TaxTMI 
TaxTMI 
2019 (6) TMI 1035
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents i.e. M/s. Sparkling Traders Pt.Ltd. purchased a transferable DFIA dated 27.12.2006, which permits duty free import of Corrosion Inhibitor, against export of Soda Ash, from M/s. Tata Chemicals Ltd. The respondents imported Ascorbic Acid as Corrosion Inhibitor under the said DFIA against export of Soda Ash, vide Invoice dated 1.6.2009 and filed B/E dated 21.7.2009 by claiming exemption under custom notification No.40/2006. Revenue raised certain queries, on the bill of entry, vide query memo dated 25.7.2009, stating that the imported goods i.e. ascorbic acid is not covered under the description of Corrosion Inhibitor and that an NOC is required to import ascorbic acid, which was replied by the respondents. Deputy Commissioner of Customs, vide order-inoriginal dated 22.9.2009, denied the benefit of notification No.40/2006 to the respondents. On an appeal filed by the respondents, Commissioner (appeals), vide impugned order dated 14.10.2009, set aside the order in original dated 22.9.2009 and directed the deputy Commissioner to release the goods only under customs/central excise escort to the factory of use of the respondent. Learned Commissioner directed that non-pharmaceutical u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er before the import and therefore, permitting the import of the same in the impugned order is not legal and proper. 3.2. Per contra the learned counsel for the respondents reiterated the findings recorded in the impugned order and prayed for dismissal of the appeal filed by revenue. He submits that Ascorbic Acid can be used as corrosion inhibitor and can be imported on the strength of DFIA issued for export of soda ash. In support of his submission he relied upon the opinion of joint director, New Custom House Laboratory, Mumbai dated 15.1.2010. He also relied upon the decision of the Hon'ble Supreme Court in the matter of Polyglass Acrylic Mfg. Co. Ltd. vs. Commr. of Customs, Vishakhapatnam; 2003 (153) ELT 276 (SC), wherein it was held that the report obtained at the instance of the Department itself has great force and it should not be ignored. He further submitted that the provisions of para 4.56 of Handbook of Procedures is applicable only for sensitive item and Ascorbic Acid does not fall into that category. Learned Counsel also informed us that despite the order of Commissioner, the department did not release the imported goods and the respondents approached the Hon'ble Hig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns of ascorbic acid as oxygen scavenger the importer may be asked to submit copies of relevant papers from the Encyclopaedia of Chemical Technology by Kirk Othmer, 5th Edition, Vol-25, Sr. No. 3 of the references cited under heading Ascorbic acid as corrosion inhibitor. Corrosion inhibitors are used in boiler water treatment as well as in cooling water system. Dr C. Rajagopal, after quoting different references has opined that ascorbic acid is an effective corrosion inhibitor for steel in all the media namely acidic, neutral and sulphite. Sh. R.V. Alagesan, Scientist of CECRI-CSIR, Karaikudi has also confirmed one of the industrial uses of ascorbic acid as oxygen scavenger used for prevention of corrosion in heat exchangers circulating cooling water system of soda ash plant. Therefore it may be considered that ascorbic acid also finds use as corrosion inhibitor. Yours faithfully, Sd/- (D. MohanKumar) (Joint Director) It can be seen above, that the Joint Director, New Custom House Laboratory has clearly opined that Ascorbic Acid can also be used as Corrosion Inhibitor. This Tribunal, at the time of hearing of application for stay filed by Revenue, considered the abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Export Product i.e. Soda Ash is $1,04,58,355.35, the C/F value of items at serial No.5 & 6 together should not be more than $10,45,835; in the instant case, the value of Ascorbic Acid itself work out to $20,05,657.50 which is contrary to the provisions of SION. Ongoing through public notices dated 3.3.2004, 29.6.2004 & 13.7.2006, we find that while the notice dated 3.3.2004 restricted the value of items at Sr.No. 4,5 & 6 of SION A1170 @ 5% and public notice dated 29.6.2004 enhanced restriction to 10% for items at Sr. No. 5 & 6, public notice dated 13.7.2006 completely removed the restriction and therefore there was no restriction in SION w.e.f. 13.7.2006. The relevant date in this matter is 27.12.2006, hence, the contention of the revenue that the respondents have breached the conditions imposed in the SION is not sustainable. We completely agree with the contention of learned counsel for the respondent that in view of paragraph 4.59 of the Handbook of Procedure Volume-I, the limiting factor of quantity and value of the individual inputs can apply only if SION so provides. In the present case, SION, as in force on the date of issuance of the DFIA, did not provide any limitin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Hon'ble Supreme Court in the matter of Union of India vs. Inter-Continental (India); 2003(156) ELT A160 (SC) which has been relied upon by the learned Commissioner in which the Hon'ble Supreme Court upholds the decision of the Hon'ble Gujarat High Court that if a notification itself does not provide any condition, such a condition cannot be imposed by subsequent circular as such an addition tantamount to rewriting the notification or legislating by Circular. 7. Now we will take up the contention of Revenue that since Ascorbic Acid is a pharmaceutical product, it is not used in the industry of manufacturing of soda ash and hence the same cannot be allowed as input. According to Revenue as per DGFT policy circular dated 24.3.2009, only those imports are allowed which are actually used or are capable of being used in manufacturing of export product and since ascorbic acid is a pharmaceutical product it is not used in the industry of manufacturing of soda ash and hence the same cannot be allowed as input against corrosion inhibitor. We have also gone through the decisions viz. SVA Udyog Viniyog Ltd. (supra) and Mewati &Co (supra) as cited by learned Authorised Representative in su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the imported material are not required in the case of material not covered by para 4.55.3. Board Circular No.16/2006 dated 9.5.2006 also clarified that only for the items specified in paragraph 4.55.3 of the Handbook of Procedures, correlation is required. Therefore Revenue ought to have taken a liberal view and benefit of Notification No. 40/2006 should not have been denied if other conditions are satisfied. Such licenses are issued to the exporter under the export incentive schemes to boost the export and to earn the foreign exchange. The whole scheme of DFIA is to allow duty free imports against exports. Denial of the benefit under the scheme on unsubstantiated and technical reasons, would defeat the very purpose of the scheme and would amount to denial of substantial benefit. This is more so when the respondents have invested huge sums of money in purchasing such licenses. The submission of learned Authorised Representative that the Ascorbic Acid does not satisfy the definition of "material" as appeared in the Notification No.40/2006 since 'Ascorbic Acid' is not actually used in the manufacture of Soda Ash is also untenable. Our attention has been drawn by the learned counsel....