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TMI Blog2024 (8) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... trate that the Central Government has power to impose a specific Countervailing duty (CVD) not exceeding the amount of subsidy bestowed upon the manufacture or production therein or the exportation therefrom of any article including any subsidy on transportation of such article, when such subsidized article is imported into India. Accordingly, Notification No. 01/2017-Customs (CVD) dated 07.09.2017issued by the Central Government had imposed CVD on import of Flat rolled products of stainless steel, whether hot rolled or cold rolled of all grades/series; whether or not in plates, sheets, or in coil form or in any shape, of any width, of thickness 1.2 mm to 10.5 mm in case of hot rolled coils; 3 mm to 105 mm in case of hot rolled plates sheets; and up to 6.75 mm in case of cold rolled flat products falling under CTH 7219 or 7220. Therefore, it could be concluded that there was a levy of CVD in force in terms of the said notification dated 07.09.2017. However, such levy was exempted only after the issuance of Notification No.79/2017-Customs dated 13.10.2017. In terms of Section 159A ibid which provide that the effect of amendment do not revive anything that was not in force or existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as that no goods are being exported, but papers are being created for availing the number of benefits under various export promotion schemes as has been held in the case of SURESH KUMAR AGGARWAL VERSUS COMMISSIONER OF CUSTOMS -III, RAIGAD, MAHARASHTRA [ 2024 (6) TMI 779 - CESTAT MUMBAI] . Therefore, the imposition of penalty under Section 114AA ibid is without any evidence or grounds and hence the impugned order is not legally sustainable in this aspect also. Duty drawback claim - HELD THAT:- The case of the appellants for claim of drawback in respect of the CVD suffered cannot be rejected as was decided in the case of appellants by the Commissioner of Customs, Nhava Sheva-II in the impugned letter dated 19.04.2022. Further, the aforesaid instructions issued by CBEC and DGFT specifically provide for accepting the claim for drawback and allowing the exporters/importers to file the documents with the jurisdictional customs authorities. As the appellants have submitted complete details with respect to the B/Es and Shipping Bills relevant to their claims for drawback along with supporting documents, there is no ground for denying the same under Rule 13 (1) (a) of the Customs and Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Customs is directed to examine the application filed by the appellants and provide necessary relief in grant of drawback benefits as per law. The impugned order is set aside - appeal allowed. - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) Shri Vishal Agrawal a/w Shri Karthik Dedhia Advocates for the Appellants Shri D.S. Mann, Authorized Representative for the Respondent ORDER The appeal being No. C/86883/2022 has been filed by M/s Hindustan Inox Limited, Mumbai (herein referred to as appellant for short) against the decision/Order issued in letter No. S/12-Hindustan-BR-613/201819/DBK/JNCH dated 19.04.2022 (referred to, as the impugned letter ) and passed by the Commissioner of Customs, JNCH, Nhava Sheva-II, Nhava Sheva, Mumbai Zone-II, Mumbai. The other appeal being Nos. C/85282/2020 has been filed by M/s Hindustan Inox Limited, Mumbai against confirmation of demand of duty; and appeals being Nos. C/85283/2020 and C/85284/2020 have been filed by Shri Hemant Bohra and Shri Vimal Bohra, Directors of the appellant company respectively (herein after, all referred together as the appellants ), against imposition of penalty, all the three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with interest. Since the appellants were having bona fide belief that CVD like other trade remedial duty imposed in terms of WTO agreement, are exempt when such imported goods are used for export of final products produced by use of such imported goods. The appellants had also approached various Ministries for obtaining necessary clarification and the Director General of Foreign Trade vide its Circular dated 11.10.2018 had clarified that the duty exemption under Notification No. 79/2017-Customs dated 13.10.2017 is prospective, and thus in respect of CVD leviable under Section 9 ibid, the exporters can claim Drawback in terms of Section 75 of the Customs Act, 1962. The same position was also separately clarified by the CBEC, Ministry of Finance in Circular No.49/2017-Customs dated 12.12.2017. Accordingly, the appellants have submitted a request in the form of an application dated 16.11.2018 for fixation of brand rate of drawback against payment of CVD along with