TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 94
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....ssued in a particular year for the reason that zero duty EPCG authorization has been issued in that year shall not be issued in future years also". 2. The learned Commissioner also confiscated the capital goods imported under these licences under section 111 (o) of the Customs Act, 1962 holding that appellant had wrongly claimed and availed the benefit of Customs Notification No.102/2009-Cus. The value of the capital goods so confiscated is Rs. 141,02,93,240. He allowed redemption of the goods so confiscated on payment of a redemption fine of Rs. 5 Crores under section 125 of the Customs Act, 1962. He confirmed the demand of Customs duty foregone amounting to Rs. 34,70,06,234/- which he held to have been evaded by the appellant by wrongly claiming the benefit of the aforesaid exemption notification. He imposed a penalty of Rs. 1 crore upon the appellant under Section 112 (a) of the Customs Act, 1962. He dropped the proposal in the show cause notice to impose penalty under Section 114A of the Act. He ordered that the bond and bank guarantee, if any, furnished by them at the time of provisional release of the seized goods to be invoked and enforced for recovery of the Customs duty, ....
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....r example, that the licencee shall export goods worth so and so. If the licencee defaults in fulfilling such conditions, duty has to be recovered from it. The only way duties can be recovered under the Customs Act is by issuing an SCN under section 28 which lays down a time limit of two years (prior to 2016, it was one year). The demand can be raised during an extended period of five years if the short payment is on account of (a) Collusion; (b) Wilful mis-statement; or (c) suppression of facts. No demand can be raised beyond five years under any conditions. Evidently, the failure to fulfil conditions of the notification cannot be termed collusion, wilful mis-statement or suppression of facts and therefore, usually the normal period of limitation applies. The time given under the DGFT schemes to fulfil obligations is often much longer than two years or even five years. Therefore, no demand can be raised under section 28 even in case of default. This challenging legislative asymmetry between the time limit for demand under section 28 and the time given to fulfil obligations under the schemes by DGFT, is dealt with by two methods by the Customs: (a) By assessing all goods imported ....
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.... allowed it to import capital goods duty free of duty subject to some conditions and meet export obligations by exporting the goods manufactured using the capital goods. SHIS is another scheme of the DGFT which allows duty credit scrips to importers who hold the specific status holder as per the FTP. 6. The allegation in the SCN is that EPCG scheme with zero rate of duty on capital goods is only available if no scrips under SHIS were issued to the appellant. When applying for the zero duty EPCG scheme in Form "ANF 5A‟, the appellant had wrongly declared that they have not availed the benefit of SHIS scheme when they have actually been issued SHIS scrips. 7. A show cause notice was issued by the DRI officers to ITC Unit, Kolkata answerable to Commissioner of Customs, Chennai. Another SCN on similar issue was issued answerable to the Commissioner of Customs, Jawaharlal Nehru Custom House, Nava Sheva in respect of the goods imported in his jurisdiction. A third SCN was issued by DRI answerable to the Commissioner of Customs, ICD Tughlakabad (Export) in respect of the goods imported in that jurisdiction. A fourth SCN was issued by DRI answerable to Commissioner of Customs, Air ....
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....owed in cases of Incorrectly issued simultaneous benefits of Zero Duty EPCG and SHIS in FTP 2009:14 by the Director General of Foreign Trade in exercise of powers conferred under Para 2.04 of the Foreign Trade Policy 2015-2020. This Directorate had received references from Directorate of Revenue Intelligence and various exporters, on the subject of incorrectly issued simultaneous benefits of Status Holder Incentive Scheme (SHIS) and Zero Duty EPCG Authorization under Foreign Trade Policy 2009-14. The issue involves Para 5.1 (b) of FTP and Para 3.10.3(b) of HBP 2009-14. The representations have been examined by this Directorate in consultation with Department of Revenue and it has been decided that exporters who have been issued or availed such simultaneous benefits of these schemes shall be allowed flexibility, to the extent specified in this public notice, to choose one of the two schemes. The option to return either benefit shall be subject to the following :- A. Return of SHIS In case of return of SHIS (including splits), the unutilized SHIS (part or whole) may be surrendered by the original holder to whom such SHIS was issued by surrender of the original SHIS scrip. Th....
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....CG Scrip(s) that has been transferred shall be treated as amount of Post Export EPCG scrip(s) utilized and treated accordingly including for purposes of payment of interest by exporter. C. Mode of payment The amount shall be paid back to Government in cash. The facility of debiting the amount in valid freely transferable duty credit scrip issued under Foreign Trade Policy or in valid SHIS scrip held by the original holder to whom it was issued, shall be allowed for paying the refund part. However, interest shall be always paid in cash. D. Time Frame A time frame of 9 months from provision of option by DGFT is allowed to exporters for the above. E. No penal action in cases of incorrect issuance. On account of different interpretations on the issue in the past, it has been decided in consultation with DoR that any erroneous issuance of SHIS/Zero Duty EPCG Authorisation will be considered bonafide error and no penal action shall be taken against exporters by RAs / field formations of Custom, including DRI. The Annexure provides the proper interpretation on the issuance of SHIS and Zero Duty EPCG/PE-EPCG benefits. F. Consequential Action by CBEC The CBEC would be iss....
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....f Condition 2(4) of the said notification as it stood during the relevant time, the benefit of exemption was not available to an importer who has been, in the year of issuance of zero duty EPCG authorisation, issued the duty credit scrips under Status Holder Incentive Scheme. Therefore, the benefit of the exemption notification is not available to the appellant. Therefore, the entire duty has to be recovered denying the benefit and since a demand under section 28 was found to be not sustainable, the bond executed by the appellant should be invoked and the duty recovered. The confiscation and penalties imposed in the impugned order are consequent upon the denial of the benefit of the exemption notification. 13. Learned Authorised Representative of the Department reiterated the arguments of the impugned order and asserted that an exemption notification must be strictly construed and relied on the following case laws: (i) Star industries Vs. Commissioner of Customs (Imports)Raigad reported in 2015 (324) ELT 656 (SC) (ii) Commissioner of Central Excise, Pondicherry Vs. Honda Siel Power Products Ltd reported in 2015 (323) ELT 644 (SC) (iii) Commissioner of Customs (Import), Mumba....