5 Duty Credit entitlement may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables, related to the main line of business of the applicant. In the case of hotels and stand-alone restaurants, the duty credit entitlement may also be used for the import of foods items and alcoholic beverages. II) FTP 2005-06 (RE-2006) (as on 1.4.2006) (after amendment) Served From India Scheme (SFIS) Entitlement 3.6.4.3 All Service providers; Including Healthcare and Educational Service providers as well as Engineering Process Outsourcing (EPO) and Knowledge Process Outsourcing (KPO) service providers; of services listed in Appendix-10 of Handbook of Procedures (Vol. I) (other than service providers covered by Para 3.6.4.4) shall be entitled to duty credit scrip equivalent to 10% of the foreign exchange earned by them in the preceding financial year. However, services or service providers as listed in Para 3.18.1 of Handbook of Procedures (Vol. I) shall not be entitled for benefits under the scheme. Imports Allowed 3.6.4.5 Duty credit scrip may be used for import of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ips allowed to be used for adjustment of customs duty only for the items which are freely importable. 14. Further, it is pertinent to state that any exemption of Customs duty on imported goods is governed under Customs Act and by way of exemption notification issued under Section 25 of Customs Act. The relevant Notfn. No.92/2004-Cus. dt.10.9.2004 fully exempts goods from customs duty on the goods imported against SFIS certificate, the extract of Notfn is reproduced as under:- "Exemption to imports under Served From India Scheme Certificate. -In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods, namely, - (i) in the case of hotel or stand alone restaurant or golf resort catering facility, capital goods including spares, office equipment, professional equipment, office furniture, consumables, related to its service sector business and food items and alcoholic beverages but excluding other products classifiable in Chapters 1 to 24 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and items not perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy provisions envisaged as per para 3.6.4.5 of FTP 2004-09 (RE-2006) as it stood at the relevant time of import and as specified in the Customs Exemption Notification 92/2002. Therefore, the appellants relying the Tribunal decision in the case of Adani Exports Ltd. (supra) and Bombay High Court decision in the case of Richardson Hindustan Ltd. (supra) are not all applicable to the present case as it is not the case here that Customs ignored the policy or any interpretation of DGFT, rather in the present case it is the department implemented the FTP policy provision in letter and spirit as existed at the relevant period of import. There is no dispute on the fact that the goods, Radars & VHF & DME are restricted items under ITC (HS) EXIM code and there is no dispute on the fact that para 3.6.4.5 of FTP 2004-09 (RE-2006) stipulated that SFIS can be utilized for customs duty adjustment only on the goods which are freely importable and not to any restricted items. 16. It is relevant to state that as rightly held by the adjudicating authority in his findings at para-30 of order that the department has not challenged the importability of impugned goods under FTP but the dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of SFIS scrip for customs duty only on the freely importable goods and the customs notification 92/2002 allows exemption as per the policy in force. Therefore, there is no promissory estoppel attracted in the present case. The citation relied by the appellants are not applicable to the facts of this case. 19. In view of the foregoing discussion, we are unable to accept the appellants plea that SFIS scrip should allowed to be used for payment of customs duty on the Restricted goods i.e. on Radars, Navigational Equipments, VHF & OME Equipments which are restricted for import under ITC (HS) EXIM code and the exemption provided under Notfn 92/2002-Cus. Is not applicable for use of SFIS scrip for adjustment of customs duty on import of the said restricted goods. 20. Further, we also find from the statement of S. Sundara Raman G.M. (Planning),dt. 21.11.07, statement of Rajesh Bhandari, G.M. (Finance) dt. 21.11.07, Shri Ajit Dubey, Executive Director (Finance) statement dt. 22.11.2007 in charge of import operations of appellant-company wherein they clearly admitted the fact that they inadvertently utilized the said SFIS scrips for payment of Customs duty towards import of Radars, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittedly, 19520.36 sq. mts. of vitrified tiles were not seized, much less released to the assessee provisionally. Only an extent of 11094.60 sq. mts of vitrified tiles were seized, it was confiscated and on payment of redemption fine, it was provisionally released. When the remaining 8425.76 Sq. Mts was not at all available and it was not seized, the question of imposition of redemption fine on such goods did not arise. When the authorities imposed redemption fine on the ground that the said goods are liable for confiscation without verifying as to the existence of the goods and the seizure of the goods, the imposition of redemption fine was illegal. Therefore the Tribunal was justified in passing the impugned order which is strictly in accordance with law. 5. Accordingly, the substantial questions of law framed in this case are answered in favour of the assessee and against the Revenue. No merit. Dismissed. The ratio of the Hon'ble Karnataka High Court decision is squarely applicable to the present appeal as in the present case, the department has not effected any seizure of goods and the goods were already cleared and only based on intelligence and investigation which led to iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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