TaxTMI 
TaxTMI 
2015 (1) TMI 367
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....and is not covered under the licences granted to the appellant and were also of the view that PFAD and acid oil are technically and commercially different products. The Revenue authorities visited the premises of the appellant herein and drew the samples of imported goods lying in stock and sent the same for analysis to Visakhapatnam. On receipt of the analysis report from KRCL (??) Visakhapatnam, who opined that the imported goods were not Palm Acid Oil, but were having characteristics of PFAD. Subsequently, the Revenue authorities recorded various statements of the responsible persons in the main appellant's (VVF) factory. On conclusion of such investigation, a show cause notice was issued to the appellant on the ground that they had mis-declared the goods which were imported and the said goods were not permitted to be imported under advance licenses. The appellant herein contested the show cause notice on merit and limitation. They contested before the adjudicating authority that the documents which were filed by them before the authorities were for 'Acid Oil'; which were conforming to the specification as given in BIS-IS 12029:1986; they also submitted that the advance licences....
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.... evidences which were not the part of the original investigation. On the face of it, these two applications need to be dismissed. Be that as it may, we consider the documents which were filed by the Revenue and will address to the applications in this order subsequently. 5. Ld. Counsel appearing on behalf of the appellant, after taking us through the entire case record would submit that the adjudicating authority has erred in coming to a conclusion that there was mis-declaration on the part of the appellant. He would take us through the Order-in-Original and submit that the products which were imported by the appellant had been declared by them as acid oil and not as palm acid oil. It is his submission that the conclusion of the chemical examiner as has been relied upon by the Department is also in his favour in as much as the said the report state that the product is other than pam acid oil which is irrelevant as the appellant has never declared the product as palm acid oil. After taking us through the BIS standard for 'acid oil', he would submit that the standards as laid down by BIS has been complied with by imported products as tested by the chemical examiner. It is his submis....
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....t the chemical examiner had analysed the product imported by the appellant with reference to the samples of PFAD procured from the market and also with the samples of acid oil prepared in his own laboratory. It is his submission that the samples which are produced in the laboratory of the chemical examiner cannot be equated with the goods which are procured by the appellant internationally and the samples of PFAD cannot be considered as correct samples as the said drawal of samples should have been witnessed by independent persons or the representative of the importer. In short, It is his submission that the opinion of the chemical examiner Visakhapatnam needs to be discarded and even if it is accepted, it does not say that the products imported by the appellant are not acid oil. 5.2 As regards the violation of the conditions of Notification No.93/2004, It is his submission the adjudicating authority has held that the appellant violated the condition (vii) of the said notification. After taking us through the history of various notifications issued by the Customs Department, he would take us through the amended as well as un-amended Notification No.93/2004-Cus dt.10.09.2004. He wo....
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....e-decisor notifications like 149/95-Cus, 37/97-Cus, and 50/2000-Cus, and has been expressly removed while issuing Notification No.93/2004-Cus. It is his submission that the notification has to be read and interpreted on its plain term, is the law which has been settled by higher judicial fora. He would also submit that the reliance placed by the adjudicating authority on Para No.4.1.5 of the Foreign Trade Policy 2004-2009 and on a letter dt.31.10.2006 of the Joint DGFT is totally mis-placed in as much as this provision of the FTP was deliberately not incorporated in the Customs exemption Notification No.93/2004-Cus. It is his submission that the Central Government has powers for exempting the provisions of original policy is under Section 25 of Customs Act, 1962 and by exercising such power, the Central Government has relaxed the onerous condition laid down by Para No.4.1.5 of FTP 2004-2009. It is his submission that such relaxation has been issued by the Central Government of India after considering all the aspects of the law and the adjudicating authority is not empowered on sitting in judgment and question of power of Central Government in granting an exemption with a view to re....
