TaxTMI 
TaxTMI 
2019 (11) TMI 740
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....nd Customs (CBEC), (ii) Circular, dated 31st May, 2019, issued by the Central Board of Indirect Taxes and Customs (the CBEC, as rechristened after the advent of the GST regime, referred to, hereinafter, as "the CBIC"), (iii) Office Memorandum, dated 6th September, 2017, issued by the Director General of Foreign Trade (DGFT), (iv) Show Cause Notice dated 15th July, 2019, issued to the petitioner by the Commissioner of Customs, ACC Import, New Delhi (hereinafter referred to as "the Commissioner"), and (v) Show Cause Notice dated 19th July, 2019, issued to M/s Mink Tradecom Private Limited (hereinafter referred to as "Mink") by the Commissioner. 3. During the pendency of these proceedings, Circular dated 9^th July, 2019, was issued by the CBIC and Corrigenda dated 30th September, 2019, and 7th October, 2019, to the impugned Show Cause Notices dated 15th July, 2019, and 19th July, 2019, were issued by the Principal Commissioner of Customs (hereinafter referred to "the Principal Commissioner. 4. This writ petition assails the Show Cause Notice dated 12th July, 2019, issued to the petitioner, as well as the Show Cause Notice 28th June, 2019, issu....
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..../2009-Cus, dated 31st December, 2009, as amended by Notification 66/2016-Cus, dated 31st December, 2016. The relevant portion of Notification 152/2009-Cus, dated 31st December, 2009, as so amended, reads thus: "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods of the description as specified in column (3) of the Table appended hereto and falling under the Chapter, Heading, Sub-heading or tariff item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the said Table, when imported into India from the Republic of Korea, from so much of the duty of customs leviable thereon as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the aforesaid Table: Provided that the importer proves to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that the goods in respect of which the benefit of this exemption is claimed are of....
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....oner under Section 112 (a) of the Act, and (v) the assessment of one of the aforesaid eight Bs/E, which was provisional, be not finalized on the above lines. 11. As we do not intend to comment on the merits of the allegations in the impugned Show Cause Notices, we refrain from entering into the specifics of the various Notifications involved therein. 12. The FTP, it may be noted, is notified under Section 5 of the FTDR Act, which reads thus: "5. Foreign Trade Policy. - The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, and that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette." 13. According to the Revenue, the gold coins imported by the petitioner under the aforesaid eight BS/E were appropriately classifiable, not under Sub-Heading 7114 1910, but under Sub-Heading 7118 9000 of the Tariff....
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....er the ITC (HS) is notified, reads as under: "2.01 Exports and Imports-'Free', unless regulated (a) Exports and Imports shall be 'free' except when regulated by way of 'prohibition', 'restriction' or 'exclusive trading through State Trading Enterprises (STEs)' as laid down in Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and Imports. The list of 'Prohibited', 'Restricted' and STE items can be viewed by clicking on 'Downloads' at http://dgft.gov.in. (b) Further, there are some items which are 'free' for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force." Notification 36/2015-2020, dated 17th January, 2017, whereby the DGFT notified the ITC (HS), 2017, reads thus: "Notification No 36/2015-2020 New Delhi, Dated: 17 January, 2017 Subject: Notification of ITC (HS), 2017 - Scheduled-1 (Import Policy) S.O. (E): In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (as amended from time to time) read with paragraph 2.01 of the Foreign Trade Policy, 2015-2020, the Central Government hereby notifies 'Indian Trade Classific....
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....hich is 'Restricted' may be exported or imported only in accordance with an Authorisation / Permission or in accordance with the procedure prescribed in a Notification / Public Notice issued in this regard." 22. On the basis of the above, the impugned Show Cause Notices allege that the gold coins imported by the petitioner and Mink, having been imported in violation of the FTP, were not entitled to the benefit of exemption under S. No. 526 of Notification. 152/2019-Cus supra. It is essentially on the basis of the aforesaid facts and allegations that the impugned Show Cause Notices call on the petitioner, and Mink, to show cause against confiscation of imported gold coins, demand of differential duty with interest, and imposition of penalty. 23. The petitioner claims to be particularly aggrieved by para 8 of the impugned Show Cause Notices, dated 12th July, 2019/15th July, 2019, issued to the petitioner, and 28th June, 2019/19th July, 2019, issued to Mink, which reads as under:- "8. Further, in a case involving import of similar article viz. gold granules, CBIC vide letter F. No. 450/67/2019Cus.IV dated 31.05.2019 has taken a stand that import of said items can on....
