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TMI Blog2024 (10) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... so, 3 notes were cancelled and against 4th contract notes, hulled seasame seeds were supplied, therefore diversion is not proved beyond allegation. The documents relied upon by the department fall flat on their face in attempting to evidence alleged diversion. Even, broker in his statement mentions that seeds were not imported but were of Somalia quality and not Somalian origin as also pointed out by the adjudicating authority. It is also found that clarification about indigenous raw material used for short fall as well as revision of norms was on specific reference by the appellants as well as the relevant export promotion council, same was therefore rather required to be given due weightage. It rather fortifies their claim that even under old dispensation of 1% wastage SION norm, there was need to use indigenous material to meet export obligation. Same was apparently done by them. In fact, instead of diversion, the evidence on record points to rather procurement of indigenous material and this appears to have been appreciated by DGFT, as how else an industry with low 1% norm as against actual 13% (revised 33%) could have practically operated, without indigenous procurement. Later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was conducted at the premises of DAE, Rajkot on 05.09.2014. The investigation revealed that DAE had imported 19944.560 MT raw sesame seeds duty free under 21 AAs, out of which export obligation was fulfilled in case of 11 AAs, by exporting 8331.752 MT hulled sesame seeds (8413.07 raw sesame seeds considering 1% process loss). 1.2 As regards remaining quantity of 11531.490 MTs of raw sesame seeds imported under 10 Advance Authorizations during the period 06.03.2013 to 05.02.2014, they have exported 1369.940 MT hulled sesame seeds (1383.290 raw sesame seeds). However, as per Standard Input Output Norms (SION) and conditions of Advance Authorization, the importer was required to export 11417.306 MTs of hulled sesame seeds. At the time of search, only 620.608 MT sesame seeds were found in stock. Thus, 9527.592 MT raw sesame seeds, imported duty free, under AA were found not utilized by them for the specific purpose i.e. processing the imported sesame seeds into hulled sesame seeds and subsequent export under advance license, but, the said quantity was alleged to be diverted into the local market in violation of condition of Notification No. 96/2009-Cus dated 11.09.2009 and Para 4.1.5 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort Obligation Discharge Certificate (EODC) is issued by DGFT, Customs cannot demand duty against advance licenses. 2.2.7 They have relied on the ruling of Policy Interpretation Committee of DGFT dated 12.01.2018, wherein it is held that advance authorization holder has option to export resultant product using duty paid materials procured from domestic sources subject to actual user condition etc. 2.2.8 The interpretation of DGFT shall be final and binding for all; Relied upon case law of AKM Trading Corporation Ltd. 2.2.9 The process loss in SION is revised to 33% on 03.01.2018, vide Public Notice No. 49/2015-20. 3. The adjudicating authority dropped the proceedings against M/s Dhaval Agri Exports as well as Sh. Chandarana, mainly on the following grounds: (i) The Adjudicating authority in his findings has observed that the investigating agency has ignored the part of the statement dated 21.01.2015 of Shri Dinesh Jayantilal Tanna of M/s. Tirupati Agro, Rajkot, a broker of sesame seeds. He had deposed that the product description mentioned in the contract notes denotes the quality of different sesame seeds which is commonly called in the business circle. As such it cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of as provided in Notification No. 96/2009-Cus dated 11.09.2009 and Para 4.1.5 of the FTP 2009-14. 5.2 The relevant condition (x) of the said notification reads as under: That the said authorisation shall not be transferred and the said materials shall not be transferred or sold; Provided that the said materials may be transferred to a job worker for processing subject to complying with the conditions specified in the relevant Central Excise notifications permitting transfer of materials for job work. 5.3 Para 4.1.5 of the FTP 2009-14 reads as under: Advance Authorization and / or materials imported there under will be with actual user condition. It will not be transferable even after completion of export obligation. However, Authorization holder will have option to dispose of product manufactured out of duty-free inputs once export obligation is completed. In case where CENVAT credit facility on inputs have been availed for the exported goods, even after completion of export obligation, the goods imported against Advance Authorization shall be utilized only in the manufacture of dutiable goods whether within the same factory or outside (by a supporting manufacturer), for which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct are erroneous. 