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TMI Blog2021 (11) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... scription as Plasticizer. As per the Notification No. 96/2009 all the raw materials are exempted if it is used in the manufacture of export goods. In the present case there is no dispute that the goods imported by the respondents are used in the manufacture of their final export product this has been established on the basis of verification conducted by the Assistant Commissioner of Central Excise and Service Tax, Bhiwadi Rajasthan vide letter dated 31.12.15 wherein it was stated that the subject goods imported under Advance Authorization by the noticee during last 5 years has been used by them for the manufacture. With this undisputed fact substantive requirement of FTP and the Notification No 96/2009-Cus was complied with. Further, there is no reason for respondent to mis- declare the classification because even if the correct classification as held by the department is declared by the appellant the same benefit was available to the appellant. Therefore, it is only on the basis of test report which found that aromatic constituents exceed that of non aromatic constituents. The use of the product does not get altered therefore only because the appellant has not declared the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent advance authorization for import of miscellaneous chemicals by declaring the goods as Plasticizers -Shell Flavex 595 B and classifying the goods under CTH 38122090. The bills of entry were filed under DEEC Scheme by claiming the benefit of Notification No. 96/2009-Cus dated 11.09.2009 which exempts the material imported in to India against advance authorization in terms of para 4.1.3 of foreign trade policy from duty of Customs, additional duty, safeguard duty, anti dumping duty subject to condition as specified in the said notification. 1.1 The DRI has carried out investigation samples that were sent to Kandla Customs House Laboratory for testing certain parameters of the imported goods. The Customs House Laboratory, Kandla vide test report No. 06 dated 27.07.2015 submitted its report wherein only Aniline point, density, Flash point were reported with note that the Kinematic viscosity is not in agreement with IS: 15078:2001. Petroleum based process oil for the rubber industry but vide letter dated 30.10.2015 the Joint Director, Customs House Laboratory Kandla reported in respect of Shell Flavex oil 595 B as under:- It is stated that the analytical parameters such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. Shell Flavex Oil 595 , which is a process Oil having high aromatic content and suitable for providing adequate solubility of rubber ingredient during the tyre manufacturing process us correctly classifiable under CTH 27079900 being similar products in which the weight of aromatic constituents exceeds that of non- aromatic constituents . (ii) I hereby drop the proceedings regarding demand of duty, interest, penalty and confiscation as initiated vide show Cause Notice F.No VIII/48-607/Misc/IMP/Gr.VII/MCH/14-15 dated 30.08.2017. 1.3 Being aggrieved by the order-In-Original revenue filed the present appeal. 2. Shri T.G Rathod, Learned Additional Commissioner (AR) appearing on behalf of the revenue reiterates the grounds of the appeal. He submits that the advance authorizations were issue showing description of import goods as Miscellaneous Chemicals: Plasticizers . However, on investigation on he basis of test report issued by the Custom Lab at Kandla it was revealed that goods were Rubber Process Oil. He submits that the Exemption notification No 96/2009-Cus dated 11.09.2009 granted conditional exemption as per condition No.(iii) of the notification provided that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel appearing on behalf of the respondent submits that the import goods i.e. Shell Flavex Oil 595 have been used by the respondent in the tyre manufacturing process as a plasticizer even if the same is called as rubber processing oil but when used specifically to aid in the dispersion of fillers is known as plasticizer. He submits that the test eligibility to import cannot change at the time of the assessment. He submits that denial of exemption on the ground of alleged misdeclaration is not sustainable as the same can be merely a technical infraction as the goods have not been diverted but it was admittedly used for manufacture of export products and this fact has even been confirmed by the jurisdictional Central Excise Authorities. He submits that that it is a settled position in law that duty cannot be exported and denial of exemption would result in taxing the exports. Without prejudice, he also submitted that demand of duty in the present case is not sustainable by application of Doctrine of Revenue Neutrality as the notice is otherwise also entitled for duty drawback, therefore, the duty so demanded would have to be refunded in the form of drawback as it is the pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for Advance Authorization as well as for filing Bill of Entry in subsequent imports. The department has never objected or challenged the same till the issue of the SCN. Customs bond has been discharged even after the issuance of the SCN which goes to prove that there was no violation of any sort including Condition No (iii) the respondent cannot be penalized or put into a worse position because the noticee followed the quasi judicial orders in letter and spirit. 