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.... in the Board. It is observed that the said orders are not legal and proper. Therefore, the Board has taken a decision that the said orders should be appealed against. Customs authorities at Hyderabad and Bangalore have been requested to take necessary action. It is therefore, requested that any similar consignments pending clearance at the ports/airports may be dealt in terms of the FTP 2015-2020 and the Board's decision above. Yours Sincerely Sd/- (Zubair Riaz) Director (Customs)" (Emphasis supplied) 26. The petitioner submits that it was grossly improper, as well as ex facie illegal, on the part of the Director (Customs), to observe, in the afore-extracted Circular dated 31st May, 2019, that the judgments of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), in the Final Orders dated 12th August, 2018 and 27th November, 2018, both of which were passed in appeals filed by M/s Sri Exports, were not legal and proper. The petitioner submits that, while the right and entitlement, of the Customs authorities, to appeal against the said final orders passed by the Tribunal, could not be gainsaid, the CBIC had....
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...., was not tenable. 6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working withi....
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....bunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under S. 35E(1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessee-public without any benefit to the Revenue. We would like to say that the department shoul....
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....n, or for the implementation of any other provision of this Act or of any other law for the time being in force, in so far as they relate to any prohibition, restriction or procedure for import or export of goods issue such orders, instructions and directions to officers of customs as it may deem fit and such officers of customs and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board : Provided that no such orders, instructions or directions shall be issued - (a) so as to require any such officer of customs to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner of Customs (Appeals) in the exercise of his appellate functions." (Emphasis supplied) 31. In directing field formations to deal with consignments pending clearance at ports and airports, in accordance with the views expressed by it, in preference to the law laid down by the Tribunal, it is clear that the CBIC has acted in direct and conscious violation of the proviso to Section 151A of the Customs Act. ....
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....ted respective field formations to appeal against CESTAT judgments in Sri Exports Versus Commissioner of Customs, Hyderabad [Final Order No. A/31494/2018, dated 27-11-2018 in Appeal No. C/30812/2018] and Sri Exports Versus G.G Bangalore-Cus [arising out of No. 344/2018 dated 12/10/2018 passed by Commissioner of Customs, Bangalore-I] respectively (copy enclosed). 2. As per the information received from the Principal Commissioner of Customs, Hyderabad, the said order passed by CESTAT Hyderabad has been suspended. Appeal has also been filed against the order of CESTAT, Bengaluru in the Karnataka High Court. 3. Subsequent to above Instructions. RBI vide letter dt. 18 June 2019 has stated that as per Master Direction dated July 1, 2016, it has been mentioned that Nominated banks and nominated agencies, as notified, by DQFT are permitted to import gold on consignment basis. Further, DGFT vide F. No, 01/89/180/36/AM-11/PC-2 (A)/Pt.II/P-321 dated 21.6.19 has clarified that 'individual parties not falling under the category of nominated agencies are not eligible for importing gold', (copy enclosed) 4. In view of the above, last para of instruction dated 31....
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.... the Circular dated 9th September, 2019, which "modifies" the directions contained in the Circular dated 31st May, 2019, does not expressly direct field formations to act contrary to the view expressed by the Tribunal, but, rather, directs them to "take suitable action in accordance with the above instructions of RBI/relevant master circulars/extant FTP provisions and the clarification from DGFT dated 21.6.19 cited above besides provisions of the Customs Act with regard to pending or future imports of gold consignments." In our view, however, the distinction between the concluding paragraph of the Circular dated 31st May, 2019, and paragraph 4 of the Circular dated 9th September, 2019, is merely superficial. The CBIC has, effectively, reiterated its direction, to all authorities assessing pending imports, to ignore the judgments of the Tribunal. We reiterate that this is completely impermissible. Administrative and executive authorities, in the Indirect Tax hierarchy, are completely proscribed from directing field formations to act in violation of judicial orders. We are aware that para 2 of the Circular dated 9th September, 2019, states that "as per the information received from t....
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...., from the lowest to the highest, in the Indirect Tax echelons, would be aware of the fact that a judicial order, which stands set aside by a higher authority, has no precedential value. Whether, however, a judicial order, which stands stayed by a superior authority, retains, or loses, it is precedential value, is a more involved question. We do not wish to express any opinion thereon, essentially because the Show Cause Notices, issued to the petitioner and Mink, are pending, and we - unlike the CBIC - do not wish to place fetters on the exercise of judicial discretion, by the authorities entrusted with the task of the adjudication thereof. Suffice it to state that there is no absolute proposition, in law, that an order, of a lower judicial authority, completely loses, on its being stayed by a higher judicial authority, its entire precedential value. We prefer to rest our observations at that. 39. In any event, in view of the above discussion, we are convinced that the Circular, dated 9th September, 2019 may, at best, serve as a source of information about the fact that appeals, against the orders passed by the Tribunal in the Appeals preferred by Sri Exports, before the Hyderab....
