TaxTMI 
TaxTMI 
2003 (11) TMI 429
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....terminal operator at Tuticorin Port. They had imported various types of gantry cranes, rail mounted quay side container cranes with accessories and two units of rail mounted quay side container cranes and two units of rubber tyred gantry cranes against EPCG Licence No. 0430000001, dated 20-8-99 and claimed the benefit of the said notification for clearance of the goods in terms of the said licence. 3. In terms of the conditions of the said licence they have to fulfil export obligation equivalent to 46 million US dollar. As per condition 2 of the Notification 28/97-Cus., dated 1-4-97 they were to execute a bond with surety or security as specified by the Assistant Commissioner undertaking to fulfil the export obligation as Nil%, 10%, 20%, 30%, and 40% during first, second, third, forth and fifth year respectively and accordingly they executed bond with Bank Guarantee equivalent to the concessional duty availed. 4. It is stated in Paras 4, 5, 6 and 7 as follows : 4. As per the condition No. 3, the importer has to produce evidence regarding the extent of export obligation fulfilled within 30 days of the expiry of each year from the date of issue of licence from....
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....nbsp; (b) Services on Board a vessel connecting and disconnecting, monitoring and supply of electricity at reefer yard 7. Shut out of containers YES 8. Stevedorage for transhipment containers YES 9. Storage of containers YES 6. Shri S.R. Ramakrishnan, Managing Director of M/s. PSA Sical vide his statements dated 21-2-2002 and 4-3-2002 stated that Dollar denominated charges collected for various services rendered as per the order of TAMP cited supra should he taken into account towards fulfilment of export obligation. He also accepted non-intimation of receipt of Indian rupees after conversion from US Dollar, to the Customs department. He was not able to give any specific reply to the explanation 'export obligation in relation to service providers' (means realizing service charges for the various services rendered by the use of capital goods in freely convertible foreign currency) given for export obligation in Notification No. 28/97-Cus., dated 1-4-97. 7. Vide letter dated 5-2-2002, the importer informed that the TAMP, in consideration of EPCG sanction issued a detailed order ....
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....ai vide their reply dated 12-6-02 to the Show Cause Notice stated as follows (Para 16.1 to Para 16.15) :- 16.1 They are a joint venture between South India Corporation (Agencies) Ltd. of India and PSA Corporation Limited of Singapore (Port of Singapore); that the company was incorporated in 1998 for the purpose of executing a 30 year Build, Operate and Transfer (BOT) licence agreement for the development, Operation, maintenance and management of a container terminal at the 7th berth of the Tuticorin Port. The agreement with the Ministry of Surface Transport was on 15-7-98. They applied for EPCG licence under the supporting service for maritime transport as a service provider and obtained the approval from the Committee of Secretaries on 4-8-99. Following this, EPCG licence No. 0430000001, dated 20-8-99 was obtained as a producer of supporting services for maritime support for importation of two numbers of quay cranes and 4 numbers of rubber tyred gantry cranes at 11.5 million US Dollar. The TAMP approved their tariff on 29-12-99. Operation was commenced on 7-1-2000. The TAMP while fixing the tariff indicated the services which are Dollar denominated and separately Rupees de....
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.... not count for EPCG in terms of Notification 28/97. Number of letters written to the department explaining that no port service provider can function without the tariff being notified in the Government Gazette by TAMP, but the department does not accept this picture. 16.4 The following submissions are made in respect of allegations 1 and 4. As per EXIM Policy (Ch. 15 Para 15.2) service providers are eligible to avail EPCG scheme, the supporting service for maritime transport is one of the approved services under the EPCG scheme. In EXIM Policy 2002-2007, a service provider has been defined as a person providing a service in India relating to exports paid in free foreign exchange or for such services paid in Indian rupees, which are otherwise considered as free foreign exchange by RBI. RBI in their letter dated 28-4-2000 have clarified that such rupee earnings of the terminal operator are deemed to be earned in foreign exchange. The RBI's letter reads as follows :- "Please refer to your letter, 7th April, 2000 on the captioned subject. In this connection, we advise that any such payment which would have been otherwise received in foreign exchange but paid in Indian rupees....
