2023 (11) TMI 73 - AT - Customs

Tribunal Rules in Favor of Exporter on SHIS and EPCG Scheme, Dismisses Customs Duty Recovery and Penalties.

The Tribunal set aside the impugned order and ruled in favor of the appellant, a manufacturer and exporter, regarding the simultaneous availing of SHIS ... Allegation of suppression in filing of ANF 5A - ANF 5A para 4B declaration requirement - application of amendment to Foreign Trade Policy with effect from 05.06.2012 - simultaneous availment of Status Holder Incentive Scheme and Zero Duty EPCG - recovery of duty foregone under Zero Duty EPCG Licence - treatment of erroneous issuance as bonafide error in Public Notice - extended period of limitation for demandAllegation of suppression in filing of ANF 5A - ANF 5A para 4B declaration requirement - application of amendment to Foreign Trade Policy with effect from 05.06.2012 - simultaneous availment of Status Holder Incentive Scheme and Zero Duty EPCG - recovery of duty foregone under Zero Duty EPCG Licence - extended period of limitation for demand - Whether demand for recovery of duty foregone under Zero Duty EPCG Licences could be sustained on the ground of suppression by the appellant where the ANF 5A did not contain para 4B prior to 05.06.2012 and the licences were issued before that date. - HELD THAT: - The Tribunal found that both Zero Duty EPCG licences were issued before 05.06.2012 and that the undertaking now contained in para 4B of ANF 5A was introduced only with effect from 05.06.2012. Since there was no requirement to give the para 4B declaration at the time the ANF 5A forms were filed, the allegation that the appellant suppressed information by not declaring non-availment of SHIS is not proved. The Tribunal noted the Public Notice dated 08.09.2016 in which authorities treated erroneous issuances as bonafide errors and that proposals for penalties were dropped by the original authority. In light of the absence of a pre-existing obligation to make the para 4B declaration and the acceptance in the public notice of bonafide error, there was no irregularity warranting recovery of the duty foregone even under extended limitation. [Paras 4, 5]Demand for recovery of duty foregone under the Zero Duty EPCG licences set aside and the appeal allowed.Final Conclusion: The Tribunal held that the demand based on alleged suppression was unsustainable because ANF 5A did not contain para 4B prior to 05.06.2012 and the licences were issued before the amendment; having regard to the Public Notice treating erroneous issuance as bonafide error, the impugned order demanding recovery of duty is set aside and the appeal is allowed. Issues:The issues involved in this case are the simultaneous availing of Status Holder Incentive Scheme (SHIS) and Zero Duty EPCG Scheme, alleged suppression of information by the appellant, recovery of customs duty, and imposition of penalties.Simultaneous Availment of SHIS and Zero Duty EPCG Scheme:The appellant, a manufacturer and exporter of footwear soles, was issued two Zero Duty EPCG Licences and three SHIS Licences. A show cause notice was issued alleging that the appellant simultaneously availed both schemes, contravening the relevant policies. The appellant argued that the restriction on simultaneous availing was introduced after the period in question and that they had complied with the provisions in force at that time. The Tribunal found that the allegation of suppression was not proved as the required undertaking was not mandatory before a certain date. The Tribunal also noted a public notice accepting errors in issuance of SHIS and EPCG Licences as bonafide mistakes, indicating no malafide intent on the appellant's part.Recovery of Customs Duty and Imposition of Penalties:The Revenue demanded recovery of customs duty of Rs.15,29,559/- from the appellant. However, the Tribunal held that there was no irregularity on the part of the appellant, especially since the original authority had accepted a public notice dropping proposals for penalties. As a result, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.This judgment highlights the importance of compliance with trade policies, the significance of relevant timelines for policy provisions, and the impact of public notices on decision-making in customs duty cases.