6.2 Shri Dinesh Tanna of Tirupati Agro, a broker firm, in his statement dated 09.09.2014, has categorically stated that the importers who import sesame seeds through him were also selling the same in the local market through him. In his further statement dated 21.01.2015, Shri Tanna stated that the goods viz. sesame seeds were delivered from Mundra and terms for supply to buyers is the responsibility of M/s. Dhaval Agri Exports. The place of delivery of the goods was Mundra i.e. port of import. The place of delivery (i.e. Mundra) mentioned in the contract notes itself is sufficient evidence to show that the goods were imported and diverted to local market. 6.3 The description, origin, quantity and delivery place mentioned in the sales contract notes coincides with the actual imports made by the importer under advance authorization. On perusal of the details of sale of goods as per contract notes and corresponding details of import, it can be seen that the description, origin, quantity and delivery place mentioned in the said contract notes exactly match with the actual imports made by the importer under advance authorization. Further, it is claimed that out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is actual, which was 1% until then, and divert the rest. 6.5 Furthermore, the said Public Notice dated 03.01.2018 is prospective and not retrospective. The SION norms applicable to an Advance Authorization in force at the time of issuance of advance authorization will be applicable. Any subsequent amendment in SION norms cannot be made applicable retrospectively, unless otherwise specified in the Public Notice of DGFT. Each advance authorization contains quantity of goods to be imported and quantity of the goods to be exported, after considering the SION as applicable. 6.6 Further, in his statement dated 11.09.2014, Shri Jay Chandarana has informed that they have received EODC from DGFT in 9 advance authorizations, according to which 5391.752 MT hulled sesame seeds were exported against import of 5445.670 MT sesame seeds. The process loss in above transactions comes to 1%, which is same as provided in SION. Furthermore, as mentioned above, in case of 11 advance licenses they had fulfilled export obligation by exporting 8331.752 MT processed sesame seeds as against import of 8413.070 MT raw sesame seeds. In these transactions also the process loss comes to @1%, which is in confo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the exports or other disposal against these. When they were asked as to how they ascertain whether the exported goods were from the imported or indigenous purchase, they could not give any satisfactory reply. They were also not maintaining any record to show the wastage arising during the processing of raw sesame seeds. It means they could be freely mixing the indigenous and imported sesame seeds at the stage of processing. DGFT ruling dated 12.01.2018 of Policy Interpretation Committee: 10. The DGFT has issued ruling dated 12.01.2018 of Policy Interpretation Committee of DGFT. The decision of the committee is as under: Taking into consideration the above stipulation and submission of the applicant, it is clarified that Advance Authorization holder has option to export resultant product using duty paid materials procured from domestic sources also within the validity of period of Authorization and subject to Actual User condition in respect of inputs imported there under . 10.1 The said committee has issued the clarification based on the submission of the Importer. The gist of representation made by the importer to the Committee to ascertain the basis of clarification issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly small quantity of imported raw sesame seeds was available. The EODC issued by DGFT is without considering the facts and evidences unearthed in the course of the investigation and detailed in the show cause notice. The issuance of EODC by the DGFT does not bar the department from proceeding against the importer for violation of the conditions of the Notification granting exemption from payment of Customs duty. Grant of EODC is towards fulfillment of obligations mentioned in the FTP. The importer has been permitted to fulfill export obligation by even using domestic inputs but this cannot be considered as fulfillment of actual user condition under the customs notification. Violation of condition (x) of Not. No. 96/2009-Cus dated 11.09.2009: 13. Notification No. 