interest made by them vide challan dated 23.10.2018. The said application dated 16.11.2018 was submitted to the jurisdictional Commissioner of Customs, along with requisite documents with a request for condonation of del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of drawback claim, inasmuch as the CVD was paid much after the date of filing of shipping bills in respect of exports effected by using the impugned imported goods. Therefore, the appellants had sought for permission of the jurisdictional Commissioner of Customs for relaxation of the procedural requirements under Rule 13(1)(a) ibid. 3.3 In the impugned order dated 19.04.2022, the learned Commissioner of Customs had decided as follows: 5. It is further observed that you have also made the following requests: A. Request for conversion of the relevant Shipping Bills from Free Shipping Bill to Drawback Shipping Bills ; B. Request for exemption from the requirements of Rule 13(1)(a) of the Drawback Rules in terms of the Proviso there to. 6. Your request for conversion of shipping bills has been considered by the undersigned and denied. The same has been communicated to you vide this office letter of F. No. S/6-Gen-03/2380/2021-22 CEAC dated 21.02.2022. 7. As regards your request as at B above it is observed that the Proviso to Rule 13(1)(a) of the Drawback Rules, provides that the Commissioner of Customs can exempt an exporter from the provisions of Rule 13(1)(a) if satisfied the expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of law that where the statute does not provide any limit, the same cannot be introduced by way of departmental circular. In this regard they relied upon the following case laws: (i) Mahalaxmi Rubtech Ltd. Vs. Union of India in Civil Application No.21636 of 2019 decided on 02.03.2021. (ii) Louverline Blinds Vs. Commissioner of Customs, Bangalore MANU/CB/0055/2022 (iii) Carboline India Pvt. Ltd. Vs. Commissioner of Customs [Customs Appeal No.40606 of 22021 dated 16.02.2022] (iv) Angel Overseas Corporation Vs. Union of India 2018 (362) E.L.T. 87 (Mad.) (v) Phil Corporation Limited Vs. Union of India 2004 (168) E.L.T. 24 (Bom) (vi) Commissioner of Customs, Mumbai Vs. Terai Overseas Limited - 2003 (156) E.L.T. 841 (Cal.) 4. Learned Authorised Representative (AR) reiterated the findings of the Commissioner of Customs in the Letters dated 21.02.2022 and 19.04.2022. He further submitted that as the appellants have not filed the amendment request within the prescribed time as mentioned in the Circular No. 36/2010-Customs dated 23.09.2010 and as they could not provide complete details for considering the request under Rule 13(1)(a) of the Drawback Rules, 2017, he claimed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding that the inclusion of CVD in the exempted list of duties occurred only on 13.10.2017. Thus, he confirmed the proposals in the SCN for demand of duty. Further, he held that the appellants importer had suppressed the facts by quoting advance authorization and did not pay applicable CVD and hence he found it fit for confiscation of the said goods and imposition of penalties on the appellants under 112(a) and 114AA ibid. 7.2 In order to address the above issues, we would like to refer the relevant legal provisions contained in the Customs Act, 1962; Customs Tariff Act, 1975; the notifications issued thereunder; and Drawback Rules, 2007 for proper consideration and for appropriate decision on payment of CVD and consequent confirmation of the adjudged demands. The relevant provisions are extracted below: Extract of Customs Act, 1962 Power to grant exemption from duty. Section 25 . (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction or otherwise, and whether it is imported in the same condition as when exported from the country of manufacture or production or has been changed in condition by manufacture, production or otherwise, the Central Government may, by notification in the Official Gazette, impose a countervailing duty not exceeding the amount of such subsidy [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 18/ 2015 - Customs New Delhi, the 1st April, 2015. G.S.R. 254 (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials imported into India against a valid Advance Authorisation issued by the Regional Authority in terms of paragraph 4.03 of the Foreign Trade Policy (hereinafter referred to as the said authorisation) from the whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of the additional duty, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices tax compensation cess leviable thereon under sub-section (9) of section 3,safeguard duty leviable thereon under section 8B, countervailing duty leviable thereon under section 9 and antidumping duty leviable thereon under section 9A shall be