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TMI Blog2022 (12) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... export item-liquid glucose is Maize specified under SION Entry E76 and not Starch specified under SION Entry E22 and that appellant has mis-classified its product in order to claim undue benefit of DFIA Scheme. There is no dispute to the classification of export item in the present case. The dispute relates to import item-input. One of the specified import items under E22 is Starch whereas Maize is the specified import item under SION E76. Since undisputedly Starch slurry is used as immediate input by the appellant in manufacturing of its export item-liquid glucose concentrate, it cannot be said that starch was not appellant s input for export item. Further Starch is in turn manufactured from Maize is also an undisputed fact and equally qualify to be the input for the aforesaid export item under E76. It can be seen that subsequent to the exports by the appellant, SION Entry E22 was deleted by DGFT upon recommendation of internal committee on the premise that E22 was being mis-used by the exporters. This goes on to show that earlier exporters were eligible to claim any of the inputs under the respective entries as export item-liquid glucose essentially remained the same under bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment of shipping bills filed by the appellant has attained finality as department has not filed appeal against the same under section 128 of the Act; classification of goods cannot be questioned subsequently by the customs by way of issuance of show cause notice. The impugned order cannot be sustained and is liable to be set aside - Appeal allowed. - CUSTOM Appeal No. 11219 of 2018 WITH CUSTOM Appeal No. 11220 of 2018 - FINAL ORDER NO. A /11878-11879 /2022 - Dated:- 7-12-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Rahul Gajera, Advocate for the Appellant Shri Tara Prakash, Assistant Commissioner (Authorized Representative) for the Respondent ORDER The present appeals are directed against Order-In-Original No. MUN-CUSTOM-000-COM-13-17-18 dated 31.01.2018 passed by the Commissioner of Customs, Mundra confirming the recovery of customs duty foregone on the inputs allowed to be imported under 7 DFIA licences issued in terms of Notification No. 98/2009-Cus dated 11-9-2009 and 19/2015-Cus dated 01-04-2015 under section 28AAA of the Customs Act, 1962 ( Act in short). 2. Briefly, the facts are that the appellant, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that one which was used directly for manufacturing export product; that for export and also for exemption for goods manufactured in India a concept of immediate parentage is well recognized and accordingly the immediate parent material was relevant to decide which input was used for manufacture of the exported goods and that since the immediate parent material was starch slurry i.e. starch and not maize ; E22 was the correctly applicable SION. For the proposition that immediate input is to be considered relevant, he relied upon Circular No. 5/89 dated 10.01.1989 and the following case laws: Commissioner of Customs, Bombay V. Jayana Packaging Pvt Ltd 2000 (122) ELT 150 Collector of Customs, Bombay V. Vijay Flexible Containers Pvt Ltd 1996 (87) ELT 744 Dhruvco Printers Pvt Ltd 1996 (85) ELT 62 3.1 He further pointed out that Raw Material is defined under chapter 9 (para 9.44) of FTP 2015-20 to mean that input may either be in a raw/natural/unrefined/unmanufactured or manufactured state and hence even when starch slurry is not the original input but an intermediate input in a manufactured state the same qualified to be the input under the policy. That all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords. 5.1 The main issue involved related to correctness or otherwise of classification of Maize (corn) Starch declared by the appellant to customs for claiming export benefit under DFIA scheme. It can be seen from show cause notice and the impugned order that there is no dispute to the fact that the export item namely liquid glucose concentrate (food grade) was manufactured from using starch slurry which is essentially a starch albeit in slurry form. Starch is a necessary input for manufacture of liquid glucose is evident even from the technical material relied upon by learned AR appearing for the Revenue and from the extract of book titled Glucose Syrups , Technology and Applications of Peter Hull published by Wiley-Blackwell relied upon by the appellant. However, the case of the revenue is that since Starch is manufactured out of Maize which is the base input, correct SION for the export item-liquid glucose is Maize specified under SION Entry E76 and not Starch specified under SION Entry E22 and that appellant has mis-classified its product in order to claim undue benefit of DFIA Scheme. It is therefore necessary to peruse both the conflicting SION entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the licence have accepted the said position. The only conclusion is Starch a specified import item declared by the appellant as Maize (Corn) Starch is correctly classifiable under SION E22 even when Maize is the base input used in manufacture of liquid glucose and is a specified input under SION E76. It can be seen that maize may be the original material used at the beginning of the manufacturing process but the input for manufacturing of liquid glucose concentrate was that one which was used directly for manufacturing export product. For export and also for exemption for goods manufactured in India a concept of immediate parentage is well recognized and accordingly the immediate parent material was relevant to decide which input was used for manufacture of the exported goods. In the present case, the immediate parent material was starch slurry i.e. starch and not maize and therefore case of the department that SION E76 was the correct norm cannot be sustained. Since the immediate parent material for manufacturing the exported goods was starch falling under SION E22 , it is clear that the Starch was the correctly applicable SION. Reliance in this behalf is placed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be noted that the licensing authority having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf 5.4 In the decision of Tribunal in the case of Axiom Cordages Ltd supra following the aforesaid judgement of the Hon ble Supreme Court it has been held that provisions contained under section 28AAA of the Act for recovery of duties are applicable only in the eventuality where an instrument issued to a person has been obtained by him by means of collusion ; or wilful m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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