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TMI Blog2019 (6) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... s much as import of Ascorbic Acid under transferred DFIA. Appeal dismissed - decided against Revenue. - Custom Appeal No. 1302 of 2009 - FINAL ORDER NO. A/86140/2019 - Dated:- 20-6-2019 - SHRI AJAY SHARMA, MEMBER (JUDICIAL) AND P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri Ramesh Kumar, Asst. Commissioner Authorised Representative for the Appellant Shri Prakash Shah, Advocate for the Respondent ORDER The instant Appeal has been filed against the impugned order dated 14.10.2009 passed by the Commissioner of Customs (Appeals), Nhava Sheva in Order-in-Appeal No. 588 (GR. VII-I) / 2009 (JNCH) EXP-26. The issue to be decided in this Appeal is whether the learned Commissioner is justified in granting the benefit, under Notification No.40/2006-Cus, to the respondents, in respect of import of Ascorbic Acid as Corrosion Inhibitor under Duty Free Import Authorisation (DFIA) or in other words whether benefit of exemption available to Corrosion Inhibitor is applicable to Ascorbic Acid imported by the respondents. 2. The facts, in brief, in the instant Appeal, are as follows. The respondents i.e. M/s. Sparkling Traders Pt.Ltd. purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oling water shall not exceed 10% of FOB value; as the FOB value of the Export Product i.e. Soda Ash is $1,04, 58,355.35, the C/F value of items at serial No. 5 6 together should not be more than $10,45,835; in the instant case, the value of Ascorbic Acid itself work out to $20,05,657.50 which is contrary to the provisions of SION. He also submitted that as per DGFT policy circular dated 24.3.2009, only those imports are allowed which are actually used or are capable of being used in manufacturing of export product and since ascorbic acid is a pharmaceutical product, it is not used in the industry of manufacturing of soda ash and hence the same cannot be allowed as input as corrosion inhibitor. He relied upon the ratio of decisions in SVA Udyog Viniyog Ltd. vs. UOI; 1993 (65) ELT 20 (Bom.) and Mewati Co. vs. CC Bombay; 2010 (253) ELT 378 (Bom.).The learned Authorised Representative further contended that in terms of the Order of Ministry of Health Family Welfare dated 13.12.2004, drugs used for dual purpose will have to obtain a waiver, from the Ministry of Health Family welfare, before Imports; respondents have not obtained any such NOC/waiver before the import and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.01.2010 To, The Dy. Commissioner of Customs (EP), New Customs House, Ballard Estate, Mumbai-400 001. Sir, Sub: Your technical opinion on Ascorbic Acid used as Corrosion Inhibitor-reg. Please refer to your letter F. No. S/16-Misc-1061/09 VIIB dt.30.12.2009 on the above cited subject. The technical opinions from Dr.C. Rajagopal Ex. Scientist, CECRI-CSIR and Sh. R.V. Alagesan, Scientist, CECRI-CSIR Karaikudi, available in the file along with other documents on above subject are studied and given credence as there is no much references available in this office library. The matter relates to importation of ascorbic acid as corrosion inhibitor against export of soda ash. In soda ash industry the demand for water is high-bringing in damage through scales and corrosion to the equipment. During onset of corrosion the dissolved oxygen present in water enhances corrosion leading to pitting. The dissolved oxygen is removed by using oxygen scavengers in boiler water treatment in boilers it is stated that In plants where the steam may be in contact with food, sodium sulphite, ascorbic acid or erythorbic acid i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion received from CSIR, Karaikudi which establishes that Ascorbic Acid can be used as Corrosion inhibitor and therefore we are of the view that the learned commissioner has rightly held that the Ascorbic Acid can be used as corrosion inhibitor. It is not the case of the department that the appellants have not used imported Ascorbic Acid as Corrosion Inhibitor and have diverted the same to outside their premises. Moreover, in view of the policy provisions also the catch word is that the imported item must be capable of being used and not necessarily be used. In view of this, Revenue s contention that since Ascorbic Acid cannot be used as Corrosion Inhibitor, respondent is not entitled to import the same under DFIA availing the benefit of Exemption Notification No.40/06-Cus dated 1.5.2006, is untenable and liable to be rejected. Revenue also contends that since Ascorbic Acidis a pharmaceutical product and is not used in the industry of manufacturing of soda ash, the same cannot be allowed as input as Corrosion Inhibitor is also liable to be rejected. 5. Learned AR for Revenue submitted that, as per SION, the value of items at Serial No.5 i.e. Corrosion Inhibitor and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed that the appellant is entitled to import saffron as a food flavour irrespective of ITC (HS) heading mentioned in the DFIA. We are in complete agreement with the aforesaid observation and there is no reason for us to take a contrary view. So far as the contention of the Revenue regarding taking NOC/waiver letter before importing Ascorbic Acid is concerned, we find that Drugs Cosmetics Act, 1945 exempts substances if not used for medicinal purpose from the purview of Chapter III which deals with import of Drugs and Cosmetics with certain conditions and for import of bulk drugs, each container has to be marked Not for Medicinal use . So far as NOC/waiver letter is concerned, Rule 43 of the Drugs and Cosmetics Rules, 1945 exempts substances not for medicinal use which is appearing under Schedule D , from the purview of Chapter III, which extensively deals with import of drugs and cosmetics in India. Although there is requirement of NOC for Ascorbic Acid, but it is clearly exempted under Schedule D , if the drug is of dual use. When the requirement of NOC has been specifically exempted by statute then no executive order/ circular can override the same and put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2009 as produced by the learned Authorised Representative. According to us, a product which is Corrosion Inhibitor and is imported under a DFIA licence, is eligible for benefit of Notification No. 40/2006. Our attention has been drawn to the transferred DFIA and it was pointed out that the actual use of the imported goods has not been contemplated in DFIA. The DFIA allows any input actually used or capable of being used in the export product. Our attention has also been drawn towards Circular No. 46/2007, dated 20.12.2007 issued by the CBEC, wherein it has been clarified that except for the items specified in paragraph 4.55.3 of the Handbook of Procedures, Vol.I 2004-09, in all other cases a correlation between the inputs under import with those used in the exported product is not required to be established and that clearance under DFIA scheme may be allowed if other conditions of the scheme and Customs notification are fulfilled. In this case, the item under import does not figure in the paragraph 4.55.3 and is of non-sensitive nature, therefore Ascorbic Acid can be imported under the said DFIA licence. In a somewhat similar matter, this Tribunal in the case of Global Exim vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the said notification, is also misplaced. We are in complete agreement with the finding of the learned commissioner that once the license is transferred by endorsing transferability by the licensing authorities, customs have no reason to go beyond the license and sit in judgment. The importer (respondent herein) need not have to prove the nexus between the imported goods and inputs used in the export product, so long as the imported product is covered under the description of the license. One has to see only if the imported goods are capable of being used in the export product. In view of this, we are of the opinion that in the instant case, Ascorbic Acid is capable of being used as corrosion inhibitor in the manufacture of Soda Ash and it is irrelevant whether it is actually used or not in the export product. In the result, we find that the respondents are entitled to avail the benefit of Notification No.40/2006-Cus. We have gone through the decision of the Hon ble High Court of Judicature at Bombay in the matter of USMS Safforn Company Inc-2016 (344) E.L.T. 161 (Bom.) which has been cited by the learned counsel for the respondent, in which the Hon ble High Court has held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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