substituted CIRCULAR NO. 36/2010-CUSTOMS F.No.609/121/2009-DBK Government of India Ministry of Finance Department of Revenue Central Board of Excise Custom ***** New Delhi, the 23 rd September, 2010 To All Chief Commissioners of Customs/Central Excise/Customs Central Excise. All Commissioners of Customs/Customs (P)/Customs Central Excise /Central Excise. All Director Generals of CBEC, Chief Departmental Representative of Customs Excise Service Tax Appellate Tribunal. Sir/Madam, Sub: Conversion of free shipping bills to export promotion scheme shipping bills and conversion of shipping bills fromone scheme to another - reg. I am directed to invite attention to the Board's circular No.4/2004-Cus dated 16.01.2004 which debars conversion of free shipping bills to Advance License/DFRC/DEPB shipping bills and allows conversion of shipping bills from one export promotion scheme to another only where the benefit of an export promotion scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torily proved in the resultant export product. c) The examination report and other endorsements made on the shipping bill/export documents prove the fact of export and the export product is clearly covered under relevant SION and or DEPB/Drawback Schedule as the case may be. d) On the basis of S/Bill/export documents, the exporter has fulfilled all conditions of the export promotion scheme to which he is seeking conversion. e) The exporter has not availed benefit of the export promotion scheme under which the goods were exported and no fraud/ misdeclaration /manipulation has been noticed or investigation initiated against him in respect of such exports. 4. Free shipping bills (shipping bills not filed under any export promotion scheme) are subject to 'nil' examination norms. Conversion of free shipping bills into EP scheme shipping bills (advance authorization, DFIA, DEPB, reward schemes etc.) should not be allowed. However, the Commissioner may allow All Industry Rate of duty drawback on goods exported under free shipping bill, without conversion of such free shipping bill to Drawback Scheme shipping bill, in terms of the proviso to rule 12(1) (a) of the Customs, Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 07.09.2017 to 12.10.2017, the duty exemption brought into effect by Notification No.79/2017-Customs dated 13.10.2017, cannot apply retrospectively when such a provision has not been exercised by the Government. In view of the above legal position and in terms of Section 159A ibid which provide that the effect of amendment do not revive anything that was not in force or existing at the time at which the amendment takes effect, we are of the considered view that import of stainless steel coils and plates from China in eight impugned B/Es all dated 12.10.2017 are liable for payment of Countervailing Duty (CVD) imposed under Section 9 of the Customs Tariff Act, 1975. To this extent the impugned order dated 01.11.2019, passed by learned Commissioner of Customs in confirmation of the demand of CVD duty is legally sustainable. 8.1 It is on record that the issue of CVD exemption in respect of imports through use of Advance Licenses was under dispute and the appellants and similarly placed exporters/importers have made a number of representations (14 such representations) to different authorities viz. Chairman, EEPC; Additional DGFT, Mumbai; Chairman, CBEC; Additional Director General, DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a penalty is imposed, if it established that in relation to goods which are liable to confiscation under Section 111 ibid, and that such penalty is liable to be imposed on any person . It is not the case that in the factual matrix of the present case, that the impugned imported goods were imported by the appellants involving any prohibition imposed under Customs Act, 1962 or any other Act. In fact, the appellants importer have given the specific Advance Licenses on which they had claimed exemption from the levy of CVD, and the departmental authorities at the Customs port of importation had also permitted such impugned imported goods to be cleared without payment of such CVD approving of such act by the appellants. It is only on account of subsequent investigation by DRI, that the appellants have paid the CVD duty on 23.10.2018. From the above factual details, it is clearly proved that there is no trace of any element of violation of Section 111(d) ibid and hence the imposition of penalty under Section 112(a) ibid is without any evidence or grounds and hence to this extent the impugned order is not legally sustainable. 