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....r is distinguishable and the ratio laid down in that case would be based upon the facts and circumstances of that case. 6. Ld. Commissioner (AR) appearing on behalf of the Revenue, would submit that in order to promote export, Government of India comes out with various export promotion schemes to facilitate exporters. It is his submission that the main purpose of the scheme is to make the export competitive internationally and to ensure that the taxes and duties are not exported. In pursuance of such an export incentive, appellant had applied for advance licences under Chapter 4 of FTP which mandated duty free import of inputs which are physically incorporated in export products. It is his submission that generally the manufacturers of export goods are required to import inputs which are indicated in the standard input-output norms (SION). He would submit that the Government of India has placed tremendous faith in and exporters and facilitated them by allowing the import of inputs duty free as declared by the exporters; wherever no SION are fixed, assessee is permitted to declare the consumption ratio himself. After making these submissions, he would take us through the advance li....
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.... PFAD which was subsequently changed and forged and the description of PFAD was removed and replaced by description PAO and there is no signature of either of the parties on the corrections. It is his further submission that the reliance placed on the expert opinion by the appellant is not correct as the said expert opinion does not say eurisic / behenic acid can be made out of fatty acid not containing any traces of eurisic / behenic acid. It is his submission that the appellants have deliberately with an intention to deceive, have not included complete specifications in their licences which has been proved by entries in the Ullage report and various documents like Bill of Lading etc. It is his further submission that the chemical examiner at Visakhapatnam specifically has brought out this commission and omission and the appellant is not able to establish that the goods which were imported are acid oil. It is further submission that the condition (vii) of Notification No.93/2004-Cus is violated in as much as the said notification also includes the definition of material which would indicate that the material means which are required for manufacturing of resultant product. It is hi....
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....s a valid test for coming to a conclusion as to the impurities. For this purposes, he would rely upon the technical literature of Protocol for Testing of Ayurveda Siddha & Unani Medicines, manual of methods of analysis of foods. It is his submission that the appeal deserves to be rejected. 7. In rejoinder, ld.Counsel would draw our attention to the applications made by the appellant to DGFT authorities. He would submit that the advance licence which is in question in this case has not been cancelled and the said application specifically declare that if the contents of Behemic / Euricic acid is found short in the goods imported, it would be made good from the process carried out from indigenous sources, hence there is no mis-declaration. It is his submission that Kreiss test which indicate the colour of the product does not state specifically as to that the product can be of palm origin or PFAD; it is a test only to determine whether the colour of the imported goods noticed is due to what reason. He would refer to very same technical literature on which ld.Commissioner (AR) has relied upon and bring to our notice that the said Kreiss test is also used to determine oxidation of any ....
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....ow such documents to be produced or witnesses to be examined or affidavits to be filed or such evidence to be adduced. (2) The production of any document or the examination of any witness or the adducing of any evidence under sub-rule (1) may be done either before the Tribunal or before such departmental authority as the Tribunal may direct. (3) Where any direction has been made by the Tribunal to produce any documents or to examine any witnesses or to adduce any evidence before any departmental authority, the authority shall comply with the directions of the Tribunal and after such compliance send the documents, the record of the deposition of the witnesses or the record of evidence adduced, to the Tribunal. (4) The Tribunal may, of its own motion, call for any documents or summon any witnesses on points at issue, if it considers necessary to meet the ends of justice. It can be seen from sub-Rule (1) to Rule 23 that parties to the appeal shall not be entitled to produce any additional evidence before the Tribunal except in the following situations: (i) if the Tribunal is of the opinion that any documents to be produced or any witness should be examined or any affidavit is to ....
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....not be produced as it was a part of some privileged communication or record which could not have been produced. It is settled law that additional evidence cannot be brought on record to fill up, lacuna or gap, if any, in the investigation as also that the Revenue cannot undertake investigation in a piecemeal manner. The application for additional evidence filed by the Revenue is therefore devoid of any merits and therefore cannot be allowed. However, since both sides have taken a lot of effort and trouble in taking us through these documents and each of them have offered diametrically opposite interpretation of these documents, we have examined the relevance and the probative value of these documents. 9.5 The application for additional evidence in para 6 states that the 'Ullage report' which is now sought to be introduced as an additional evidence was always available on record and was not made a part of the relied upon documents in the instant case. It then states with reference to this document, which was available in one of the DRI files which the Respondent was reviewing, that a letter dated 17.9.2014 was now written to the shipping agent calling for the records. It is further....
