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TMI Blog2021 (10) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an SCN under section 28 which lays down a time limit of two years (prior to 2016, it was one year). The demand can be raised during an extended period of five years if the short payment is on account of (a) Collusion; (b) Wilful mis-statement; or (c) suppression of facts. No demand can be raised beyond five years under any conditions - no demand can be raised under section 28 even in case of default. The effect of Public Notice No.30/2015-2020 dt. 08.09.2016 is that the exporters who have incorrectly availed simultaneous benefit of zero percent EPCG and SHIS have been provided an option to surrender one of the benefits subject to some conditions. Correspondingly, CBEC issued Circular No.45/2016-Cus. dt. 23.09.2016 directing that pending issues related to simultaneous issuance or availing of zero duty EPCG and SHIS shall be decided in terms of the above public notice - It is undisputed that the appellant has not utilised the SHIS scrips and returned them to the JDGFT, Hyderabad who had issued them and that they were cancelled by the JDGFT. Therefore, there is no dispute that the appellant had surrendered the benefits under the SHIS scheme as envisaged under the Public Notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent ORDER In this appeal, the appellant is challenging the order of the Commissioner of Customs (IV) dated 28.09.2018 [ Impugned order ] whereby the Commissioner denied the benefit Exemption Notification No.102/2009-Cus. dt. 11.09.2009 as amended to imports by the appellant through various Customs locations made under twelve (12) zero duty Export Promotion Capital Goods [ EPCG ] licenses for imports on the ground that condition 2(4) of the Notification which reads as follows was not fulfilled: 4. That the importer is not issued, in the year of issuance of zero duty EPCG authorization, the duty credit scrips under SHIS scheme under para 3.16 of the Foreign Trade Policy. SHIS scrips which are not issued in a particular year for the reason that zero duty EPCG authorization has been issued in that year shall not be issued in future years also . 2. The learned Commissioner also confiscated the capital goods imported under these licences under section 111 (o) of the Customs Act, 1962 holding that appellant had wrongly claimed and availed the benefit of Customs Notification No.102/2009-Cus. The value of the capital goods so confiscated is ₹ 141,02,93,240. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. The charge of duties of Customs, is however, under the Customs Act, 1962 which does not provide for waiver of the taxes through schemes or licenses issued by the DGFT under the FT(D R) Act. Therefore, whenever a scheme is formulated by the Ministry of Commerce/DGFT, a corresponding exemption notification is issued under Section 25 of the Customs Act to grant exemption from duties of customs. Such exemptions can be full or partial, conditional or unconditional. If goods imported under a promotion scheme of DGFT are exempted, evidently, the importer will have to fulfil the conditions laid down in the scheme which are mirrored in the exemption notification issued under the Customs Act. Many of these conditions are post import conditions, for example, that the licencee shall export goods worth so and so. If the licencee defaults in fulfilling such conditions, duty has to be recovered from it. The only way duties can be recovered under the Customs Act is by issuing an SCN under section 28 which lays down a time limit of two years (prior to 2016, it was one year). The demand can be raised during an extended period of five years if the short payment is on account of (a) Collusion; (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds from both domestic and overseas suppliers. Intelligence gathered by the Directorate of Revenue Intelligence [ DRI ] Ahmedabad indicated that it had wrongly availed the benefit of Customs Notification No.102/2002-Cus. in respect of the capital goods imported by them under zero duty EPCG Scheme. In terms of Condition 2 (4) of the said notification as it stood during the relevant time, the benefit of exemption was not available to an importer who has been, in the year of issuance of zero duty EPCG authorisation, issued the duty credit scrips under Status Holder Incentive Scheme [ SHIS ] under para 3.16 of the Foreign Trade Policy [ FTP ]. The appellant had in all obtained twenty (20) zero duty EPCG authorizations during the period 2011-12 and 2012-13 which allowed it to import capital goods duty free of duty subject to some conditions and meet export obligations by exporting the goods manufactured using the capital goods. SHIS is another scheme of the DGFT which allows duty credit scrips to importers who hold the specific status holder as per the FTP. 6. The allegation in the SCN is that EPCG scheme with zero rate of duty on capital goods is only available if no scrips under SHI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), New Delhi. The appellant was issued 10 scrips but decided not to utilise the said 10 SHIS and they lapsed on May 8, 2013. 