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TMI Blog2020 (1) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings, the department has sought for information from the concerned department Central Excise regarding examination of goods by it. It is further stated therein that no refund / rebate of the duty paid on their supplies to the EOUS has been granted to M/s. Rajhans Impex Pvt. Ltd., Jamnagar. It also reveals from the letter dated 28.08.2014 of the Superintendent (PI), Central Excise Division, Surendranagar that the goods were sent to M/s.Shrikrupa Exports and as per the affidavit filed on behalf of Srijan Exports, Chandigrh (page Nos.173-174 of the petition), the firm has received the consignment with form No. ARE-3 and the same has been examined by the jurisdictional Superintendent of Central Excise and the officer has visited the factory premises after verifying the contentions of the documents and the material received, has certified the facts of receipt of the goods. It is pertinent to note that in view of Rules 25 and 26 of the Central Excise Rules referred to hereinabove, it is admitted legal position that if there is any breach under the said Rules, the Central Excise Department has an authority to confiscate and impose penalty upon defaulting individual or the firm. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are similar, the facts of Special Civil Application No.12550 of 2017 are taken as lead matter. 3. By way of present petitions under Article 226 of the Constitution of India, the petitioners seek a writ of mandamus quashing and setting aside the Order No.MUNCUSM- 000-COM-030-16-17 issued by respondent No.2 confirming duty with interest and imposing penalty, with the following prayers:- a. Your Lordships be pleased to issue a writ mandamus of or in the nature of mandamus quashing and setting aside the order passed by the Respondent No. 2 bearing No.MUN-CUSTM-)))-COM- 030-2016-17 Dated 31.03.2017 issued on 05.04.2017. b. Your Lordships be pleased to issue a writ of Prohibition or in the nature of Prohibition thereby completely and permanently prohibiting Respondent No. 2 its subordinate officers from taking any action against the petitioner, for disturbing the benefits allowed, in view of Order In Original No. MUN-CUSM-000-COM-030-16-17 dated 31.03.2017 issued on 05.04.2017. c. Pending admission, hearing and final disposal of the petition Your Lordships be pleased to stay further proceedings pursuant to the Order No. MUN-CUSM-000-COM-030- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional Range Superintendent. 4.4 It is alleged that on 05.09.2013, the officers from the Office of Directorate of Revenue Intelligence (hereinafter be referred to as DRI ) visited the factory premises and impounded certain documents including statutory record, copy of ARE 3 etc. That DRI recorded statement of authorized persons of the aforesaid 100% EOU as well as Director. It is alleged that the EOUs have accepted the fact of receipt of material in their factory premises and recorded that the said material is duly accounted for in their statutory record. It is contended that the transporters and the truck owners have also supported the same. It is alleged that the DRI had also requested jurisdictional Assistant Commissioner s to certify whether the material covered under the respective ARE 3 were physically verified by the Range Officer or not. That in response to the same, respective jurisdictional Assistant Commissioner certified that the goods were covered under the respective ARE 3 s are received by the said 100% EOU but have not been physically verified. It is further contended that the goods sold to respective units were brass rods / hollow rods of various len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the department, the petitioners cannot be penalized. It is also alleged that the attention of the adjudicating authority was also drawn to the fact that the material imported is against valid authorization issued by the DGFT and none of the authorization are declared as invalid or cancelled. That neither the custom department nor the department of DGFT has ever raised any objection or has ever stated that the petitioner has violated any of the condition of the Notification No. 96/2009 CUS availed and, therefore, the demand of custom duty is also not sustainable and is bad in law. It is also contended that adjudicating authority has confirmed the show-cause notice without considering the submissions made and as also the documentary evidence produced and the order passed by the adjudicating authority is bad in law and without jurisdiction. It is submitted that the duty of the Central Excise demanded is equal to the duty refunded by the department of DGFT and is not based on transaction value and since the refund is neither issued by Customs Department nor by Central Excise Department, the demand raised is bad in law and without jurisdiction. It is contended that the show-cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand has been confirmed and merely tendering of the affidavit of 100% EOU is not enough. 6. On behalf of the petitioners, the Director of the petitioner company has filed affidavit-in-rejoinder wherein it has refuted the facts narrated by the respondents and has stated that the show-cause notice has only been issued on the basis of the statement of the some of truck drivers and has stated that the Investigating Agency has ignored the statement of the transporter who had admitted that the materials physically transported and has produced relevant documents. The petitioner reiterated his contention that the advance authorizations issued by the department of DGFT are still valid and are neither declared as void nor cancelled by the authority. It is also stated that the authority has ignored the fact that the said authorizations are used to importation of material only after obligations are complied with. It is further stated that the department has ignored the fact that the Central Excise Duty demanded on the so-called clandestine clearance is nothing but duty paid clearance and hence, no duty can be demanded and, therefore, it is beyond jurisdiction of the respondents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise, Surendragar on the body of Form No. ARE 3, wherein it is stated that in terms of Circular No.88/89-CUS physical verification is not required. 