96/2009 - Cus dated 11.09.2009 exempts materials imported into India against an Advance Authorization issued in terms of paragraph 4.1.3 of the Foreign Trade Policy 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, safeguard duty and anti - dumping duty leviable thereon, respectively, under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals. 4. Submissions of M/s. Dhaval Agri Exports (Hereinafter referred to as Respondent) It was submitted that they are engaged in processing of natural sesame seeds and trading of Sesame Seeds including natural as well as hulled sesame seeds and other agriculture produce. Respondent was importing Raw Sesame Seeds and also procuring locally. It mainly exports processed sesame seeds directly and sometimes through merchant exporter also. Sometimes they export natural sesame seeds as well as other agriculture produces like cotton, cumin seeds, coriander seeds etc. 5. Respondent had imported 19,944.56 MTs Raw (Natural) Sesame Seeds valued at Rs. 222,93,89,018/- without payment of customs duty amounting to Rs. 80,56,12,014/-under 21 Advance Authorisations (referred in paragraph 7(b) and 7(c) of the SCN) during the period 24.12.2012 to 23.07.2014 vide 139 Bills of Entry. It had declared and classified the goods as Raw Sesame Seeds under tariff item 12074090 which attracts basic customs duty 30% with 2% Education Cess and 1% Secondary Higher Education Cess and 4% Additional duty of Customs and claimed benefit of Notification No.96/2009Cus. dated 11.09.2009. In addition to the said quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Act, 1962 on 08.09.2014 and 11.09.2014, which were exculpatory. 7. Respondents filed detailed reply to the said SCN and also appeared before the Commissioner, Customs, Mundra who had while passing Order dated 10.08.2018 dropped the proceeding initiated vide said SCN dated 21.10.2015 against both the respondents. Hence the present appeals by the department. Also a protective appeal has been filed by the party as appellant to seek adjustment of certain shipping bills filed as Drawback to be claimed and treated as having been filed under Advance Authorization Scheme, in case the department appeal is contemplated for acceptance. 7.1 Respondent submitted that though the learned Committee has directed to prefer an appeal for correct determination of mainly three points for determination viz. (i) Whether goods imported under various Advance Authorisations were not used for specified purpose but have been sold in local market? (ii) Whether respondent has violated the Condition No. (x) of the Notification No. 96/2009-Cus. dated 11.09.2009 read with Para 4.1.5 of the Foreign Trade Policy 2009-14? and (iii) Whether Public Notice No.49/2015-20 dated 03.01.2018 issued by DGFT (Revising SION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported natural sesame seeds under 11 Advance Authorisation after allowing 1% process loss 8,331.752 MT processed Hulled Sesame Seeds were exported. 7.6 Respondent submitted that it is a fact evident on record that goods viz. imported raw sesame seeds were never diverted in local market but were used for intended purpose viz. hulling and exported the same. The goods viz. hulled sesame seeds instead of exporting under Advance Authorisation were through oversight exported under claim of Drawback. Even process loss claimed were less than 1% of permissible limit under SION. In any case there is no evidence of diversion of raw sesame seeds in local market. Since, it is established from the records available at the time of search and also revealed during further investigation by way of recording statements of CEO of the respondent as well as License-wise Statement/Sheet showing import and export of goods against 10 Advance Authorisation, imported goods were used for intended purposes of hulling and exported with claim of process losses less than 1% within the permissible limit of 1% as per SION. Therefore, grounds raised in the appeal about violation of the condition of notification an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have exported 8140.649 MT of Hulled Sesame Seeds under drawback scheme and not under Advance Authorization Scheme; that even if its exports under drawback scheme was accounted against export under Advance Authorization, there was shortage of 1284.486 MT of imported Raw Sesame Seeds which is as detailed below; and that Respondent failed to give any explanation for this shortage. Sr. No. Description Qty (in MT) 1 Total Import 19944.560 2 Total Export required as per SION 19747.089 3 Total Export under Advance Authorization 9701.346 4 Export under Drawback and claimed under Advance Authorization 8140.649 5 Stock of Sesame Seeds available at the time of Panchnama as per books of accounts 620.608 6 Shortage of imported