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....rected by the shipping agent, by applying white ink and writing the description PAO in hand. The fact that such a change was done by the Shipping Agent is not disputed. It is also not in dispute that J M Baxi., was the authorized agents for the shipping line and were therefore entitled to make corrections. We fail to see how an inference of 'forgery' or manipulation of document can be reached when undisputedly the corrections were made by the shipping agency itself and not by the importer or any unauthorized third party. It is not as if every act of putting white ink is an act of manipulation or forgery, if the white ink is put to correct a mistake and is done by the author of the document or by a person duly authorized by that person, the same can only be construed as a 'correction' and not as a 'manipulation' or 'forgery'. 9.8 In view of the above it is held that the application for additional evidence cannot be entertained in terms of the provisions of Rule 23 of the CESTAT Procedure Rules and that even otherwise the additional evidence does not further the case of the Revenue. 10. Insofar as the case on merits is concerned, demand for customs duty has been confirmed by the im....
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.... not. 10.3 It is not in dispute that, 'Acid Oil' is a by-product that arises in the process of chemical refining of any oil. On the other hand, Palm Acid Oil is specie in the genus of Acid Oil and covers only such Acid Oil which arises in the chemical refining of palm oil. As such the test results and the opinion of the Chemical Examiner are totally irrelevant to the dispute in hand as the same have been issued on the mistaken presumption that what was required to be examined was whether the goods imported were 'Palm Acid Oil' or not. The adjudicating authority has in the impugned order refused to take cognizance of this error on the ground that the Appellant had raised the said contention only in the course of adjudication and not during investigation. We find this reason to be totally unacceptable as the Commissioner of Customs., Kandla while adjudicating the case was not acting as an Appellalte authority but as an adjudicating authority. A defense set up by a noticee cannot be rejected or brushed aside merely for a reason that the same was not put forth before the investigating agency. The stage of investigation is not a stage for making submissions. The stage of adjudication i....
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....stion were 'other than palm acid oil' and that they had the characteristic of PFAD are both irrelevant and both insufficient for drawing an inference that the goods were other than 'Acid oil' as declared on the bill of entry and as covered by the advance licence. The finding of mis-declaration and the further finding that the goods imported were not covered by the description of the licence are therefore unsustainable. 10.4 The Learned Commissioner AR appearing for the Revenue has contended that the purchase order placed by the Appellant did not refer to the very same specification which was spelt out in the application filed before the Norms Committee and that on import the goods were not tested to ascertain whether the same had enough content of Euricic acid, so as to meet the export obligation. This contention of the Revenue is not only irrelevant but also incorrect inasmuch as in the Application filed with the Norms committee the Appellant had specifically stated in the Application itself that they may use indigenous inputs to fulfill the export obligation for Euricic acid if the Euricic acid in 'Acid oil' was not sufficient to meet the export obligation. The endorsement to th....
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.... If the Customs authorities felt that the licensing authorities had been mis-lead and the licence had been obtained through mis-representation as is now being suggested by the learned AR, the only course of action open to Revenue was to have brought this fact to the notice of the licencing authority, whereupon the licensing authority would examine whether or not there was any mis-representation in obtaining the licence. It is significant that in this case such reference was indeed made to the licensing authority as recorded in the Show Cause Notice. The Licensing authority apparently did not find any substance in the complaint made by the Customs and therefore chose not to suspend, cancel or amend the licence in question even though some action was apparently taken by the licensing authority in respect of some other licences which are not the subject matter of the present dispute. Thus, the licence in question was valid at the time of import and has not been suspended, cancelled or annulled by the licensing authority notwithstanding the Customs intimation to them of an alleged mis-representation of facts. If the licensing authorities who are alleged to have been mis-lead themselves....