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....ments. 16.7 As regards the TAMP's role, as per Section 47A speaks about the constitution and incorporation of TAMP. Section 48 speaks about scale of rates for services performed by board or other person. Section 48 reads as follows :- "48. Scale of rates for services performed by board or other persons. - The authority shall from time to time by notification in the Official Gazette frame a scale of rates at which and a statement of conditions under which any of the services specified hereunder shall he performed by a board or any other person authorised under Section 42 at or in relation to the port or port approaches - (a) Transhipping of passengers or goods between vessels in the port or port approaches. (b) Landing and shipping of passengers or goods from or to such vessels to or from any wharf quay, jetty, pier, dock, berth, mooring, stage or execution land or building in the possession or occupation of the board or at any place within the limits of the board or post approaches. (c) Carnage or porterage of goods on any such place. (d) Wharfage, storage or dem....
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....e most important feature of the proposal is about denomination of all the tariff's in Dollar terms. It has been the constant stand of this authority that only vessel related charges can be Dollars denominated, cargo related charges can only be denominated in rupee terms. From the extracts of Para xviii (Page 16), it could be seen that it is Government of India which ordered the services at Sl. Nos. 3, 4, 5, 6 and 9 to Mumbai Port Trust in Dollar terms and the same policy has been adopted in respect of their case. RBI has also clarified that the Dollar denominated services provided to MLOs and VOs contribute foreign exchage earnings and hence Dollar denominated charges as approved the TAMP and collected from VOs and MLOs in rupees constitute foreign exchange earnings. Their services are integrated and recognized and duly approved by the designated authority of Government of India (TAMP). The jurisdiction of TAMP indicating the service which can be Dollar denominated should be appreciated otherwise the whole exercise by permitting EPCG facility to port sector will become a meaningless proposition making the efforts of Commerce Ministry and TAMP futile. 16.10 The third allegat....
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....ontainer handling and related charges were also approved by the Government to be Dollar denominated based on the logic that container was an extension of vessel hatch. 16.12 Since Dollar denominated charges collectable in rupees, container as extension of vessel hatch, etc. are not the inventions of PSA Sical and are terms contained in various notified Government orders and circulars, they cannot be accused of suppression of information. All information furnished was based on notified Government circulars. DGFT is statutory authority which will have to notify the Dollar services for export obligation and aware of the RBl's position to the effect that rupee earnings of terminal operators will be deemed to foreign exchange. Based on RBI's clarifications in their letter dated 28-4-2000 and 17-5-2002 the DGFT has accepted their export obligation. DGFT has not raised any issue regarding earnings of Dollar denominated services of PSA Sical and aware that similar EPCG licence has been given to NSICT. However, to remove even the slightest confusion, the Commerce Ministry has clarified the matter in the EXIM Policy 2002-07. The Show Cause Notice questions the authority of several st....
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....tion complete justifications have been furnished that every act of them is legal and valid. They have made truthful and factual statements in EPCG application. EPCG licence was issued after due verification of every parameter by Commerce Ministry and approved by a Committee of Secretaries. RBI's letter of 28-4-2000 and 17-5-2002 answer all the allegations contained in the Show Cause Notice. Commerce Ministry has accepted fulfilment of their export obligation and have issued a clear clarification in EXIM Policy 2002-07 as to what amounts to foreign exchange earnings for a service provider. In matters of foreign exchange, RBI is the final authority and requested the department not to go against those orders. They are a joint venture between two reputed organizations and all their statements and activities are transparent and within the parameters of various laws. They have obtained EPCG Licences in a bona fide manner and fulfilled their export obligations as per law. The allegation in the Show Cause Notice are baseless and due to misconception of the functioning of the port sector and various statutory authorities governing it as well as an in complete reference of various orders rel....
