2014 (2) TMI 1015 - AT - Customs

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

The Tribunal set aside the Commissioner's order, granting relief to the appellants. It held that the import of raw silk from China through the specified ... China border trade between the local residents living either side of the border - Import of raw silk from China - Exemption under Notification No. 38/96-Cus. dated 23-7-1996 - Commissioner has primarily held against the appellants on the ground that Shri Krishna Singh Garbyal is staying at a place about 80 Kms. away from the border, the import made by him cannot be held to be border trade - violation of the provisions of MoU - Confiscation of goods - Imposition of penalty - Held that:- benefit of notification is available in respect of imports made from China through Gunji route and there is no restriction of the actual user of the goods so imported. Having held that importer has not violated any other condition of the notification - there is no definition of the border trade available anywhere or the distance from the border within which the importer should have been residing. In the absence of the same, the findings of the lower authorities that Shri Krishna Singh Garbyal was not a local resident, cannot be appreciated. Admittedly, the bill of entry was filed by M/s. Krishna Enterprises and as such he has to be held as importer of raw silk in question. As per domicile certificate produced before the Commissioner, he has been shown a person living along the Indo-China border. Import was made by a person living along the Indo-China border and as such can be safely concluded as a border trade. Further, as per the authority for the advance rulings, there is no restriction on the sale of the goods after import. As such, even if Revenue’s allegation as regards the sale of the raw silk by M/s. Krishna Enterprises to M/s. Elegant Industries is accepted to be correct, the same are very much in the legal frame work of law. Levy of anti-dumping duty - Revenue’s allegation of misdeclaration of the Mulberry Raw Silk - Held that:- even if part of raw silk imported by the appellants is held to be of grade 2A, even then no anti-dumping duty is leviable, inasmuch as the Notification No. 106/2003, dated 10-7-2003 levies anti-dumping duty on Mulberry Raw Silk of grade 2A and below, if the landed value of consignment is less than US$ 27.97 per Kg. Admittedly, in the present case the landed value of consignment is US$ 28.18 per Kg. In fact, we find that Commissioner in his impugned order has not confirmed anti-dumping duty against the appellants. In these circumstances, the charge of misdeclaration against the appellants cannot be upheld so as to confiscate the goods, in terms of provisions of Section 111(m) of the Customs Act - Decided in favour of assessee. 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.