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TMI Blog2024 (9) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... d and statements recorded during inquiry, it was prima facie observed in the impugned order that the petitioner failed to comply with the conditions stipulated under the Exemption N/N. 12/2012-Cus dated 17th March, 2012 - From the above alleged failure on part of the petitioner, it was concluded that petitioner was not eligible for exemption from custom duty under the Exemption Notification more particularly to reconcile conditions of Exemption Notification as the invoices issued by the petitioner to the power generating companies towards sell of RLNG and utilisation certificate issued by the generating companies did not contain any reference to the corresponding entry to the Bills of Entry. The Respondent-Department therefore invoked provision of Section 28 (4) of the Act on the alleged breach of the conditions by the petitioner on the ground that the utilisation certificate was not produced within the time limit of three months and twelve months and the transit loss of LNG not supplied to the power generating companies during the gasification during the relevant period - thus, in view of the alleged allegation levelled against the petitioner, it is clear that there is no suppress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-COM-021-022-21 dated 20.01.2022 passed by Respondent No. 2 Principal Commissioner of Custom, Ahmedabad against Show Cause Notice No. VIII/10-12/Pr. Commr/O A/2019 dated 19.06.2020 and Show Cause Notice No. SCN/01/CH-Dahej/2021-22 dated 23.08.2021 issued u/s. 28 (4) of the Customs Act, 1962 . 4. Brief facts of the case are as under. 4.1 The petitioner is a Government company under section 617 of Companies Act, 1956 read with section 2 (45) of Companies Act, 2013. As per the Memorandum of Association (MOA) of the petitioner, one of the objects under clause-5 of MOA is to act as an agent of Government of India and to implement its scheme in the country. 4.2 The petitioner is availing customs duty exemption under Notification No. 12/2012-custom dated 17th March, 2012 under Entry No. 139. Subsequently, Notification 12/2012 was amended by Notification No. 36/2013 dated 22nd July, 2013 and further amended by Notification No. 30/2014 dated 20th October, 2014. Under the said amendments in the Notification, period for submission of certificates were extended to twelve months from the date of import. 4.3 Thereafter, the said Notification of the year 2012 was amended by Notification No. 31/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner under Section 28 (4) of the Customs Act, 1962 (for short the Act ) for the import period from 27th May, 2015 to 12th December, 2018 alleging following issues; (i) Raising a demand of custom duty of Rs. 1,66,62,050/-on 0.66% conversion/transit loss during re-gasification process. (ii) Raising a demand of custom duty of Rs. 2,01,71,06,450/- alleging non-submission of utilization certificate within necessary time limits by correlating with Bills of Entry. 4.7 Subsequently, another show cause notice was issued on 23rd August, 2021 under Section 28 (4) of Act for raising a demand of Rs. 03,01,376/- for the period September, 2019 to August, 2020 on account of transit loss claimed by the petitioner during conversation of LNG into RLNG. 4.8 The petitioner, filed reply to the first show-cause notice on 25th August, 2020 along with all documentary evidences. Subsequently, the petitioner had also filed reply to the second show-cause notice by letter dated 09th November, 2021. 4.9 Under the said replies, the petitioner had mainly raised the question of maintainability of show-cause notices under Section 28 (4) of the Act as on 19th June, 2020 (first show-cause notice) and 23rd August, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod from 27th May, 2015 to 12th December, 2018 which is admittedly beyond the period of two years as provided in the said Section. 5.2 It was submitted that the respondent authorities have misinterpreted the provisions of the Notifications granting exemption from payment of duty by the petitioner for importing LNG without taking into consideration the submissions of the petitioner made along with documentary evidence placed on record to show the reconciliation of the imported LNG and supply of RLNG to the power generating companies. 5.3 It was submitted that the respondent authorities have failed to consider the fact that modalities for claiming customs duty exemption for LNG cargos imported for supply to power plants were discussed with Deputy Commissioner of Customs, Surat on 18th June, 2015 and the same was communicated to the petitioner vide letter dated 20th June, 2015 and emails dated 15th June, 2015 and 10th July, 2015. The petitioner has also submitted month-wise reconciliation of imported cargo along with utilisation certificates and invoices as per the Notification issued in the year 2015. 5.4 Learned senior advocate Mr. Soparkar submitted that the scheme of the Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively that as there was delay of about four-months-thirteen-days in submission of the utilisation certificate by the petitioner, the same was within the extendable period of six months and the Respondent-Department had never objected while accepting the submitted documents on the date of submission, meaning thereby that the time for submission was deemed to have been extended. 5.8 Learned senior advocate Mr. Soparkar thereafter submitted that the impugned order is passed only on the alleged violation of conditions of the Notification for non-submission of utilisation certificate and for not considering the fact that there was conversion loss of 0.66% in RLNG which is also not disputed by the respondent authorities. 