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....rce Ministry spelt out in the current EXIM Policy 2002-2007 in respect of certain service providers payments received by them even in Indian rupees would be treated as if the same has been received in free foreign exchange appearing in the said notification; in the absence of any definition of the same in the notification itself it has to be understood in the context of EXIM Policy and clarification issued by RBI having a statutory force and therefore binding on customs. It was stated that customs have no legal authority to place an interpretation on the expression "freely convertible foreign currency" in a manner which is repugnant to what is provided in clear terms in the EXIM policy as that would frustrate the very objective of providing facility of importing capital goods by port related service providers under EPCG scheme. It is also stated that in December, 1991 Ministry of Surface Transport issued a policy direction to all major ports for notifying vessel related charges in US dollars but to collect the same only in Indian rupees. It was stated that with the setting up of TAMP under Major Ports Trust Act, the power for fixing scale of tariff and conditions is exercised by th....
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....her reliance placed as reported in 1996 (82) E.L.T. 81 (T) wherein it has been observed that construction attributing redundancy to a legislation is not acceptable. It was stated that RBI clarification about treating payment in Indian rupees as if the same is received in foreign exchange is to be treated as creating a legal fiction. Reference is made to the Hon'ble Supreme Court's decision in the case of UOI v. Jalayan Udyog as reported in [1996 (82) E.L.T. 81 (T)] wherein it was observed that it is well settled proposition that where a fiction is created by a provision of law, the Court must give full effect to the fiction and it should not allow its imagination to be bogged by any other consideration. They also stated that there was no suppression or misstatement on their part in its dealing with either customs or TAMP or DGFT for that matters before any authority in the matter relating to import of subject capital goods as has been elaborately explained by them. They submitted that larger period is not extendable in terms of the provisions of Section 28 of the Act nor penalty is imposable. He relied on the judgment rendered by the Madras High Court in the matter of UOI v. Oceani....
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....time of import of the Capital goods. Hence, the contention of the importer that bulk of their export obligation falls in the EXIM Policy 2002-07 and definition of a service provider as per the EXIM Policy 2002-07 is to be made applicable to their case is not acceptable. 24. As per condition No. 3 of the Notification 28/97-Cus., dated 1-4-97, the importer has to produce evidence regarding the extent of export obligation fulfilled within 30 days of the expiry of each year from the date of issue of licence from second year onwards. The export obligation claimed to have been fulfilled was filed on 12-1-2001 in Appendix 10C of the Handbook of Procedures wherein vide Column (h), the importer have claimed that they have achieved cumulative export of US Dollar 65,98,842.76 and the Canara Bank, Tuticorin has also certified that all service exports as shown above were denominated in US Dollar and payment of the same had been realized. But, the fact of receiving the payments in Indian rupees which have been confirmed by the Manager, Canara Bank, Tuticorin vide their letter dated 9-1-02 have been suppressed from the Customs Department. 25. Though all the service charges were de....
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.... had the same wording as in the previous EXIM policy 1997-2002 and the same clarification would apply even retrospectively. It was argued at great length that once the statutory provision lays down certain conditions and terms and law is promulgated with regard to foreign exchange the authorities are bound by the said regulation. It was argued that TAMP lay down the rates and clarify that the exchange rate will be in rupee and all charges are payable under tariff fixed by TAMP (Tariff Authorities for Major Port) which is gazetted on 29th December, 1999. It was also pointed out that the Central Board of Excise were privy to the said fixation of prices by statutory authority and therefore it cannot be said that the customs authority was not aware of the fixation of the charges to be paid in rupee and all the statutory provision which have been gazetted. In the light of the gazetted tariff provisions and the terms which are gazetted therein, the customs authority cannot take their own stand in contra to the other bodies who also dealt with the said provisions of law. It was argued that the service rendered by the appellant is an integrated activity and all its services are necessary i....
