2014 (2) TMI 1015 - AT - Customs

Tribunal grants relief, exempts raw silk from China, stresses strict interpretation of customs duty rules

KRISHNA SINGH GARBYAL Versus COMMISSIONER OF CUSTOMS, LUCKNOW

KRISHNA SINGH GARBYAL Versus COMMISSIONER OF CUSTOMS, LUCKNOW - 2013 (298) E.L.T. 593 (Tri. - Del.) Issues Involved:1. Eligibility for customs duty exemption under Notification No. 38/96-Cus.2. Interpretation and enforcement of the Memorandum of Understanding (MoU) between India and China.3. Allegations of misdeclaration and imposition of anti-dumping duties.4. Legal validity of public notices and internal correspondences in imposing conditions not specified in the notification.Issue-Wise Detailed Analysis:1. Eligibility for Customs Duty Exemption under Notification No. 38/96-Cus:The primary issue was whether the import of raw silk by M/s. Krishna Enterprises from China through the Gunji land route was eligible for customs duty exemption under Notification No. 38/96-Cus. The notification exempts specified goods, including raw silk, when imported from China through specified land routes. The customs authorities initially refused the bills of entry, but intervention by the Chief Commissioner of Customs led to their acceptance. The Commissioner denied the exemption on the grounds that the import did not qualify as border trade as per the MoU between India and China, and that M/s. Krishna Enterprises was not a local resident along the Indo-China border.2. Interpretation and Enforcement of the MoU Between India and China:The Commissioner based the denial of exemption on the MoU dated 13-12-1991, which envisaged border trade between local residents on either side of the border. However, the Tribunal noted that the MoU is an international obligation and must be converted into domestic law to be enforceable. The notification in question did not specify any such condition, and the Tribunal held that no additional conditions could be introduced by executive or administrative action. The Tribunal cited several legal precedents emphasizing that exemption notifications must be interpreted strictly based on their language without adding any conditions not explicitly stated.3. Allegations of Misdeclaration and Imposition of Anti-Dumping Duties:The Commissioner alleged that M/s. Krishna Enterprises misdeclared the grade of the raw silk, which was found to be of a lower grade (2A) in some samples, potentially attracting anti-dumping duties. However, the Tribunal found that the initial samples were not representative, and subsequent samples were drawn without proper procedure. Moreover, the landed value of the consignment was above the threshold for anti-dumping duties as per Notification No. 106/2003. Therefore, the charge of misdeclaration was not upheld, and no anti-dumping duty was confirmed.4. Legal Validity of Public Notices and Internal Correspondences:The Commissioner relied on various public notices, internal correspondences, and clarifications issued by the Ministry of Commerce and Ministry of Finance to deny the exemption. The Tribunal held that such notices and correspondences do not have the force of law unless they are part of a legislative enactment or officially published in the Gazette. The Tribunal referenced the case of Intercontinental v. UOI, which stated that conditions not specified in a notification cannot be imposed through subsequent circulars or internal letters. The Tribunal concluded that the importers could not be required to adhere to conditions not explicitly stated in the notification.Conclusion:The Tribunal set aside the Commissioner's order, allowing the appeals and granting consequential relief to the appellants. The Tribunal emphasized that the notification's conditions were fulfilled, and no additional conditions could be imposed based on the MoU or internal correspondences. The allegations of misdeclaration were also dismissed due to procedural lapses and the absence of anti-dumping duty confirmation. The decision underscored the importance of strict interpretation of exemption notifications and the necessity of legislative backing for any additional conditions.