2019 (11) TMI 1359 - AT - Customs

Appeal dismissed for failure to meet export obligation & lack of legal basis. Upheld Customs Dept decision.

M/s. MIRACLE FOOD PROCESSORS INTERNATIONAL LTD. Versus Commissioner of Customs - COCHIN

The appeal was dismissed as the appellants failed to fulfill the export obligation and lacked a valid legal basis for reassessment of the Bill of Entry. ... Concessional rate of duty - EPCG scheme - additional duty liability had not been disclosed in the B/E - import of Fruit Dehydration Plant (Spray Evaporation Machine – SPV 10) from Germany - HELD THAT:- The appellants have failed to fulfill the export obligation and accordingly, Customs Department has issued a show-cause notice to recover the applicable duty on the imported goods. We find that the representation of the appellants could not succeed before the EPCG Committee and the appellate authority. This being the fact of the case, we find that Customs Authorities, as submitted by the Commissioner (AR), cannot take an independent decision. We further find that the Bill of Entry is dated 6.5.1996 and the appellants sought to revalue the goods and approached the Commissioner with a request dated 18.1.2001 and 9.2.2001 for re-assessment of the Bill of Entry. We also find that the appellants have submitted a Bond at the time of import binding themselves to the conditions envisaged in the Notification No.110/95 dated 5.6.1995. We find that the Department was within its rights to impose the conditions of the Bond for violation of the provisions therein. We find that the impugned show-cause notice is about the recovery of duty foregone in terms of the conditions of the Notification. The appellants having not appealed against the assessment of the Bill of Entry and having not requested for provisional assessment, cannot demand the same while replying to the show-cause notice. Such a request, is beyond the scope of the provisions of Customs Act. Once a machine is imported in terms of the EPCG license wherein certain export obligation has been fixed by the DGFT authorities and particularly, in the case when the EPCG Committee has rejected the appeal made by the appellant, Customs cannot revalue the goods and reduce the export obligation accordingly. We find that the appellants have shown no case for redetermination of the value of the imported goods in terms of the provisions of Customs Act either. There is no infirmity in the lower authorities coming to a conclusion that the redetermination, of the value was not possible in the facts and circumstances of the case and under the provisions of law - appeal dismissed. Issues Involved:1. Re-determination of the value of imported machinery.2. Fulfillment of export obligation under the EPCG scheme.3. Legal provisions for reassessment of Bill of Entry after a significant time lapse.4. Authority of Customs Department versus EPCG Committee decisions.5. Applicability of judicial directions for reconsideration of valuation.Issue-wise Detailed Analysis:1. Re-determination of the value of imported machinery:The appellants argued that the value of the imported machine should be re-evaluated based on the actual value paid, which was lower than initially declared. They claimed that they paid only US$ 4,31,330 to the German supplier and later received compensation from the manufacturer due to the machine's underperformance. Consequently, they contended that the duty paid was more than the applicable tariff rate, even without the EPCG scheme's concessional rate. However, the Customs Department and EPCG Committee rejected this claim, stating that there is no provision under the law for reassessment of the Bill of Entry after more than five years, especially since the initial assessment was not provisional.2. Fulfillment of export obligation under the EPCG scheme:The appellants were required to fulfill an export obligation of Rs. 7,37,34,784 within five years as per the EPCG scheme. They argued that since the re-evaluated value of the machinery was lower, the duty paid was already more than the normal applicable duty, and hence, they should not be required to fulfill the export obligation. The Customs Department issued a show-cause notice for recovery of duty due to non-fulfillment of this obligation. The EPCG Committee and subsequent appellate authorities upheld the demand, stating that the appellants failed to fulfill the export obligation as required under the scheme.3. Legal provisions for reassessment of Bill of Entry after a significant time lapse:The Customs Department argued that there is no legal provision for reassessment of the Bill of Entry after more than five years from the date of assessment. The initial assessment was made on 6.5.1996, and the appellants requested reassessment in 2001. The department cited various legal precedents, including the Supreme Court's rulings in CCE, Kanpur vs. Flock India Pvt. Ltd. and Priya Blue Industries Ltd. vs. Commissioner of Customs, which established that reassessment cannot be entertained unless the initial order is modified through appropriate legal proceedings.4. Authority of Customs Department versus EPCG Committee decisions:The EPCG Committee, which includes a Customs representative, had rejected the appellants' request for re-evaluation of the machinery's value. The Customs Department argued that it cannot independently revise the value of the imported goods and the export obligation, as these decisions are within the purview of the EPCG Committee. The appellate authorities upheld this stance, emphasizing that the Customs Department is bound by the EPCG Committee's decisions.5. Applicability of judicial directions for reconsideration of valuation:The appellants cited a High Court order directing the authorities to consider their request for revaluation. However, the High Court explicitly stated that it was not delving into the merits of the case. The appellate authorities interpreted this direction to mean that the request should be considered within the bounds of the law. They concluded that the request for revaluation was not legally permissible, given the significant time lapse and the lack of provisional assessment.Conclusion:The appeal was dismissed on the grounds that the appellants failed to fulfill the export obligation and did not have a valid legal basis for reassessment of the Bill of Entry. The Customs Department and EPCG Committee's decisions were upheld, and the appellants' submissions were deemed weak and lacking merit. The direction for consideration by the High Court was interpreted as non-binding, subject to legal provisions, and did not mandate acceptance of the appellants' request for revaluation. The order was pronounced in open court on 28/11/2019.