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....e that when clarification is given by the competent authority the same is binding on the customs authority. In this regard the judgment rendered in the case of General Traders v. CC as reported in 2000 (124) E.L.T. 971 was relied. Reliance was made on the judgment rendered in the case of M. G. Abrol v. Shantilal Chhotelal and Co. as reported in AIR 1996 (SC) 197 wherein it has been laid down that where the goods are not prohibited goods, customs authorities had no jurisdiction to proceed and impose penalty or to confiscate the goods. It was argued that the activity was regulated by the RBI and TAMP and clarifications were received from them and hence there was no suppression in the matter. Further reliance is made on the judgment rendered in the case of Bombay Chemicals Pvt. Ltd. v. UOI & 14 Others as reported in 1982 (10) E.L.T. 171 wherein a similar proposition was upheld that the customs authorities are bound by the certificate issued by the D.G.T. & D under Notification dated 1-3-1968 and cannot ignore or bypass it on the ground that it was issued under mistake or misrepresentation. 11. Jt. CDR Shri V.K. Nayanar argued along with SDR Smt. Bhaghya Devi. Both reiterated t....
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....umbai also clarified and confirmed that the charges recovered by Terminal Operator are remittable in foreign exchange and is to be treated as foreign earnings. The letter is extracted : irja-va baOMk Reserve Bank mauvaM[- Mumbai BaartIya irja-va baOMk ivadoSaI maud`a inayaM~Na ivaBaaga kond`Iya kayaa-laya kond`Iya kayaa-laya Bavana mauvaM[- - 400 001 RESERVE BANK OF INDIA EXCHANGE CONTROL DEPARTMENT CENTRAL OFFICE CENTRAL OFFICE BUILDING MUMBAI-400 001 paosT baa@sa saM Post Box No. fO@sa saM Fax No. 10vaIM maMijala 10th Flr. 11vaIM maMijala 11th Flr. Amar Bavana Amar Bldg. mau#ya Bavana Main Bldg 1055 kond`Iya kayaa-laya Bavana (Central Off. Bldg.) 022-2665330 022-2654092 022-2611427 (1st Flr.) 022-2632088 (3rd Flr.) 022- 2654121(3rd Flr.) 022-2694933 (Pa`Saasana/Admn.) saM M[- saI. -----------------199 Sak No. EC _____CO EPD 2411/21-8-02/99-2000 April 28, 2000 (SAKA) The Commercial Manager, Nhava Sheva International Container Terminal Ltd., Darabshaw House, Level-I, Narotham Morarji Road, Ballard Estate, Mumbai - 400038 Dear Si....
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....it cannot be said that the customs is not aware of the meaning of the term which is in dispute. The term which has caused controversy is a commercial and a banking term. It is only appropriate for the RBI to have clarified as to whether the term 'free foreign exchange' should be understood as US dollars or to be understood as Indian rupees. The Foreign Exchange Regulation is done by the RBI. In a circumstance where there is a notification issued by the Customs authority under Section 25 of the Customs Act and its terms are to be read along with clarifications issued by other statutory authorities then it is appropriate to accept the clarification given by the RBI to the term "Free Foreign Exchange" such a clarification has a binding effect on the customs authority. We see that the Commissioner has also not disputed its applicability with regard to the explanation given by the RBI to the term appearing in the EXIM Policy 2002-2007. The spirit of the notification is thereby satisfied when RBI has clarified the issue on savings and earnings of foreign exchange. This term was available in the previous policy as well as has been seen by us in the copy of the EXIM policy 1997-2002, place....
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....erm 'service provider' has the same definition. 17.  In the case of Commissioner of Sales Tax, Madhya Pradesh v. M/s. Jaswant Singh, Charan Singh as reported in AIR 1967 SC 1454, the Apex Court in Para 8 of the order laid down in the context of explanation Section 5 of the Colliery Control Order, that the Legislature there had dealt with coal in its strict and technical meaning. The Counsel had relied upon certain other statutory provisions with a view to show that the Legislature has all along been using the word 'coal' as a mineral product only. The Colliery Control Order deals with the collieries and obviously, therefore, the term 'coal' there is used as a mineral product. Therefore the Apex Court laid down that in construing a word in an Act caution is necessary in adopting meaning ascribed to that word in other statutes. As Lord Loreburn stated in Macbeth v. Chislett, [1910 AC 220 at p. 224] "it would be a new terror in the construction of Act of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone". The strict sense in w....