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TMI Blog2009 (9) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ications as the applications are liable to be rejected in limine". These applications were filed purportedly under Regulations 11 and 18 of the Authority for Advance Rulings (Central Excise, Customs and Service Tax) Procedure Regulations, 2005. Under Regulation 11, the Authority may permit the applicant or the Commissioner to submit such additional facts as may be necessary to pronounce the ruling on the questions specified. Regulation 18 empowers the Authority whether suo moto or on a petition filed by the applicant or the Commissioner to modify an order passed for advance ruling pronounced on being satisfied that the order/advance ruling was pronounced under mistake of law or fact. Thus, the miscellaneous applications have been filed on the premise that the order of admission is vitiated by mistake of fact or law. By these petitions, the Revenue, in effect, requests the Authority to recall the order passed under Section 28-I(2) of the Customs Act. 2. The Department submits that this Authority overlooked certain material facts while passing the order under S.28-I(2). It is pointed out that by the date of filing the application and even later, the applicant had imported the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans import or export; (b) "advance ruling" means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay duty in relation to an activity which is proposed to be undertaken, by the applicant; (c) "applicant" means - (i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or (b) a resident setting up a joint venture in India in collaboration with a non-resident; or (c )a wholly owned subsidiary Indian company, of which the holding company is a foreign company, who or which, as the case may be, proposes to undertake any business activity in India: (ii) a joint venture in India; or (iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf, and which or who, as the case may be, makes application for advance ruling under sub-section (1) of section 28H; Explanation.- For the purposes of this clause, "joint venture in India" means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a year. Apart from that, as rightly pointed out by the learned counsel for the applicant, a trial-run can also result in the provision of services on commercial basis. It does not stand on the same footing as importing samples that were not intended for sale or other commercial activity. 5.2 Before parting with the discussion on this aspect, we would like to point out one disturbing feature which we have come across. The applicants (in Misc. Applns), especially the Commissioner of Customs (Import), Mumbai, find fault with the following statement in the order passed by this Authority on 28th May, 2009: "It does not appear from the comments of the concerned Commissioner that any imports of the said four products were made by the date of filing the application." The applicant in Misc. petition No.2, namely the Commissioner of Customs(Import) Mumbai, after having extracted the said observation, states thus: "Though the copy of the comments had been sent to the Authority on 29.4.2009 wherein it was informed that the activity in respect of which an advance ruling has been sought is an 'ongoing' activity as a few imports have been noticed in concerned Group of this Commissionera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; clauses in section 28-E and certain other provisions which we shall refer to. "(a) "activity" means import or export; (b) "advance ruling" means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay duty in relation to an activity which is proposed to be undertaken, by the applicant; (c )"applicant" means - (i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or (b) a resident setting up a joint venture in India in collaboration with a non-resident; or (c )a wholly owned subsidiary Indian company, of which the holding company is a foreign company, who or which, as the case may be, proposes to undertake any business activity in India: (iv) a joint venture in India; or (v) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf, and which or who, as the case may be, makes application for advance ruling under sub-section (1) of section 28H; 7.1 Section 28 H which bears the caption "Application for advance ruling" provides that an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative, on a request made by the applicant. This is the scheme of the Act from the stage of filing the application till the stage of pronouncement of ruling. 8. On a conspectus of the relevant provisions referred to above, it is clear that the applicant is entitled to file the application if the criteria prescribed in various provisions set out above are satisfied. It logically follows that the entitlement to seek the remedy of advance ruling has to be judged with reference to the date of filing the application. Has the advance ruling been sought on an activity proposed to be undertaken as stated in the application, is the line of inquiry that has to be made before considering the admission of the application under Section 28 I(2). In other words, one of the points to be addressed before admission is whether the statement in the application about the proposed activity is correct or not? Viewed from another angle, the appropriate line of inquiry would be whether on the date of invoking the jurisdiction of the Authority, the activity had gone beyond the stage of proposed activity. That is what needs to be inquired into while passing an order under S.28 I(2). If the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness before any proceeding involving the same issue is initiated. The purpose of advance ruling is to seek an authoritative and binding opinion on a debatable question before the dispute arises and the matter gets locked up in litigation. Unnecessary and unspecified restrictions cannot be super-imposed to curtail the scope of advance ruling. 8.1 The interpretation sought to be placed by the Revenue leads to unintended and unjust results. Supposing the consideration of the application either under sub-section (2) or sub-section (4) of S.28 I takes long time i.e, much more than three months, either on account of vacancy or the absence of Chairperson or by reason of some other unforeseen delay not attributable to the applicant. If, in the interregnum, the applicant makes a few imports, should he on that account forfeit the right to obtain the advance ruling? Certainly not. Even if the application is going to be disposed of within 3 months, it is not expected of him to defer the commencement of business during the pendency of the application so as to be eligible to seek advance ruling. The spirit and purpose underlying the provision for advance ruling should be kept in view. Incident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e context in which the word, phrase or sentence occurs. As pointed out in Sun Engineering Works Ltd. vs. CIT (1992) 198 ITR, 297: " A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this court, to support their reasonings." In any case, the applicant having moved this Authority well in advance of starting business operations, nothing can be put against the applicant based on the underlined portion in Cradle Runways case. 9. Yet another objection raised by the Revenue to the maintainability of the application is from the standpoint of clause (a) of the Proviso to Section 28-I(2) which says: The Authority may, after examining the application and the records called for, by order, either allow or reject the application : Provided that the Authority shall not allow the application where the question raised in the application is - (a) already pending i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application which was in substantial compliance with the procedural requirements prescribed by law, there was no proceeding pending before the officer of Customs, the bar under clause (a) of the Proviso to Section 28-I(2) does not operate and the subsequent initiation of the proceedings, that is to say, during the pendency of the application, cannot be regarded as a bar to proceed with the hearing on merits. 9.2 The language of Section 28-I makes it clear that it is with reference to the date of filing the application, the pendency or otherwise of the relevant question before the Customs authority or the Court or Tribunal has to be decided. The expression "already pending" is important. If the proceeding is already pending, the application cannot be entertained and heard on merits so that two parallel proceedings will not go on. Otherwise, an over-zealous officer can, after coming to know of the application, start a proceeding so as to stall the hearing of the application by this Authority. The matter can be viewed from another angle also. Supposing, after the application is allowed under Section 28-I(2) and posted for hearing on merits, a proceeding is initiated, as in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean "already pending" as on the date of the application" and not with reference to any future date. In the present case, since there was no return or claim before the authorities before the application was filed before this Authority, the application cannot be rejected by invoking clause (a) of the proviso to section 245R(2)." The same view was taken in Rottem Company In Re (145 Taxman Reports pg.488 ) and in Mustaq Ahmed vs. DIT (Intl.Taxation) {AAR No.743 of 2007}(2007) 293 ITR 530. It was observed in Mustaq Ahmed case: "In order to decide whether the question raised in the application is already pending before the Income-tax authority, the crucial point of time to be taken into account is the date on which the application was filed before this Authority. It is on that date, the factual position as regards the pendency of the question has to be decided. If on the date of filing the application, the assessee and the Revenue were at issue as regards the question raised in the application, the bar under the proviso does operate." 10. In the light of above discussion, we find no merit and substance in the miscellaneous applications filed by the concerned Commissioners. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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