goods found [2-(3+4+5)] 1284.486 Thus, at the time of investigation it was deposed that out of imported raw sesame seeds 8140.649 MTs of Hulled Sesame Seeds were exported under claim of drawback instead of under Advance Authorisations. All these facts were disputed only on the ground that conversion of shipping bills were not allowed and application for conversion of shipping bills were made after initiation of investigation by DRI, which is factually in correct as ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that another statement of the CEO was recorded under Section 108 of the Customs Act, 1962 on 11.09.2014 wherein he inter alia stated that on being asked to explain the shortage of 1578.136 MT of sesame seeds as they have imported a quantity of 18755.180 MT of sesame seeds under Advance Licenses out of which they had exported 9590.186 MT against Advance Licenses and 6966.250 MT against Drawback Scheme as claimed by them and only 620.608 MT was in balance as per record, he stated that the shortage was on account of processing losses. On being asked that whether they have sold the imported Sesame Seeds or Hulled Sesame Seeds processed from imported Sesame Seeds through M/s. Tirupati Agro, Rajkot, to which he replied that they sold Natural as well as Hulled Sesame Seeds which were purchased locally and processed in their unit. 7.12 Respondent most respectfully further submits that a statement of Shri Dinesh Jayantilal Tanna of M/s. Tirupati Agro was recorded under Section 108 of the Customs Act, 1962 on 09.09.2014 wherein he inter alia stated that on being asked how much quantity of sesame seeds was imported by the respondent under indent ship and sold into the local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad of advance authorization. There is no other evidence in any form was/is adduced regarding diversion of goods in domestic market to local buyers nor recorded relied upon any statement of such buyers if any. 7.15. Respondent submitted that while recording statement dated 08.09.2014 of CEO of respondent he had submitted License wise 10 Statements/Sheets for 10 Advance Authorisations referred in table at paragraph 7(c) of page 8 of the SCN showing details of Import and Export viz. Bills of Entry date, import quantity(MT), CIF Value (Rs.) import of goods, Description viz. Raw Natural Whitish Sesame Seeds for import and Quantity to be exported, Shipping Bill Number and date, Invoice No., Export Quantity(MT), FOB Value (Rs.), FOB Value (USD as per BRC), Description-Hulled Sesame Seeds for export, which bears signature of CEO with date i.e. 08.09.2014. It is further submitted that Shipping Bills mentioned as per the remarks at bottom of the sheets for License/Advance Authorisation at Sr. No. 4, 5, 6, 7, 8, 9 and 10 were for exported Hulled Sesame Seeds processed from imported Raw Sesame Seeds under claim of Drawback instead of under Advance Authorisation. Attention of the Bench was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for conversion of shipping bills (listed in the attached sheets) against 3 Advance Authorisation (Licenses at Sr.No.4,5 8 of the table at page 8 of the SCN) was submitted to Custom House, GPPL, Pipavav on 05.09.2014. Co-incidentally, date of search and submission of the said letter are same but by any means it was prepared and sent prior to search only. In addition to that the respondent had paid Rs. 2,28,41,127/- (Rs.2,13,41,127/- as shown in paragraph 6 page 7 of the SCN plus Rs.25,00,000/- paid vide GAR-7/TR-6 Challan No. MP SEZ/2785/14-15 dated 21.11.2014) as against drawback of Rs. 1,37,36,994/- (inclusive of interest of Rs.6,04,519/-) were sanctioned and paid to it by way of refund. Therefore, grounds of appeal at para 10 and 10.1 are totally baseless. 7.17 Respondent without admitting anything further submitted that in any case export obligations against said 10 Advance Authorizations were completed by it by procuring duty paid goods from the local markets, as per the provisions of the Foreign Trade Policy in addition to the hulled sesame seeds exported under claim of drawback. In this regard attention of Hon ble Bench is invited towards sheets showing Advance Authorization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions on fulfillment of export obligations. The same was informed by the Superintendent of Customs, Custom House, Mundra to Respondent vide his letters (1) F. No. VIII/48-36/MISC/MCH/15-16 dated 30.06.2015, (2) F. No. VIII/48-390/MISC/MCH/15-16 dated 14.08.2015, (3) F. No. VIII/48-309/ MISC/MCH/15-16 dated 28.12.2015, (4) F. No. VIII/484/MISC/MCH/15-16 dated 25.02.2016 and (5) F. No. VIII/48-52/MISC/MCH/ 15-16 dated 17.04.2015. 