2017 (9) TMI 1144 - AT - Customs

Tribunal overturns fines and penalties, grants relief to appellants in export dispute.

The Tribunal set aside the impugned order, allowing the appeals with consequential relief, and pronounced the judgment in the open court on 01.09.2017. ... Redemption fine - penalty - transfer of DFIA license - clearance of pan masala, pan masala gutkha in domestic market as well as are exporting the same - N/N. 40/2006-Cus dated 01.05.2006 - Held that: - N/N. 40/2006 ibid clause 1 provisio provides that in respect of resultant products specified in para 4.55.3 of the handbook of procedures, the material permitted in the said authorization or the duty free authorization or the intermediate supply shall be for technical characteristic and specification as the material used in the said resultant product. Provided further that in respect of said resultant product, the exporter shall give declaration with regard to technical quality, characteristics and specifications in the shipping bill. The notification no.40/2006 provides that the items mentioned in para 4.55.3 of HBP are the resultant products. As per public notice no.35(RE13)2009/14 dated 30.10.2013 the provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not applicable if DFIA has been endorsed as transferrable after 01.08.2013. Admittedly, there is no dispute in this case that DFIA has already been transferred. Therefore, the provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not applicable to the facts of this case. As appellant has exported the goods availing the benefit of N/N. 40/2006-Cus dated 01.05.2006 and complied with conditions thereof. Therefore, the proceedings are not sustainable against the appellant - as the DIFA has already been transferred and no objection was raised by customs authorities as well as DGFT while transferring or during the export of goods, in that circumstances, provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not invokable - redemption fine and penalty set aside. Appeal allowed - decided in favor of appellant. Issues Involved:1. Imposition of redemption fine and penalty on the appellants.2. Compliance with the DFIA license scheme and relevant notifications.3. Interpretation of resultant products and inputs under notification no. 40/2006-Cus.4. Applicability of policy circulars and public notices.5. Validity of confiscation of goods and imposition of penalties.Issue-wise Detailed Analysis:1. Imposition of Redemption Fine and Penalty:The appellants were appealing against the impugned order that imposed redemption fine and penalties on them. The core argument was whether the appellants complied with the conditions of the DFIA license scheme and relevant notifications, particularly notification no. 40/2006-Cus dated 01.05.2006.2. Compliance with DFIA License Scheme and Relevant Notifications:The appellants exported goods under the DFIA license scheme and imported natural essential oil at a nil rate of duty under notification no. 40/2006-Cus. The DFIA license was transferred by DGFT without any objections from customs authorities. The appellants argued that the goods exported (pan masala, pan masala gutkha) were not among the 22 items listed in para 4.55.3 of the HBP, which required declaration of technical characteristics, quality, and specifications.3. Interpretation of Resultant Products and Inputs:The appellants contended that the essential oils and perfumes were not resultant products but inputs. The Tribunal referred to previous cases (CC Vs. Sicpa India Ltd. and Global Exim Vs. CC) to support the appellants' argument that only resultant products listed in para 4.55.3 required such declarations. The Tribunal concluded that since pan masala and pan masala gutkha were not listed as resultant products, the appellants were not required to provide the technical details as per the notification.4. Applicability of Policy Circulars and Public Notices:The Tribunal examined policy circular no. 57/2009-14 and notification no. 31(RE-2013)2009-14, which were issued after the exports were completed. The Tribunal noted that these circulars and notifications could not have retrospective effect. Public notice no. 35(RE-13)2009/14 clarified that provisions of notification no. 31(RE-2013)2009-14 were not applicable if DFIA had been endorsed as transferable before 01.08.2013. Since the DFIA in this case had already been transferred, the Tribunal held that these provisions were not applicable.5. Validity of Confiscation of Goods and Imposition of Penalties:The Tribunal found that neither the goods were exported under any bond nor were they available, thus redemption fine was not imposable as per the decision in Shiv Kripa Ispat (P) Ltd. and Raja Impex (P) Ltd. Furthermore, since no objections were raised by customs authorities or DGFT during the export or transfer of the license, the Tribunal concluded that the provisions of notification no. 31(RE-2013)2009-14 were not invokable, and consequently, the redemption fine and penalties imposed on the appellants were set aside.Conclusion:The Tribunal set aside the impugned order, allowing the appeals with consequential relief, and pronounced the judgment in the open court on 01.09.2017.