5.9 Learned senior advocate Mr. Soparkar referred to and relied upon the order passed by the CESTAT, New Delhi in Service Tax Appeal No.52946 of 2016 and Service Tax Appeal No. 52980 of 2016 wherein the claim of exemption by M/s. Petronet LNG Limited which converts LNG into RNLG has been upheld on the ground that the said quantum had not been utilised for any commercial gain and it is technologically impossible to convert 100% LNG of RNLG. Reliance was also placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption of the custom duty for import of LNG is subjected to the condition that the importer produces the invoices for sale RLNG to the generating companies before the customs authority within the period of three months from the date of import or such extended period not exceeding further period of six months and also produces utilisation certificates from the generating companies to the effect that RLNG has been utilised for generating and supplying electrical energy before the customs authority within a period of three months from the date of import. It was pointed out by learned advocate Mr. Gupta that petitioner has failed to adhere to the conditions of the Notification to avail the benefit of exemption of customs duty. By inviting attention of the Court to the details in the show-cause notice pertaining to 28 Bills of Entries wherein it is found that the petitioner has not produced utilisation certificate and the certificates which are produced are beyond the specified time limit of three months and that some certificates were not appropriate as there is no co-relation with the quantity stated in the Bill of Entry and the utilisation certificate produced by the petitioner. 6.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition is considered on merits. 8.1 On perusal of the impugned show-cause notices issued by the Commissioner of Customs, it appears that the same could not have been issued on the ground of suppression of material facts on part of the petitioner by invoking Section 28 (4) of the Act which reads as under. 28. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. xxxxx (4) Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of, (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or not paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. 9. Considering the contents of the show-cause notice, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) of section 2 of Electricity Act 2003; (ii) the importer produces the invoice for sale of RLNG to the generating companies before the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, within a period of three months from the date of import, or such extended period not exceeding further period of six months as the Commissioner of Customs may allow; (iii) the importer also produces utilisation certificates from the generating companies to the effect that the RLNG has been utilised for generating and supplying electrical energy by the said generating companies before the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, and such utilisation certificates shall be produced within a period of three months from the date of import, or such extended period not exceeding a further period of six months as the Commissioner of Customs may allow; (iv) GAIL furnishes a corporate guarantee backed by it's Board resolution, of an amount equal to the difference between the Customs duty leviable on such goods but for the exemption contained therein and the duty levied at the time of import, to the Assistant Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records. Revenue foregone on the said differential quantity was calculated by CRA as Rs. 2,03,57,456/- (d) Utilization Certificate submitted was also short of actual quantity sold. Rs. 11,93,29,989/- was revenue involved on such quantity of LNG for which utilization certificate was pending. (e) There was no evidence of any sale of LNG of 68,21,849 MMBTU of Value Rs. 2,86,05,99,588/- involving duty forgone Rs. 14,73,20,888/- (f) The Noticee claimed transit loss of 0.66% of LNG actually received. However, provision under which such loss had been claimed was not on record. The revenue forgone on such transit loss is Rs.41,07,145/-. 9.4 The said issues were taken up with the petitioner by various communications dated 27th November, 2017, 12th December, 2017, 04th February, 2019 and 11th February, 2019, which were replied by the petitioner by letters dated 15th February, 2018, 13th April, 2018 and 05th March, 2019 by submitting various documents. Thereafter inquiry was initiated by the Preventive Section and statements of the responsible/authorised persons of the petitioner and M/s. Petrone LNG were recorded. 9.5 Considering the documents made available on record and statements rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies through pipeline in a continuous manner. 13. The impugned notice and the Order-in-Original therefore are contrary to the facts available on record. The Commissioner (Appeals) in the impugned oil dated 20th January, 2022 with regard to invoking of Section 28 (4) of the Act has observed as under. 14. It has been contended that the extended period of limitation was not applicable since there was no wilful mis-statement or suppression of facts in the case. In this regard it is to mention that the entire demand has been raised in light of the non-fulfilment of the conditions of relevant Notifications. Both the Notifications clearly spell out that the exemption to import of LNG is for the specific purpose of supply to generating company as defined in clause (28) of Section 2 of the Electricity Act, 2003 and generation of electrical energy. In the instant case, it was in the knowledge of the Noticee that 0.66% of the Imported LNG was neither supplied to the generating company nor used for generation of electrical energy in as much as such quantity was claimed as loss even before the act of supply to the generating company i.e. process loss during conversion from LNG to RLNG. Despite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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