7.20 Respondent submitted that in view of the above, there was no diversion of goods at all. As regard to goods imported against Advance Authorisation but exported under claim of drawback and export obligations against said 10 Advance Authorization were fulfilled by procuring duty paid Sesame Seeds within validity period. Therefore, EODC were issued by the DGFT and Bonds were also cancelled by the Customs Department. As per settled position of law amongst other in following decisions it held that once export obligations are discharged it is not open for the revenue to initiate proceedings against the exporter: Jindal Drugs Pvt. Ltd. Vs. Commissioner of C. Ex. ST, Ludhiana 2018 (362) ELT 281 (Tri. Chan.) Aditya Birla Nuvo Ltd. Vs. Commissioner of Cus., Bangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above letter dated 18.11.2017, the Respondent, vide letter dated 12.01.2018 was informed by the Foreign Trade Development Officer DGFT, New Delhi that its case was discussed at length by the Policy Interpretation Committee (PIC) on 19.12.2017. Decision of the PIC was also conveyed under the said letter wherein after discussing the fact and provisions of the Policy, it was held that: Taking into consideration the above stipulation and submission of the applicant, it is clarified that Advance Authorization holder has option to export resultant product using duty paid materials procured from domestic sources also within the validity period of Authorization and subject to Actual User condition in respect of inputs imported thereunder. Only inputs which are declared in the shipping bills shall be allowed to be imported. 7.22 As per settled position of law amongst other following decisions decision /clarification issued by the DGFT is binding upon Customs: A.G. Enterprise Vs. Commissioner of Cus. (Preventive), Jamnagar 2014 (308) ELT 418 (Tri. Ahmd.) Unimers India Ltd. Vs. Commissioner of Customs, Mangalore 2010 (250) ELT 225 (Tri. Bang.) Commissioner of Custom (Gen.), Mumbai Vs. AKM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers one of the reasons for shortages was process loss at higher rate than permissible 1% and goods were not diverted in local market as such. In any case process loss was claimed @ less than 1% only and indigenously procured duty paid raw sesames seed after hulling were exported for excess process loss. Therefore, allegations of diversion are far from the truth. 7.25 Respondent further submitted that apart from that differential quantities were exported by procuring duty paid raw sesame seeds under the said licenses. Even process loss claimed was less than 1%. Therefore, department s appeal is liable to be quashed on these grounds too. 7.26 Respondent submitted that in view of the above oral evidences as well as documentary evidences it is proved that there was no diversion of goods but raw sesame seeds after process of hulling through oversight were exported under claim of drawback instead of advance authorization. There was no other evidence in any form was adduced regarding diversion of goods in domestic market to local buyers nor recorded relied upon any statement of such buyers, if any. 8. Apart from the above the learned Committee in sheer disregard to above referred ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other country quality goods and goods were sold against H form. 8.2 The above apart, learned Committee appeared to have lost sight of the fact that Respondent does not only deal in sesame seed imported against Advance Authorizations. It was matter of record that Respondent also traded in local sesame seeds in addition to imported sesame seeds under Advance Authorization scheme. Therefore, by comparing isolated data of imports referred to above, it cannot be claimed that said goods were diverted by it in local market. 8.3 Respondent without admitting any thing further submitted that Show Cause Notice did not refer such details nor alleged the same. Therefore, learned Committee at appeal stage cannot create new case and such points cannot be raised at the time of appeal before the Tribunal by traveling beyond the scope of SCN. 8.4 Respondent without admitting anything and without prejudice further submitted that even if it is assumed that above adverse inferences were true for sake of argument, even in that case based on one contract note it can be alleged that 18MT of sesame seeds were diverted by it in local market. It was for the reason that first three contracts were cancelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal filed based on the order passed by the learned Committee under Section 129D(1)ibid is devoid of merits. The learned Committee in exercise of powers conferred under Section 129D(1) ibid is supposed to call for and examine the record of any proceedings in any order for the purpose of satisfying itself as to the legality and propriety of order. However, on perusal of the review