1995 (9) TMI 174 - AT - Customs

Tribunal: Notification 133/94 Applies Retrospectively for Export Obligations Compliance /94

The Tribunal held that Notification 133/94, repealing Notification 339/85, applies retrospectively. It directed a re-examination of the appellants' ... Service/Consultancy service whether goods - Export obligation Issues Involved:1. Interpretation of 'production of goods' in Customs Notification No. 339/85.2. Applicability of subsequent notifications and public notices.3. Principle of promissory estoppel.4. Jurisdiction and authority of the adjudicating authority.5. Correlation of consultancy services with imported goods.6. Compliance with export obligations.Issue-wise Detailed Analysis:1. Interpretation of 'production of goods' in Customs Notification No. 339/85:The primary issue was whether the term 'production of goods' in Customs Notification No. 339/85 includes consultancy services. The appellants argued that the term should be interpreted broadly to include consultancy services rendered abroad, citing the inclusive definition of 'goods' under Section 2(22) of the Customs Act and the evolving nature of technology and services. However, the adjudicating authority and the Tribunal held that 'goods' do not include services, and the term 'production of goods' as specified in the Notification does not encompass consultancy services. This conclusion was supported by the Calcutta High Court's decision in the case of Metal Corporation of India Ltd., which held that 'know-how' is not a tangible asset capable of being sold.2. Applicability of subsequent notifications and public notices:The appellants referred to Public Notice No. 10/93 and Notification 154/93, which acknowledged that rendering consultancy services abroad constitutes exports within the meaning of Notification 339/85. They argued that these subsequent notifications should be considered clarificatory and applicable retrospectively. However, the Tribunal held that Notification 154/93 is not clarificatory in nature and cannot be given retrospective effect. The Tribunal also noted that Notification 133/94, which repealed Notification 339/85, includes a deeming provision that anything done under the earlier notification is deemed to have been done under the new notification. This widened the exemption to include consultancy services for development of software on site abroad.3. Principle of promissory estoppel:The appellants argued that the principle of promissory estoppel should apply, preventing the government from denying the benefits of Notification 339/85 based on its earlier representations and approvals. However, the Tribunal held that the doctrine of promissory estoppel cannot be invoked against the government in matters of exemption notifications issued under Section 25 of the Customs Act. This was supported by the Supreme Court's decision in Kasinka Trading & Another v. Union of India & Another.4. Jurisdiction and authority of the adjudicating authority:The appellants contended that the Collector of Customs did not have jurisdiction to monitor export obligations, which is the duty of the Development Commissioner of the NEPZ. The Tribunal did not explicitly address this jurisdictional issue but focused on the applicability of the exemption under the changed legal position brought by Notification 133/94.5. Correlation of consultancy services with imported goods:The adjudicating authority found that the appellants failed to correlate consultancy services rendered abroad with the goods imported and installed at NEPZ. The Tribunal noted that the adjudicating authority should re-examine this aspect in light of the new legal position under Notification 133/94. The Tribunal directed the adjudicating authority to look into the details of contracts and ascertain the extent of earnings from consultancy services and their correlation with the imported goods.6. Compliance with export obligations:The appellants argued that they had fulfilled their export obligations by earning foreign exchange through consultancy services rendered abroad. The Tribunal acknowledged that the Board of Approval NEPZ had extended the time limit for fulfilling export obligations and that the Commerce Ministry had communicated this decision to the CBEC. The Tribunal directed the adjudicating authority to verify the appellants' compliance with export obligations under the terms of Notification 133/94.Conclusion:The Tribunal concluded that Notification 133/94, which repealed Notification 339/85, applies retrospectively to actions taken under the earlier notification. The Tribunal directed the adjudicating authority to re-examine the appellants' compliance with export obligations and the correlation of consultancy services with imported goods under the terms of Notification 133/94. The appeal was disposed of with these directions, and the Miscellaneous Applications filed by the appellants were dismissed as not pressed.