3.5 He further submits that notwithstanding the merit of the case, the entire demand proposed in the SCN is otherwise hit by limitation in as much as there is no corroborative evidence to invoke grounds for extended period of limitation. Without prejudice, if department wishes to change stand regarding classification the same can only be with the prospective effect. In this regard he placed reliance on the Hon ble Supreme Court Judgment in the case of Myosre Electrical Industries Ltd 2006 (204) ELT 517 (S.C). 3.6 The SCN is dated 30.08.2017 whereas the date of last bill of Entry is 01.05.2015 which is past the normal limitation period of two years. Hence, the entire demand is hit by limitation. He submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... willful misdeclaration, if any. 3.9 The issuance of EODC and subsequently discharge of Customs Bonds even after issuance of SCN and forwarding a copy of the same to Joint Director, DGFT, further indicate that there were no violations of any condition of any sort as prescribed in FTP or Customs Notification. Without prejudice, even if there were any technical infractions even if any nonobservance of the same has been deemed to have been sanctioned by the proper officer. Therefore, the judgment in the case of Sheshank Sea Foods Pvt. Ltd (Supra) is not applicable to the facts of the present case. 3.10 He submits that it is incorrect to state that the demand has been dropped by the adjudicating authority on presumption that the importer was free to get an Advance Authorization for import of subject goods and would have been allowed by DGFT while ignoring at the time of import goods were not covered by the Advance Authorization scheme and hence not eligible for exemption. He submits that goods were always covered in the Advance Authorization as the description as well as CTH matched with the description found in the test report and also as finally assessed by the Customs Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e involved is of classification based on the assessment order issued by the proper officer in this very case. 3.14 The Adjudicating authority has no jurisdiction or powers to examine the scope of the very same import goods, the classification of which has already been determined under Customs Act whether these import goods technically would be covered by the general description of the item mentioned in Advance Authorization, until and unless there are corroborative reasons indicating diversion or mensrea. He submits that in view of the binding findings, this ground is without any legal force and should be dismissed. With his above submission, he prays to uphold the impugned order and dismiss the revenue s appeal. 4. We have carefully considered the submission made by both the sides and perused the records. We find that the case of the department is that since the appellant has mis declared the import goods as Miscellaneous Chemical: Plasticizer under CTH 38122090 whereas on test of the product it was found to be rubber process oil classifiable under 27079900 therefore the appellant are not eligible for exemption notification No . 96/2009-Cus dated 11.09.2009 issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the similar issue has been considered. In that case the appellants imported Hot Rolled Steel coils/Plates which were used for making steel pipes for export under Advance Authorization. All the appellants described the goods as Primer HR Coils and classified under CTH 72083690. The Advance Authorization issued to the appellants allowed import of Non alloy HR Coils/plates classifiable under 72083690. Revenue found that the appellants have imported other steel classifiable under CTH 7225.The issue before CESTAT was to decide whether the appellants have made willful mis- declaration on the Bills of Entry in order to evade payment of custom duty. The Hon ble CESTAT referred to the decision of Hon ble Apex court in the case if Northern Plastic Ltd- 1998 (101) ELT 549 (SC) and held that classification of steel under CTH 7208 cannot be considered as mis- declaration . The relevant extract from the decision of CESTAT is reproduced below: 15 . Next issue for consideration before us is whether appellants have made a wilful misdeclaration on the Bills of Entry in order to evade payment of customs duty or to take any undue financial benefits. In this regard it is the case of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us columns relating to the goods, their value and their assessment under Customs Tariff as also Central Excise Tariff (for countervailing duty), it is not obligatory under the Customs Act that while presenting to Customs the importer or his Clearing Agent must indicate in the Bill of Entry the correct Customs Tariff Heading or customs duties or c.v. duties leviable or total duty leviable on the goods sought for clearance against the Bill of Entry. However, an indication of Customs Tariff Heading and Exemption Notification, if any, which the importer feels may be applicable to his goods is normally expected to be given at the time of presentation in the relevant column of the Bill of Entry to enable allocation of the Bill of Entry to proper Group/Appraiser and to expedite its processing. In case the Customs Tariff Heading or Central Excise Tariff Heading under which the party feels his goods will be covered are not finally accepted by the Deptt. appropriate classification under the Customs Central Excise Tariff would be made in the Appraising Group without any action against the Importer. The Board considers that Section 29 S.C.A. (Now Sections 17 and 46 of C.A.