order dated 26/30.10.2018 as well as grounds of appeal dated 22.11.2018, however it is evident from the reply given under the RTI (enclosed in compilation submitted at the time of hearing) that the learned Committee has not called for and examined the record of proceedings of the Order-in-Original dated 10.08.2018. In other words while reviewing the order and preferring the appeal, the learned Committee has not gone into any entire case records viz. Show Cause Notice and its relied upon documents including statements recorded under Section 108 of the Customs Act, 1962, reply dated 07.03.2017 to the SCN supported with documentary evidences, further submission dated 23.04.2018 supported with documentary evidences and summary of submission dated 01.08.2018 made at the time of personal hearing before the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on the following case law: Nisan Exports Vs. CC, Mundra Final Order No. A/12221/2023 dated 25.09.2023 Pr. Commr. of Customs, Mundra Vs. Lykis Ltd. 2021 (377) ELT 646 (Guj.) Oriental Carbon Chemicals Ltd. Vs. UOI 2021 (377) ELT 850 (Guj.) Gokul Overseas Vs. Union of India 2020 (373) ELT 49 (Guj) The Ld. Advocate prayed that though conversion of shipping bills is permissible but if the department s appeals are rejected, impugned appeal No. C/10985/2017-DB will become infructuous. FINDINGS :- 11. We have considered the rival submissions along with the case law on record. We find that at the heart of the controversy (as it originally emanated) is the fact of respondent working under Advance Authorization Scheme and making exports under the same claiming initial wastage as per SION norms without conducting day to day inventory of non issued raw-material. It is found that there was deficiency in the inventory of non issued material which the respondent explained to the Appellant-Department as being due to higher rate of wastage than provided in SION norms. They sought to explain the deficiency in materials found during the search was due to higher process loss than permitted under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DC issued in this regard and which forms part of the record of the findings of the adjudicating authority in discussion as contained in para 17 to 24 as reproduced below: Para 17. I find that the entire show cause notice is based on the allegation that M/s. DAE has diverted the raw sesame seeds imported under Advance License in the domestic market and therefore, they have not fulfilled the actual user condition as envisaged in the Notification No. 96/2009-Customs dated 11.09.2009. In support of this allegation, the evidences relied upon by the investigating agency are the statement dated 10.09.2014 of Shri. Dinesh Jayatilal Tanna of M/s. Trupati Agro, Rajkot (a broker in selling or imported raw materials ) and six contract notes bearing no. 1087 dated 20.03.2014, . 10849 dated 21.03.2014. 11098 dated 20.05.2014, 11080 dated 14.05.2014, 10786 dated12.02.2014 dated 10066 dated 26.04.2013 of M/s. Tirupati Agri Brokers, Rajkot showing seller as Dhaval Ari Exports, Rajkot , Father, the shortage of imported goods to the tune of 1284.486 MTs ticed during the course of physical stock verification carried out under Panchnama dated 05.09.2014 is also relied as evidence of diversion by the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sesame seeds. Further, one of the contract notes does not reflect any country name to indicate the quality of the goods. Therefore, I find force in the defence submission of M/s. DAE wherein they have contended that the name of any country mentioned on the contract note to indicate its quality does not mean that the particular goods have originated from that country Also in two contract notes, the sesame seeds mentioned are hulled, which is the processed product of M/s. DAE and not the raw material imported by them. Moreover, these contracts are under 'H' form for exports out of country and not for domestic sale. Hence, the allegation that M/s. DAE were diverting imported sesame seeds in the domestic market is not supported by the evidences on record. 17.3. In regard to the shortage of insported goods to the tune of 1284 486 MTs noticed during the course of physical stock verification carried out under Panchnama dared 05.09.2014 (as referred in para 4 of the SCN), I find that Mis DAF in their statements before the investigating agency, as well as their defence reply, contended that this shortage 13% approx. was due to process loss, while the DRI has allowed for only 1% p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous market In this regard, 1 find that M/s. DAE had approached the DGFT for clarification on the issue vide their letter dated 18.11.2017. The issue was disussed in Policy Interpretation Committee of DGFT and the DGFT vide its ruling dated 12.01.2018 decided as under: Taking into consideration the above stipulation and submission of the applicant it is clarified that Advance Authorization holder has option to export resultant product using duty paid materials procured from domestic sources also within the validity period of Authorization and subject to Actual User condition in respect of inputs Imported there under only inputs which are declared in the shipping bills shall be allowed to be imported. 