8.2 While referring to the communication and the proceedings of hearing by the adjudicating authority, Mr.Joshi, learned senior counsel has also submitted that the adjudicating authority has ignored the fact that they are demanding duty on the goods cleared under proper invoice and on which, duty is physically paid and is accepted by the department as duty. He has submitted that the DGFT has also accepted the fact that as the duty is physically paid, it has refunded such payment by way of Terminal Excise Duty Refund. 8.3 Mr.Joshi, learned senior counsel has submitted that the alleged demand of ₹ 90,59,957/- under the provisions of Section 11A(4) of Central Excise Act is challenged on the ground that the same is without jurisdiction in as much as said amount is nothing but refund sanctioned by DGFT and the Customs department has no jurisdiction to recover such amount. He has submitted that the demand of ₹ 1,26,99,092/- which is confirmed under Section 28(4) of the Customs Act, 1962 is challenged on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitions as the petitioners have challenged the order passed by the Custom Authority and at this stage, this Court may not entertain the present petitions. According to her, there is an alternative efficacious remedy available to the petitioners available under the Central Excise Act before the Customs, Excise and Service Tax Appellate Tribunal. She has submitted that the petitioners have not availed alternative remedy and directly approached this Court. While referring to the decision in the case of Panoli Intermediate (India) Pvt. Ltd. Vs. Union of India, 2015 (326) E.L.T. 532 (Guj.), she has submitted that in the said decision also, this Court has held that the writ petition is maintainable but the grounds mentioned therein are that when the authority has passed the order without jurisdiction and by assuming jurisdiction and by overstepping or crossing the limits of jurisdiction or acting in flagrant disregard to law or rules or procedure or acting in violation of the principles of natural justice where no procedure is specified and accordingly, the said decision will not be applicable in this case. 9.1 Ms.Shruti Pathak, learned counsel for respondent No.2 has sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly passed the order and it has jurisdiction to take action within the powers conferred upon it under Section 111 of the Customs Act. She has submitted that the jurisdiction and powers of the licensing authority stand on a different footings which mainly have the duty cast upon them to monitor and to see that the provisions with respect to the license are duly complied with and in case of breach of the provisions contemplated under the said section, the powers are also conferred with the authority to confiscate the goods. According to her submissions, the contentions of the petitioners that the advance authorization has not been cancelled and that the license is not cancelled by the authority is not justified. According to her submissions, there were misused of the advance authorization scheme which was made by the petitioners and, therefore, the EODC stipulates and provides that the custom authority is empowered to take action against the licensee at any stage for misuse of the scheme. 9.3 Ms.Shruti Pathak, learned counsel for respondent No.2 has submitted that during the course of investigation, it was found that there is difference in daily stock production and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has submitted that the Director General or the Licensing Authority has enough power to cancel the licensse in the eventuality which are narrated therein. While referring to Form ARE-3 at page No.112 of the paper-book, Mr.Joshi, learned senior counsel has submitted that this form has been counter signed by the authority and after due verification of the documents, the DGFT has issued EODC certificate. According to him, the Custom Authority may inform DGFT regarding fraud, but the Custom Authority itself cannot initiate any proceedings. He has submitted that at the relevant point of time, there was valid Advance Authorization in favour of the petitioner and, therefore, the issuance of the notice is without jurisdiction. 11. In the case of Commissioner of Customs Vs. Rajnarayan Jwalaprasad (supra), this Court while relying on the decision of the Supreme Court in the case of Titan Medical Systems Pvt. Ltd. Vs. Collector of Customs (supra) has observed that once an advance licence is issued and not questioned by the licensing authority, the customs authority cannot refuse exemption on an allegation that there was any misrepresentation. That if there was any misrepresentation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 111(o) enable the Customs authorities to investigate. 15. In the case of Panoli Intermediate (India) Pvt. Ltd. (supra), while referring to the various decisions of the Apex Court, this Court has observed that no legislation can whittle down or dilute or nullify the power of the constitutional Court under Article 226 of the Constitution of India, but the parameter for exercise of the writ of certiorari would be in a case where the Tribunal or the Authority has acted without jurisdiction or in excess of jurisdiction or acted in flagrant disregard of the law or the rules of procedure or have acted in violation to the principles of natural justice and thereby resulting into failure of justice . It is further observed therein that certiorari jurisdiction may be exercised when the error if not corrected at the very moment may become incapable of correction at the later stage and refusal to intervene would result travesty of justice . It is further observed that such jurisdiction of writ of certiorari should not be converted into the Court of appeal or indulge into reappreciation of the evidence or evaluation of the evidence or correction of the errors were two views a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DFIA) scheme. A Duty Remission Scheme enables post export replenishment / remission of duty on inputs used in export product. Duty remission schemes consist of (a) Duty Entitlement Passbook (DEPB) Scheme and (b) Duty Drawback (DBK) Scheme. 4.1.3 Advance Authorisation An Advance Authorisation is issued to allow duty free import of imputs, which are physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts which are consumed / utilised to obtain export product, may also be allowed. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorisation. Duty free import of mandatory spares upto 10% of CIF valuation of Authorisation which are required to be exported / supplied with resultant product are allowed under Advance Authorisation. Advance Authorisations are issued for imputs and export items given under SION. These can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of HEP. [Advance Authorisation can be issued either to a manufacturer exporter or a merchant exporter tied to supporting manufacturer(s). However, advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notified. For remaining exports, Policy / Procedures in force on authorisation issue date shall be applicable. 20. Chapter 8 of the Hand Book which deals with the deemed exports provides in para 8.3.1 as under:- 8.3.1 Procedure for claiming Deemed Export Drawback Terminal Excise Duty Refund / Exemption Procedure for claiming benefits under paragraphs 8.3(b) and (c) of FTP shall be as under:- [(i) An application in ANF 8, along with prescribed documens, shall be made by Registered office or Head office or a branch office or manufacturing unit of supplier to RA concerned. Where applicant is branch office or manufacturing unit of a supplier, it shall furnish self certified copy of valid RCMC. Recipient may also claim drawback benefits on production of a suitable declaration from supplier, in the format given in Annexure III of ANF 8. In case of TED refund, a declaration, in the format given in Annexure II of ANF 8, regarding non-availment of CENVAT credit, shall be given, by the recipient of goods, in addition to other prescribed documents.] (ii) In case of supplies under paragraphs 8.2(a), (b) (c) of FTP, claim shall be filed agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) xxx xxx (b) Supply of goods to EOU / STP / EHTP / BTP; (c) xxx xxx 8.3 Benefits for Deemed Exports Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP :- (a) Advance Authorisation / Advance Authorisation for annual requirement / DFIA. (b) Deemed Export Drawback. (c) Exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an Advance Authorisation holder to a manufacturer holding another Advance Authorisation if such manufacturer, in turn, supplies the product(s) to an ultimate exporter. 22. It is worthwhile to refer to Section 9 of the Foreign Trade (Development and Regulation) Act, 1992. Section 9 reads as under:- 9. Issue, suspension and cancellation of licence. - (1) The Central Government may levy fees, subject to such exceptions, in respect of such person or class of persons making an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted under these rules if - (a) the licence has been obtained by fraud, suppression of facts or misrepresentation; or (b) the licensee has committed a breach of any of the conditions of the licensee; or (c) the licensee has tampered with the licence in any manner, or (d) the licensee has contravened any law relating to customs or foreign exchange or the rules and regulations relating thereto. 24. Section 24 of the Customs Act, 1962 provides as under:- 24. Power to make rules for denaturing or mutilation of goods. - The Central Government may make rules for permitting at the request of the owner the denaturing or mutilation of imported goods which are ordinarily used for more than one purpose so as to render them unfit for one or more of such purposes; and where any goods are so denatured or mutilated they shall be chargeable to duty at such rate as would be applicable if the goods had been imported in the denatured or mutilated form. 25. Section 28(4) of the Customs Act, 1962 provides as under:- 28(4) Where any duty has not been [levied or not paid or has been short-levied or short-pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. 26. Penalty for certain offences.- (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater.] (2) Any person, who issues- (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made there under like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit of five thousand rupees, whichever is greater] 28. It is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Exports, Chandigrh (page Nos.173-174 of the petition), the firm has received the consignment with form No. ARE-3 and the same has been examined by the jurisdictional Superintendent of Central Excise and the officer has visited the factory premises after verifying the contentions of the documents and the material received, has certified the facts of receipt of the goods. 30. It appears from ARE-3 (page No. 23 onwards of the petition) that there is signature of the Superintendent of the Central Excise, ARE 2, Surendranagar and it also appears from the remarks column thereof that the clearance is against Advance Authorization and duty debited in CENVAT. 31. It also appears from the impugned order-in-original (page No.204 of the petition) that the date of order is shown as 31.03.2017 and date of issuance is 05.04.2017. While referring to the letters of jurisdictional Central Excise Offices of recipient EOUs, it has been observed therein that the concerned authority has stated that in certain transactions, the officer has physically verified the goods. So far as other transactions are concerned, it was not physically verified. It also appears from the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority. It is also admitted fact that whatever refund has been granted, is issued by the DGFT. It also appears from the correspondence between other department that the jurisdictional Excise Offices have certified the facts of receipt of the goods though the material was not physically verified. It also appears that DRI is demanding the amount which has been refunded by the DGFT. 35. It also reveals from the letter dated 27.10.2013 (page No.167 of the petition) that the Central Excise Department has not sanctioned any refund / rebate of the duty paid on the supplies to the EOUs. It also appears that the refund of TED is sanctioned by the DGFT and if DGFT has acted under the different provisions and the refund is sanctioned under those provisions, the proper authority is DGFT who can initiate proceedings against the petitioners for violation of exemption notification and the Advance Authorization Licence. Now, it is an admitted fact that the Advance Autorization Licence of the petitioners is still valid and no action is taken by the DGFT for breach of condition thereof. As such, initiation of proceedings by the customs is nothing but an exercise of power in excess of jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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