2023 (7) TMI 449 - AT - Customs

Tribunal Upholds Exemption, Rules No Simultaneous Benefit in Export Policies for 2009-10 and 2011-12 Periods.

The Tribunal dismissed the department's appeal, upholding the original authority's decision that the respondent did not violate the conditions of ... Exemption to capital goods imported by them under the Zero Duty Export Promotion Capital Goods (EPCG) Scheme - denial on the ground that the importer has been issued duty credit scrips under the Status Holder Incentive Scheme as well as the Zero Duty EPCG Authorization Scheme. HELD THAT:- Relevant conditions of the notification has already been reproduced. The basis for issuing the SCN is that respondent has received SHIS scrips as well as Zero Duty EPCG Authorization scheme in the same year i.e. 2011--12. From the records as well as the arguments it is brought out that SHIS scrips corresponds to the exports made by respondent in the year 2009--10 whereas the Zero Duty EPCG authorization scheme is issued in 2011--12. The respondent has requested for clarification from the DGFT as to whether there has been violation of notification. Vide e--mail dated 28.07.2014, the reply has been received stating that as the SHIS benefits are for the exports made in the year 2009--10, and the Zero Duty EPCG Authorization is issued in the year 2011--12, there is no violation of the provisions as clarified in Public Notice No.12 dt, 26.7.2013. It is mentioned in Public Notice No.12 dt, 26.7.2013 that if SHIS application is filed for the year 2009--10, Zero Duty EPCG Authorisation cannot be issued to an importer for the year 2010--11. In the present case, the respondent has not availed any Zero Duty EPCG Authorization for the period 2010--11. The Zero Duty EPCG Authorization is for the period 2011--12. Thus, there is no violation of the conditions. The Commissioner has analyzed the entire issue and given detailed discussion. The appeal filed by the department is without merits. Impugned order is sustained - appeal filed by Revenue is dismissed. Issues Involved:1. Whether the respondent is entitled to the benefit under Notification No.102/2009-Cus. as amended by Notification No.42/2012.2. Whether there is a violation of the conditions of the said notification as alleged by the Department.Summary:Issue 1: Entitlement to Benefit Under Notification No.102/2009-Cus.Brief facts are that a show cause notice was issued consequent to the investigation conducted by the D.R.I. Ahmedabad which indicated that the respondent is engaged in manufacturing various equipment used in steel plants and have wrongly availed the benefit of exemption Notification No.102/2009-Cus. dated 11.09.2009 in respect of the capital goods imported by them under the Zero Duty Export Promotion Capital Goods (EPCG) Scheme in contravention of condition 2 (4) of the said Notification. The original authority dropped the proceedings proposed in the SCN. Aggrieved, the department is now before the Tribunal.The department argued that the exemption under Notification No.102/2009-Cus. was not admissible to an importer who has been issued duty credit scrips under the Status Holder Incentive Scheme (SHIS) as well as the Zero Duty EPCG Authorization Scheme simultaneously during the year 2011-12. The respondent would be eligible to avail the exemption only if the SHIS benefit that is unutilized is refunded with applicable interest before availing the zero duty EPCG authorization. In this case, the SHIS scrip was sold and transferred by the respondent to another firm who utilized it for their imports. The respondent has not refunded the unutilized amount of the SHIS scrip issued to them prior to obtaining zero duty EPCG authorization, thus contravening conditions prescribed in Notification No.102/2009.The respondent argued that the adjudicating authority was legally correct in holding that the provisions of the Customs Notification No.102/2009-Cus. is not applicable to the present case as the respondent was issued SHIS scrip during 2011 for the exports of the year 2009-10 and the respondent has not availed simultaneous benefit. The respondent received clarification from DGFT stating that availing SHIS against exports of 2009-10 and zero duty EPCG during 2011-12 does not violate the provisions stipulated by Public Notice No.12 dated 26.07.2013.The Tribunal found that the SHIS scrips correspond to the exports made by the respondent in the year 2009-10 whereas the Zero Duty EPCG authorization scheme is issued in 2011-12. The respondent has not availed any Zero Duty EPCG Authorization for the period 2010-11. The Zero Duty EPCG Authorization is for the period 2011-12. Thus, there is no violation of the conditions. The Commissioner analyzed the entire issue and provided a detailed discussion, concluding that the interpretation of the condition 2 (4) adopted in the notice was not correct.Issue 2: Violation of Conditions of NotificationThe basis for issuing the SCN is that the respondent has received SHIS scrips as well as Zero Duty EPCG Authorization scheme in the same year i.e., 2011-12. The Tribunal noted that the SHIS scrips correspond to the exports made by the respondent in the year 2009-10, whereas the Zero Duty EPCG authorization scheme is issued in 2011-12. The respondent received clarification from DGFT stating that availing SHIS against exports of 2009-10 and zero duty EPCG during 2011-12 does not violate the provisions stipulated by Public Notice No.12 dated 26.07.2013.The Commissioner held that the term 'year of issuance' has to be viewed from the provisions of the Foreign Trade Policy read with Procedures and public notice No.12 issued by DGFT/RA. The term 'year of issuance' has to be related to the period for which the SHIS vis-à-vis EPCG benefits being availed by an exporter and not the physical issue of or application for the licenses or scrips. The Commissioner concluded that there was no simultaneous availment of the licenses/scrips issued under these two schemes, and the intent of the two governing notifications to promote exports should not be settled on technicalities and semantics.After appreciating the facts and provisions of law, the Tribunal agreed with the view taken by the Commissioner. The appeal filed by the department was found to be without merits, and the impugned order was sustained. The appeal filed by the department was dismissed.(Pronounced in court on 11.07.2023)