21. I find force in M's DAE's submission that in view of Parn 2.3 of FTP, interpretation of the DGFT shall be final and binding. In this regard, reliance is placed on the decision of the Hon'ble Tribunal, Mumbai, in the case of Commissioner of Customs (Gen) Mumbai Vs AKM Trading Corporation reported as 2067(208) ELT 406(Tri-Mum), wherein, the Hon'ble Tribunal held that; The Decision Of The DGFT On Interpretation Of The Policy Is Final And Binding In The Light Of Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not Somalian origin as also pointed out by the adjudicating authority. We find explanations offered in this regard by the respondents as credit worthy. Ground taken by the department that EODC was incorrectly taken belies the trite law in this regard that once export obligations are certified by DGFT, it is not open to revenue to initiate proceedings as reported in Jindal Drugs (P) Ltd. vs. CCE and ST, Ludhiana reported in 2018 (362) ELT 281 (Tri-Chan.) Aditya Biral Nuvo Ltd. Vs. C.C, Bangalore reported in 2010 (249) ELT 273 (Tri. -Bang.) A.G. Enterprise Vs. C.C. (P), Jamnagar-2014 (308) ELT 481 (Tri. Ahmd.) Commissioner Vs. Cine Land-2002 (142) ELT A68 (S.C.) Titan Medical Systems (P) Ltd. Vs. Collector of Customs, New Delhi- 2023 (151) ELT 254 (S.C.) 11.2 It is also found that clarification about indigenous raw material used for short fall as well as revision of norms was on specific reference by the appellants as well as the relevant export promotion council, same was therefore rather required to be given due weightage. It rather fortifies their claim that even under old dispensation of 1% wastage SION norm, there was need to use indigenous material to meet export obligation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also part of the bunch) was filed as abundant precaution to safeguard respondent s interest. As the acceptance of appeal of the department would have exposed them to undue loss during the course of their export business. And the same was on the premise that in case appeals of the department are accepted, they still have the right to get the drawback export made by them to be adjusted towards Advance Authorization Scheme. He in the same breath however, also pointed that there was no diversion, but procurement as indicated of the materials above was done by them. We find that in the peculiar facts of the matter, where norm was revised to 33 percent and the concerned Ministry also permitted usage of indigenous materials, whatever respondents did were alternate pleas and situational response till they became aware of the decisions of the concerned Ministry. 11.5 Further, we find that unless, the department is able to produce clear cut evidence of clandestine removal of material and by showing to whom it was transported, sold etc., its allegation of removal in domestic market cannot be taken as proved. All this is woefully lacking on the part of the department and therefore unproved ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Customs Act by Ministry of Finance/Customs. Their word in respect of the schemes administered by them is final and cannot be challenged by the Department without getting EODC license cancelled by the Revenue department. Customs is not precluded from conducting its investigations, as pointed by department by relying on ruling of Shashank Seafood Ltd. vs. U.O.I as reported in 1996 (88) ELT 626 (S.C.) but due respect to any administrative decision of Ministry of Commerce is required to be given and such later development like issuance of EODC can have bearing on investigations of the department and ought to be considered with positivity. Revenue cannot assign to itself the role of DGFT office. c. That the Ministry of Commerce being Administrative Ministry, its fiat runs and is respected as far as what is required to be done and how the administration of the Scheme is required to be undertaken. The certificates issued by them, as well as its clarification, therefore, have lot of weightage in understanding and in interpreting the nitty gritty of the Advance Authorization Scheme or any other scheme administered by them. And in this particular case, it has not only substantially re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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