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....erely specifies that the item for import is 'Acid oil', without there being any specification as to the quality and the amendment sheet thereto which is at Page 228 states that the item to be imported under the licence is Acid Oil; Contents: TFM 94%, M/V 4%; Euricic Acid 20% max. The licence issued to the Appellant did not specify FFA as a limiting factor, unlike what has been argued by the Learned Commissioner AR. 10.7 The Learned Commissioner AR has also contended that Appellant could not have used any product of Palm origin for manufacture of Euricic Acid as oils of Palm Origin do not contain any Euricic Acid. What the Appellant had ordered for and imported was Acid Oil and not Palm Acid Oil as has been presumed. The Managing Director of the Appellant Company has in his statement, which the notice itself has relied upon, clearly stated that the Acid Oil exported from Malaysia was likely to be a mixture of different Acid Oils which are stored together in a common storage tank. It is for this precise reason that while applying for licence on ad-hoc norm basis, the Appellant categorically stated that indigenous material may be used for fulfilling the export obligation for Euricic ....
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....ant exporter, - (a) the name and address of the supporting manufacturer is specified in the said licence and the bond required to be executed by the importer in terms of condition (iii) shall be executed jointly by the merchant exporter and the supporting manufacturer binding themselves jointly and severally to comply with the conditions specified in this notification; and (b) exempt materials are utilised in the factory of such supporting manufacturer for discharge of export obligation and the same shall not be transferred or sold or used for any other purpose by the said merchant exporter. It can be seen from the above, that a merchant exporter who gets his goods manufactured from a supporting manufacturer is barred from using the duty free material for purposes other than discharge of the export obligation while for a manufacturer-exporter there is no such stipulation. The only stipulation qua a manufacturer-exporter is that the said license and materials should not be transferred or sold. It is not the Revenues case that this condition has been violated. 11.2 It is relevant to note here that the Central Government has been for the last at least 15 years been issuing three ....
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....he present case as the Advance Licence Notifications are also a part of a chain of notification issued from time to time without any overlap, and accordingly the difference in the language of the Notification over a period of time has to be taken note of and given effect to. 11.3 A long line of decisions of this Tribunal have been cited by the Learned Counsel for the Appellants to contend that a prohibition against transfer or sale of duty free imports does not prohibit an importer from using the duty free material for domestic production. The decisions of the Tribunal are the following: i) Dolphin Drugs Pvt Ltd vs CC 2000 (115) ELT 552 (Tri) ii) U-Foam Pvt Ltd vs CC 2003 (154) ELT 633 (Tri-Chennai) iii) Vorin Laboratories Ltd vs CC 2004 (168) ELT 107 (Tri-Chennai) iv) Standard Industries Ltd vs CC 2004 (168) ELT 107 (Tri-Mumbai) v) Jay Engineering Works Ltd vs CC 2003 (162) ELT 680 (Tri-Bang) vi) Galaxy Surfactants Ltd vs CC 2006 (202) ELT 495 (Tri-Mum) vii) Jindal Drugs Ltd vs CC 2007 (214) ELT 37 (Tri -Mum) viii) Areva T & D India Ltd vs CC 2009 (242) ELT 421 (Tri-Chennai) ix) Global Exim vs CC 2010 (253) ELT 417 (Tri-Mum) A contrary view taken by th....
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....l Government while exercising the powers conferred upon it by the statute to grant exemption under Section 25 of the Customs Act. It is therefore natural for an Exemption Notification to contain provisions which are less onerous compared to the original Policy. The difference between the provisions of the Exemption Notification and the Policy (or the statute for that matter) cannot be regarded as a situation of conflict between the Policy and the Notification. Coming to the facts of the present case, it can be seen that insofar as a manufacturer-exporter is concerned, the Exemption Notification was unambiguous in providing in clause (vii) that the imported material was not permitted to be transferred or sold. This clause does not prohibit use of such duty-free material for manufacture of finished goods or domestic clearances. Clause (viii) of the very notification does contain such a prohibition, but only for a licence issued to a merchant-exporter. The distinction between clause (vii) and clause (viii) is clear and without ambiguity. The Central Government, while issuing the notification, chose to prescribe two separate and distinct conditions for two kinds of licence holders; man....