9. According to the appellant, there were differences in understanding of the scope of the issue of SHIS Scrips and EPCG licences which was pointed out by the Comptroller and Auditor General and also noticed by the DRI and it was a problem on a large scale. DGFT examined the matter in consultation with the Department of Revenue and issued the following Public Notice No.30/2015-2020 dt. 08.09.2016 to resolve the issues of incorrectly issued zero duty EPCG and SHIS under FTP 2009-14. This Public Notice reads as follows : Public Notice No.30/2015-2020 New Delhi dated the 8th September, 2016 Subject : Notification of procedure to be followed in cases of Incorrectly issued simultaneous benefits of Zero Duty EPCG and SHIS in FTP 2009:14 by the Director General of Foreign Trade in exercise of powers conferred under Para 2.04 of the Foreign Trade Policy 2015-2020. This Directorate had received references from Directorate of Revenue Intelligence and various exporters, on the subject of incorrectly issued simultaneous benefits of Status Holder Incentive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 28AA) from date of clearance of the goods till the date of payment. In such cases, SHIS scrip need not be surrendered. This option shall not be available when the zero duty EPCG is already redeemed by DGFT. When zero duty Post Export EPCG is to be returned, the authorization(s) shall be surrendered. If any related duty credit scrip(s) against such Zero duty Post Export EPCG authorisation(s) have been issued the same if unutilized may be surrendered by the original holder (by surrendering the original duty credit scrips). The amount of such Post Export EPCG scrip(s) that has been utilized by the original applicant shall be refunded in cash (with interest at the rate prescribed under Section 28 AA of Customs Act from the date of issue of the PE EPCG). The amount of PE EPCG Scrip(s) that has been transferred shall be treated as amount of Post Export EPCG scrip(s) utilized and treated accordingly including for purposes of payment of interest by exporter. C. Mode of payment The amount shall be paid back to Government in cash. The facility of debiting the amount in valid freely transferable duty credit scrip issued under Foreign Trade Policy or in valid SHIS scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return the SHIS, the power under Para 2.58 of FTP 2015-20 in consultation with relevant Committee would be exercised by DGFT to relax the FTP/HBP provisions requiring the 'prior' return of SHIS. According to the Learned Commissioner, this para requires the appellant to obtain a policy relaxation under para 2.58 of the Foreign Trade Policy in respect of the SHIS which they have not done. They simply surrendered them to the JDGFT Hyderabad who cancelled them. Since they have not obtained a policy relaxation under para 2.58 of FTP, they have violated the above condition of the Public Notice and therefore, are not entitled to its benefit. Since they are not entitled to the benefit of the Public Notice, the capital goods imported under Notification No.102/2002-Cus has to meet all the conditions of the notification. In terms of Condition 2(4) of the said notification as it stood during the relevant time, the benefit of exemption was not available to an importer who has been, in the year of issuance of zero duty EPCG authorisation, issued the duty credit scrips under Status Holder Incentive Scheme. Therefore, the benefit of the exemption notification is not available to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h orders or grant such exemption, relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade to any person or class or category of persons from any provision of FTP or any Procedures. While granting such exemption, DGFT may impose such conditions as he may deem fit after consulting the Committees as under: S.No. Description Committee a Fixation/ modification of product norms Norms Committees b Nexus with Capital Goods (CG) and benefits under EPCG Schemes EPCG Committee c All other issues Policy Relaxation Committee We do not find anything in para 2.58 also to indicate that an exporter/importer has to apply for relaxation to the Policy Relaxation Committee or that there is form or manner in which it has to be applied for. Therefore, we find that the impugned order has gone beyond the scope of the Public Notice and read into it additional words and came to conclusion that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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