8.3 In respect of penalty imposable under Section 114AA ibid is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based upon reliance on technical features to distinguish it from a capability inherent in all vessels that put out to sea in terms of subordination to its principal function. With that complexity to be resolved, there is no scope for indicting the individuals in these proceedings for deliberate mis-declaration. That the benefit of an exemption has been sought to be availed does not, of itself, render such claim to be with intent to evade duty. Furthermore, the role of these individuals in the mis-declaration of stores and bunkers is not evident in the impugned order. The penalties imposed on the individuals are, accordingly, set aside to allow their appeals. In an appeal filed by the department against the said order of the Tribunal in Civil Appeal Diary No. 26805/2022, the Hon ble Supreme Court had upheld the above order of the Tribunal and dismissed the Civil appeals filed by the department. 9.1 In fact, it is due to a number of representation made by the appellants importer and the trade, that the Government came out with the solution to the dispute in relation to imports by use of Advance Authorization/License, both for the period commencing from 13.10.2017 by issue of amendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above CBEC instructions, it is established that with respect to Countervailing Duties (CVD) which are leviable under Section 9 of the Customs Tariff Act, the Board had in clear terms had clarified that these are rebatable as Drawback in terms of Section 75 of the Customs Act, 1972. The said circular also explains the grounds/reasons as to why such drawback should be entertained by the departmental authorities, by stating that since CVD are not taken into consideration while fixing All Industry Rates of Duty Drawback, the Drawback of such Countervailing Duties can be claimed under an application for Brand Rate under Rule 6 or Rule 7 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 and/or the Customs and Central Excise Duties Drawback Rules, 2017. The said circular also clearly give directions to the departmental authorities in the field formations that drawback shall be admissible only where the inputs that suffered CVD were actually used in the goods exported as confirmed by the verification conducted for fixation of Brand Rate. 9.3 We also find that the DGFT authorities vide letter F. No. 01/94/180/ 201/AM18/PC-4(GST) dated 11.10.2018 had addressed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court as discussed in the following paragraphs. 9.6 The Hon ble High Court of Madras has held in the case of Angel Overseas Corporation (supra) that the object being that the exporter should be entitled to drawback, the delay in filing claim filed for drawback should be entertained by condoning the delay. 24 . The Learned Central Government Standing Counsel for the Revenue emphasise that such power to relaxation is only in relation to the export of any goods and not in a case like that of the petitioner, where it is a case of supplementary claim. What has to be noted is that a claim for drawback can arise only in a case where an export occurs. Therefore, to state that Rule 17 would have no application is a very narrow and incorrect way of interpreting Rule 17. Above all, the object of the Drawback Rules is to encourage and boost exports and if the entitlement for drawback is interpreted to be on par with the exemption notification, then what is essential is compliance of the mandatory conditions. 9.7 The Hon ble High Court of Bombay has held in the case of Phil Corporation Limited (supra) that condonation of delay is permissible and the same cannot be rejected only on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration for the Court is how an exemption clause is to be interpreted. The learned judges held that in the matter of granting exemption, some provisions are mandatory which are decided on the basis of the policy division and some provisions are procedural. It will be erroneous if the Court interprets both the provisions on the same footing. In M/s. Mangalore Chemicals the Apex Court was considering the interpretation of the provisions of the Karnataka Sales Tax Act, 1957. The Court in coming to the aforesaid conclusion relied on Francis Bunion s Statutory Interpretation 1984 Edition, page 683. The learned author states that the modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation. 34 . In the instant case, also the Court should adopt a liberal construction as is required to further the object behind Drawback Rules, namely to boost export. 9.9 The Hon ble High Court of Ahmedabad has held in the case of M/s Mahalaxmi Rubtech Ltd. (supra) that the time limit of the submission of the request for conversion of shipping bills from one scheme to another ..... X X X X Extracts X X X X X X X X Extracts X X X X
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