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....sued by an authority which is incompetent to do so, that, ordinarily, a court would interfere therewith. In the present case, the petitioner does not even remotely suggest that the Commissioner was not competent to issue the impugned Show Cause Notices. The challenge of the petitioner, qua the allegations in the Show Cause Notice, and the proposals following thereupon, are on merits. 44. Article 226 of the Constitution of India is no akshaya patra, in which every sort of grievance can find absolution, even where adequate and efficacious alternative remedies are available. In Special Director v. Mohd Ghulam Ghouse (2004) 3 SCC 440, which questioned the propriety of the interference, by the High Court, with a Show Cause Notice issued by the Enforcement Directorate under the provisions of the Foreign Exchange Management Act, 1999, the Supreme Court held thus (in para 5 of the report): "This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence o....
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....dated 6th September, 2017, of the DGFT, reads thus: "F. No. 01/89/180/36/AM-ll/PC-II(A) Government of India Ministry of Commerce & Industry Department of Commerce Directorate General of Foreign trade Udyog Bhawan, New Delhi Dated the 6th September, 2017 Office Memorandum Subject: Amendment in Import Policy of gold and silver under Chapter 71 of the ITC(HS) 2017-regd. The undersigned is directed to refer to letter No. VIII(12) Import/Gr. III. IV 85 VI/KCPL/39/2016/1605 dated 30.08.2017 from the Commissioner (Customs) Air Cargo Complex seeking clarification on the above mentioned subject. 2. In the matter, it is clarified that date of reckoning of import is decided w.r.t. the date of shipment, as per Para 2.17 read with para 9.11 of the HBP (2015-20). Accordingly, shipments prior to 25.08.2017 may be considered for clearance by Customs. However, of late there has been an unprecedented surge in import of gold coins from South Korea under INDIA - Korea CEPA. Customs being the verifying agency for Rules of Origin (RoO) criteria of the imported goods, may like to examine these consignments of gold with due diligence to ensure that such imports....
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....118 9000, of the Tariff, as well as of the ITC (HS). It is well settled that where an item is covered by an entry specific thereto, it has to be classified under the said entry and resort to all other entries would, ex facie, stand proscribed. 50. Gold coins being specifically classified under Sub-Heading 7118 9000 of the Tariff as well as of the ITC (HS), there can be no question of classifying gold coins under Sub-Heading 7114 1910. 51. In stating, in para 4 of the impugned Office Memorandum dated 6th September, 2017, issued by the DGFT, that gold coins fall within Heading 7118 9000 of the ITC (HS), and that, therefore, their import would be subject to RBI guidelines, the CBEC merely sets out the indisputable statutory position. We find no reason to interfere therewith. 52. At the same time, it is also settled that the manner in which an import item is described in the Bs/E, is not necessarily conclusive regarding its classifiability. It is always open to an importer to contend that an item is not exactly conforming to the description contained in the Bs/E. It is only in cases in which an assessee avails certain benefits, whether by way of exemption or otherwise, based o....
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....18 Coin 7118 10 00 Coin (other than gold coin), not being legal tender 100% 7118 90 00 Other 100% 2.1 Within this CTH, are included: (i) coins (other than gold coin) which are "no longer legal tender" - 7118 10 00 (ii) All remaining COINs (includes all legal tender, regardless of constituent material, and Gold Coins)-7118 90 00 Accordingly, the classification of GOLD COINS ought to have been under 71 18 90 00. 3. Furthermore, the communication exchanged with RBI dated 13"' Sept. 2017 which has been enclosed with the subject letter, states that only nominated agencies can import gold coins or gold in primary forms. They have also categorically stated that other than the notified agencies / banks / Star & Premier Trading houses, import of gold coins and medallions is not permitted. 4. In view of the above, it appears that the issue of classification and eligibility of the entities who imported "gold coins" during the period 1st July to 25th Aug 2017 under India-Korea FTA requires action in terms of Foreign Trade Policy. 5. This issue with the approval of the Board. Sd/- ....
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....th February, 2018, of the CBEC practically adjudicates, by executive fiat, Show Cause Notices, such as those issued to the petitioners in these writ petitions. This is completely impermissible. Being, as it is, in the nature of executive trespass on the quasi-judicial terrain, the Office Memorandum dated 16th February, 2018, must necessarily perish. 57. We say no more. 58. The above findings apply, mutatis mutandis, to WP (C) 9230/2019 which, too, deals with import of goods declared as "gold coins (other than legal tender)", from South Korea, under eight Bills of Entry. Conclusion 59. Resultantly, these writ petitions are disposed of, in the following terms: (i) Circular No 450/67/2019-Cus. IV, dated 31st May, 2019, stands modified by Circular No 450/67/2019-Cus. IV, dated 9th September, 2019, issued by the Central Board of Indirect Taxes and Customs. While no orders are, therefore, required to be passed in respect of Circular dated 31st May, 2019, Circular dated 9th September, 2019, is quashed and set aside, to the extent of the directions contained therein, especially in para 4 thereof. The effect of the said Circular shall be read as limited to conveying of ....