9911796707
TMI Blog2003 (5) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... -Alloy Melting scrap for the value of ₹ 5,89,614/- and they have filed Bill of Entry No. 027835, dated 19-9-2002. Import of Non-Alloy Steel Melting Scrap is figuring in Group-1 in the said licence. But the licence restricts Group-1 value to US $ 96,142.44. In the said group-1, there are two Sensitive List-III items (items for which licence shall be issued with individual quantity and value limits) namely Low Silica Lime Stone (1c) and Cooking Coal (with ash content less than 1%) or Low Ash Metallurgical Coal with ash content below 15% (1d). Item No. (1c) namely Low Silica Lime stone is issued with quantity of 595.06 MTs with the individual value cap of US $ 8925.99 and item No. (1d) with quantity limit of 959.78 MT with individual value cap of 62,385.95 US $ . In the said licence, item Melting Scrap has already been imported for a value of US $ 39,509.50 vide Bill of Entry No. 013570, dated 22-6-2001. Condition No. 3 of the said licence and the Head Note to Sensitive List-III items at the relevant time placed a restriction that the individual CIF value earmarked for Sensitive List-III items shall not be utilized for import of other items permitted in the licence. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity has not appreciated the fact that the Hon'ble Apex Court has laid down demarcation of the jurisdictional aspect of the Customs Authority and the Licensing authority as held in their judgment in the case of Union of India v. Tara Chand Bros. reported in 1983 (13) E.L.T. 1456 wherein it was held that the jurisdiction of the Customs Authorities starts only from the jurisdiction so exercised by the Licensing authority. (d) The circulars issued by the Licensing authority is binding on the Customs authorities. 3. Shri G.L. Rawal, learned Sr. Counsel for the appellants vehemently argued that both the lower authorities have not appreciated the case in the right perspective. He has pleaded that the appellants are operating under the DEEC scheme. In the Group-1 category there are items which are termed as sensitive and non-sensitive. In terms of the licence issued by the Licensing Authority, value of sensitive items can be exchanged for the value of non-sensitive items and the only condition is that there cannot be any interchange of items between one group and another group. In this case there is no such interchange of items between two groups inasmuch as flexibility within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tilized for import of other items. Flexibility will be available for import of one or more items within the value of a particular group. Interchangeability of value between groups of import will not be allowed. He has invited our attention to Para 48 of the Import Export Policy for April, 1992 - March, 1997 (incorporating, amendments made up to 25th March, 1996) which reads as under : Advance licence is granted for the import of inputs without payment of basic customs duty. Such licence shall be issued in accordance with the policy and procedure in force on the date of issue of licence and shall be subject to the fulfilment of a time-bound export obligation and value addition as may be specified. Advance licence may be either value based or quantity based. He also referred to para 110 of the Exim policy as on March, 1994 dealing with Value Based Advance Licence which reads as under : Application for value based advance licence with complete details of quantities and value of items of import and export shall be considered only for such export products where input-output ratio and value addition norms have been published. Such value addition norms are specified in colum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the values earmarked for Sensitive List-III items cannot be used for importing other non-sensitive items, whereas no such condition is there for Sensitive List-II items. He has further submitted that the clarification no where mentions that the importer can use the values earmarked for sensitive List-III items for importing non-sensitive items. The learned DR invited our attention to the decision of the Tribunal in the case of General Traders v. CCE, Calcutta reported in 2000 (124) E.L.T. 971 (T), wherein it has been held that any clarification issued by the DGFT, when found by a Court or Tribunal to be in conflict with a clear provision of the Import Export Policy, is not binding on that Court or Tribunal. It was further held therein that while clarification from DGFT that licence is not required was correct and acceptable, the rest of the clarification that import subject to input output norms of Advance licence was not acceptable as requirement of input output norms of Advance licence is not applicable to para 7.12 of Export-Import Policy. The Tribunal took this view while agreeing with the contentions raised by the Sr. Advocate on behalf of the assessee therein. 5. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -III shall be issued with both the value and the quantity as limiting factors. We observe that in the subject licence there is a condition at Serial No. 3 which reads as under : Where the individual quantity and values of specific items are indicated, import shall be restricted to that extent and the CIF value shall not be utilized for import of other items. Flexibility will be available for import of one or more items within the value of a particular group. Interchangeability of value between groups of import items will not be allowed . On a reading of the above condition in the licence with which we are concerned in the present case, it is clear that where the quantity and value of specific items are indicated, CIF value cannot be utilized for import of other items. Further in terms of para 110 of the policy dealing with Value Based Advance Licence, applicable at the relevant time, i.e. as on March, 1994, which we have extracted above, the licence holder shall have the flexibility to import any one ore more item(s) within the overall value of the licence excluding the value of sensitive items, (emphasis supplied by us). It was only later, in the policy applicable as on Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notices ALC CIRCULAR No. 20/95, Dated 4th October, 1995 Utilisation of balance value of sensitive items not imported under Advance Licences for importing non-sensitive items - regarding. Attention is invited to paragraph 49 of Export Import Policy 1992-1997 as amended up to 31st March, 1995 and paragraph 110 of Handbook of Procedures (Vol. 1) as amended up to 30th April, 1995 relating to utilisation of value earmarked for sensitive items for importing non-sensitive items under Duty Exemption Scheme. A doubt had been raised whether this locality is available even if part of the value earmarked for sensitive item has been utilised for import of such items. It is hereby clarified that even if part value earmarked for sensitive items have been so utilised balance value available in respect of sensitive items can be utilised for import of non sensitive items. Sd/- (L.B. Singhal) Dy. Director General of Foreign Trade Issued by : Ministry of Commerce Directorate General of Foreign Trade New Delhi As could be seen from the wording of the Circular, the Circular does not specifically state about Sensitive List-III items. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the Statutory Provisions (emphasis supplied by us). The General Circulars and communications cited by the learned Counsel for the appellants do not have any statutory force. The learned Counsel for the appellants has also cited the judgment of the Hon'ble Apex Court in the case of East India Commercial Co, ltd. v. Collector Customs, Calcutta reported in SC Reports 1963, page 338. This judgment has no relevance to the present case as the facts and circumstances in that case was not similar to the present one before us. That was a case where certain raw materials were imported into the country for consumption as raw material in the licence holder's factory but instead of using the raw material as such by the factory concerned, the goods were sold in open market and the Custom department issued notice alleging breach of condition of licence and for confiscation of the goods. On appeal from the judgment of the High Court, the Customs authority was restrained from proceeding with the inquiry under Section 167(8) of the Sea Customs Act, 1878, by the Hon'ble Apex Court. Therefore, in the facts and circumstances of the present case, the cited judgment does not come to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. The jurisdiction of the customs authorities commences from the point where Licensing Authority exhausts/applies its jurisdiction. He also pointed out that Condition 3 of the licence gives right of flexibility to the appellant in the group itself could have been applied but though interchangeable from one group to the other is not permissible. He submitted that the appellant was entitled to take benefit of flexibility from one item to the other item in the same group i.e. Group No. 1 and it is also open to take benefit of flexibility even of value of sensitive goods in the same group. He submitted that flexibility will be available for import of one or more items giving value of a particular group. He stated that appellants were taking the benefit of flexibility in the same group viz. Group 1 as it doesn't restrict to take benefit of the unutilized value of the item, may be sensitive or otherwise in the same group of flexibility and the benefit cannot be denied. He relied on ALC Circular No. 3/95, dated 6-3-95 issued by the Director General of Foreign Trade which had clarified that once the CIF value of all imports is determined, the exporter will have the flexibility to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sr. Counsel in the matter. The circular clearly grants flexibility and the appellants in terms of the said clarification have imported the items and those items fell within the same Group 1 which is not in dispute. It is not the case of the department that appellants are trying to seek benefit of the item which is not in the same Group. Therefore, learned Counsel clearly demonstrated that the benefit was being obtained only against the items falling in the same group irrespective of item being sensitive or non-sensitive. Therefore, in view of the clarification issued by the DGFT which had binding effect, the appellants are entitled to seek benefit of notification and hence non-grant of the same is not correct and appeal is required to be allowed by setting aside the impugned order. Ordered accordingly. Sd/- (S.L. Peeran) Member (J) POINTS