‟ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 23. We, therefore, hold that the appellant had not misdeclared the imported goods either by making a wrong declaration as regards the classification of the goods or by claiming benefit of the exemption notifications which have been found not applicable to the imported goods. We are also of the view that the declarations in the Bill of Entry were not made with any dishonest intention of evading payment of customs and countervailing duty. 15.2 In the light of above law laid down by the Apex Court, in the present imports made by the importer-appellants a declaration given with respect to classification of steel as CTH 7208 in the Bills of Entry, cannot be considered as wilful misdeclarations with intention to evade customs duty, in the absence of any other corroborative evidence The ratio of the judgment in PSL case squarely applicable to the facts of the present case. The judgment of the tribunal in PSL case has been affirmed by the Hon ble Supreme Court and also the review petition filed by the revenue was dismissed. In the present case also there is no dispute about the use of the import goods under Advance Authorization for manufacture of the export goods. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the finding of the adjudicating authority which are reproduced below: 25. Now I come to second issue regarding admissibility of benefit of Advance Authorization for the import of the impugned goods by the Noticee. The imported material has been cleared without payment of duty claiming benefit of Advance Authorization Scheme under Notification No. 96/2009-Customs dated 11.09.2009. The Noticee, in their defence submissions, contended that as long as the rawmaterials imported by them have been used in the manufacture of resultant export product, there is no irregularity and benefit of duty exemption against Advance Authorization is admissible in view of the definition of raw material in the FTP and Notification No 96/2009-CUS, which is wide and not linked with the classification under a particular heading. 26. Further, the Noticee has also contended that on the basis of exports made by them against the Advance Licenses, the DGFT has issued EODC in all cases and accordingly, the Bonds executed by them at Custom Hose, Mundra, for duty free import have also been discharged/released. The Noticee has further submitted that the impugned goods i.e, Shell Flavex Oil 595 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per para 4.1.3 of the FTP ( ( 2009-14 ) , Advance Authorizations were issued to allow duty free imports of inputs which physically incorporated in the export product . Notification No. 96 / 2009 - Customs dated 11.09.2009 granted exemption to ' materials ' imported into India against an Advance Authorization for and materials have been defined in the notification to mean raw material , components intermediates , consumables , catalysts and parts which are required for the manufacture of resultant export product . The Notification No. 96 / 2009 - Cus . is not confined to a particular chapter heading of the tariff and it applies to all the goods falling in the Schedule of the Customs Tariff Act . Therefore , the importer was always free to get an Advance Authorization issued for import of the subject goods duty free as Process Oil falling under CTH 2707 and the same would have been allowed by the DGFT . Therefore , I am of the view that there could not have been any intention on the part of the importer to mis - classify the goods since the imported goods were always eligible for the exemption notification as raw material under the particular scheme , irrespective of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Apex Court in the case of Northern Plastic Ltd Vs. Collector of Customs Central Excise [ 1998 ( 101 ) ELT 549 ( SC ) and held that classification of steel by the appellants under CTH 7208 cannot be considered as mis declaration as it is only a claim made by the importers on the basis of the belief entertained by them . Hence , such a declaration of classification cannot be considered as willful mis - declaration in the absence of any other corroborative evidence . This case was affirmed by the Supreme Court in Civil Appeal Nos . 10071-10074 of 2014 and the Review Petition (C) Nos . 1613-1616 of 2015 against the said Civil Appeals were dismissed by the Supreme Court [ 2016 ( 331 ) ELT . A89 (SC) ) . Hence, the said case law has attained finality and required to be followed in order to adhere to judicial discipline. 32 . In view of the above , I find that the Notices has not violated the conditions of duty free import under Advance Licenses and therefore , the proposal for confiscation of 56,11,160 Kgs of Shell Flavex Oil 595 having assessable value of ₹ 34,26,25,952/- imported by them under various Advance Authorizations ( as listed in Annexure - A to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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