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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 ..... ed goods under FTP but the dispute is restricted to payment of customs duty on the restricted goods through SFIS scrip under the Notification 92/2004. The appellants are entitled to utilize the SFIS scrips for import of any capital goods which are freely importable. That being the case, there is no overlapping of power of DGFT or Customs vice versa. It is a fact that SFIS scrips are issued based on foreign exchange remittance received over previous years and the DGFT issued the SFIS scrips to appellant on 4.7.2006 and utilization of scrip should be as per the condition of FTP as existed on the date of import. It is a settled law that any clause policy provision should be strictly enforceable prospectively w.e.f. from the date of such amendment. In the present case, para 3.6.4.5 of FTP 2004-09 (Re-2006) w.e.f. 1.4.2006 stipulates the utilization 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. SFIS scrip should not allowed to be used for payment of customs duty on the Restricted goods i.e. on Radars, Nav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (JDGFT), New Delhi. Based on the intelligence by DRI that appellant had imported various restricted items such as Radars, Airport Navigational Equipments, VHF Equipments, DME Equipments etc. with accessories classifiable under CTH 85261000 and 85269190 through Chennai Seaport claimed exemption from Customs duty under SFIS certificates in terms of Notification 92/2004-Cus. dt. 10.9.2004. 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 ₹ 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 ₹ 9,46,01,417/-, ₹ 1,34,14,918/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned ₹ 913.20 crores of foreign exchange in the year 2004-05 from the services provided to air travel passengers, airlines arriving and departing to various destinations from various airports in India owned and controlled by them. They are entitled to duty credit of ₹ 10% of the foreign exchange so earned under SFIS. He submits that they are entitled for the credit of ₹ 91.3 crores and they have filed application on 31.12.2005 to DGFT for issue of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under subject scrips. He submits that DGFT has categorically clarified that they are entitled to utilize the credit under SFIS scheme as per the policy prevailing during 2005-06 - RE-2005 and also submits that Departments contention that credit cannot be utilized to pay duty on the items imported in 2007-08 is contrary to the clarification given by the DGFT. He relied the following decisions :- 1. Richardson Hindustan Ltd. Vs UOI 1988 (37) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the statements recorded from G.M. and Dy.GM, Executive Directors they have clearly admitted before the customs authorities that the goods are restricted and they have inadvertently used SFIS scrips for payment of customs duty on the restricted goods and also voluntarily paid entire demand in cash by various T.R. 6 challans and the same was appropriated by the adjudicating authority. He submits that the DGFT clarification relied by the advocate relates to only 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 conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 3.6.4.5 of FTP year 2004-05 and 2006-07 (RE 2006) which is reproduced as under : I) FTP2004-05 (as on 31.8.2004) before amendment Served From India Scheme (SFIS) Entitlement 3.6.4.3 All Service providers (other than hotels and restaurants shall be entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the preceding financial year. 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 serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8529 90 20 For communication jamming equipment Restricted 12. It is evident from the above ITC (HS) EXIM code, these items are restricted and not freely importable. Therefore, there is no dispute on the fact that policy provision in force at the time of importation and EXIM code confirms that SFIS scrip is to be utilized for Customs duty purpose only to the goods which are freely importable and not to the restricted goods. 13. On perusal of DGFT letter dt. 4.7.2006 and SFIS scrip No.0510185674/0/22/00 enclosed at page 13 14 of Appeal, we find the date of issue of SFIS scrips is 4.7.2006 i.e. after the date of amendment in 3.6.4.5 (w.e.f. 1.4.2006) where SFIS scrips 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pments are specified as restricted items under heading 8526 of ITC (HS) EXIM Code. 15. It is pertinent to state that where an exemption of customs duty is to be allowed under the said notification the provisions of the notification has to be strictly applied as on the date of import and the SFIS scrip can be used to adjust customs duty only on an item which is freely importable under FTP ITC (HS) EXIM Code. It is not a case here of any contravention of import export regulations but on exemption of customs duty under the notification. The appellants contention that DGFTs clarification on import/export shall prevail over customs and customs authority cannot interpret the policy is not at all relevant to the facts of this case. Rather, we find the Customs is only implementing the FTP 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case as the foreign exchange realized in 2004-05 and the relevant para 3.6.4.5 as existed as on 31.8.2004. Therefore the department is estopped in denying the benefit when the goods are imported in 2006-07. The above contention is totally unacceptable and without any legal basis. It is a fact that SFIS scrips are issued based on foreign exchange remittance received over previous years and the DGFT issued the SFIS scrips to appellant on 4.7.2006 and utilization of scrip should be as per the condition of FTP as existed on the date of import. It is a settled law that any clause policy provision should be strictly enforceable prospectively w.e.f. from the date of such amendment. In the present case, para 3.6.4.5 of FTP 2004-09 (Re-2006) w.e.f. 1.4.2006 stipulates the utilization 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 SFI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir contention. 23. In this regard, the Hon ble High Court of P H in the case of CC Vs Raja Impex Pvt. Ld. (supra) and the Hon ble High Court of Bombay in the case of CC Mumbai Vs Finesse Creations Inc., (supra) and Hon ble High Court of Karnataka in the case of CC Bangalore Vs G.M. Exports (supra) clearly held that imposition of redemption fine arises only when the goods are available for confiscation and held that RF not imposable when goods are not available for confiscation and upheld the Tribunal orders. The relevant paragraph of Hon ble High Court of Karnataka in the case of CCE Vs GM Exports (supra) in reproduced as under :- 4. In order to levy redemption fine, two condition are to be satisfied : (i) the goods should have been seized, (ii) the goods should be liable for confiscation. Admittedly, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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