OF DIFFERENCE In view of difference of opinion arisen in the matter, the following arises for deciding the case by the Third Member :- ''Whether the appellants are not entitled for the benefit of the notification and the impugned order is required to be confirmed by dismissing the appeal of the appellants as held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f value US $ 39509.50) and therefore the 100 MTs of NASM Scrap in question should be assessed to duty at Tariff rate applicable. Learned Member (Judicial) has, on the other hand, taken the view that, in the absence of importation of the Group-1 (c) and (d) goods, the value limit of US $ 71/311.94 prescribed for such goods was available for utilization in duty-free clearance of the 100 MTs of NASM Scrap in question under the DEEC Scheme under Notification No. 203/92. 15. Learned Sr. Advocate mainly banked on the following licence condition : Where the individual quantity and values of specific item are indicated import shall be restricted to that extent and the CIF values shall not be utilised for import of other items. Flexibility will be available for import of one or more items within the value of a particular group. Interchangeability of value between groups of import items will not be allowed. He submitted that both the sensitive goods were grouped along with NASM Scrap in the same Group (Group-1) of goods in the list appended to the Advance Licence and hence their total value limit was available for utilization in duty-free clearance of the non-sensitive item viz. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 110 ibid was amended so as to permit Value Based Advance Licence holders to use the value of sensitive items for importing non-sensitive items. What the DGFT circular dated 4-10-95 relied on by the counsel clarified was the entitlement of such licence-holders under the amended provisions of the EXIM Policy. No clarification of the DGFT on a licence-holder's right of duty-free imports under the DEEC Scheme as on 31-3-1994 was brought on record by the appellants. Ld. DR thus argued that the DGFT circular dated 4-10-95 and the case law cited by the counsel in the context were not applicable to the instant case. Extracting from the Handbook of Procedures 1992-97 (as amended up to 31-3-94), learned DR submitted that both Limestone and Cooking Coal/Metallurgical Coke figured in List III of SENSITIVE ITEMS, for which it was stipulated that individual CIF value for import of the items was not to be utilized for import of other items permitted in the licence. 17. I have carefully considered the records and the submissions. The Advance Licence dated 7-12-93 was issued in terms of Para 110 of the Handbook of Procedures (1992-97) read with Para 48, Chapter VII, EXIM POLICY 1992-97. Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er repugnant to the first part. It has to be construed harmoniously with the rest of the condition so as to advance the object of the Policy provisions. I think, in this context, I am supported by relevant rulings of the Apex Court vide British Airways v. UOI [2001 (139) E.L.T. 6 (S.C.) - 2001 (47) RLT 264 (S.C.)]. The second part of the licence condition says that flexibility will be available for import of one or more items within the value of a particular group. It further says that interchangeability of value between groups of import items will not be allowed. It is apparent that the second part of the licence condition provides for intra-group flexibility and rules out inter-group flexibility. The intra-group flexibility for utilization of the value of one item in a given group for importing another item in the same group should (under the harmonious construction) be understood as subject to the restriction laid down in the first part of the licence condition. The fact that NASM Scrap and the sensitive items occur in one group as per the licence cannot detract from the said restriction. In other words, the condition, when understood and construed as a whole, would mean nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a clarification from the licensing authority. The DGFT, in ALC Circular No. 20/95, dated 4-10-95, clarified the position and gave full effect to the above provision contained in the last sentence of the amended para 110. A similar provision is conspicuously absent in the unamended para 110 relevant to the licensing period (1993-94) and therefore it will be a misconception to think that the DGFT's clarification has any bearing on the issue involved in the present case. For this reason, the decisions in Indu-Nissan case, Casio India case and Usha Martin case cited by learned counsel have no relevance. On the other hand, the High Court's decision in C.L. Jain Woollen Mills cited by him has a bearing on this case inasmuch it was held in that case that Customs authorities were not to go behind the licence issued by DGFT. In the instant case, the Customs authorities correctly understood the licence condition and rightly acted upon it. In Titan Medical Systems (supra), it was held by the Apex Court that Customs authorities were not to deny exemption to a DEEC licence-holder on the ground that the licence was obtained by misrepresentation. This case law also does not make any he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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