AI Drafter 
TaxTMI 
TaxTMI 
2019 (7) TMI 1987
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....,304 made by M/s Uhde India Ltd on 19.8.2005 [refer para 20(v) above]. 62. Customs duty amounting to Rs. 6,49,640 in respect of B/E931881 dt 26.7.2004 in respect of imports through Air Cargo Complex, Sahar, is hereby confirmed u/s 18 of the Customs Act, 1962, and is appropriated from the amount of Rs 6,49,640 deposited by M/s Uhde India Ltd on 7.8.2004 [refer para 22(v) above]. 63. The two Bills of Entry are treated as finalized accordingly. 64. The goods having CIF value of Rs 22,95,67,164 covered by B/E No. 480059 dtd. 22.7.2004, imported through Mumbai Sea Port, are confiscated u/s 111(o) of the Customs Act 1962. I, however, allow the goods to be redeemed on payment of a fine of Rs. 5.75 Crores. Since the goods have been released provisionally on execution of Bond and B/G and are no longer available for confiscation, I appropriate the redemption fine from the revenue deposit of Rs 5.75 crores of M/s Uhde India Ltd but later replaced by the B/G of M/s RCF as per the order of the Mumbai High Court. 65. The goods having CIF Value of Rs.15,93,058 imported vide B/E No.931881 dt 26.7.2004 imported through ACC, Sahar, Mumbai, are confiscated u/s 111(....
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....this project a term loan of US Dollars 5.5 Million from Appellant 2, who was the project implementing authority. The project was financed by the Asian Development Bank. 2.2 To implement the project contractor imported the impugned goods at Mumbai by claiming the benefit of exemption under Notification No 84/97-Cus., dated 11.11.97, as amended by Notification No. 85/99-Cus., dated 6.7.99, No. 119/99-Cus., dated 2.11.99, No. 75/2001-Cus., dated 6.7.2001 and 107/2001Cus., dated 12.10.2001. The benefit under this Notification was admissible to all the goods imported into India and intended to be used in a project financed by the World Bank, the Asian Development Bank etc, subject to condition that the importer produces a certificate from the executive head of the Project Implementing Authority and counter signed by an officer not below the rank of Joint Secretary to the Government of India in the concerned Line Ministry, stating that the said goods are required for the execution of the said project and that this project has duly been approved by the Government of India. 2.3 Directorate of Revenue Intelligence, New Delhi ("DRI") gathered the information that Appellant 1 was claimi....
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....tly and severally called upon to show cause, in writing, to the Commissioner of Customs (Import), New Custom House, Mumbai in respect of the goods sought to be cleared through Mumbai Port, Mumbai under Bill of Entry No 480059 dated 22.07.2004 as to why: (i) the benefit of Notification No. 84/97-Cus.dated 11.11.97 as amended should not be denied in respect of goods mentioned under Bill of Entry No 480059 dated 22.07.2004 which were assessed provisionally and the assessment should not be finalized accordingly; (ii) the said goods having declared CIF value of Rs. 22,95,67,164/- and released provisionally should not be confiscated under Section 111(o) of the Customs Act, 1962; (iii) Customs duty amounting to Rs. 9,26,89,304/-should not be demanded and recovered from them under proviso to Section 28 (1) read with Section 18 of the Customs Act, 1962; (iv) penalty under Section 112(a)/114A of the Customs Act, 1962 should not be imposed upon them for their acts of omission and Commission as aforesaid; (v) the amount of Rs. 15,01,89,303/- deposited during investigation should not be appropriated towards payment of duty and penalty. 2.9 Contrac....
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.... the appellants and Shri R K Dwivedy, Additional Commissioner, Authorized Representative for the respondent, revenue. 3.2 Arguing for the appellant learned counsel submits that,- Appellant 1 is a Public Sector Undertaking with 92.5% equity participation by the Government of India. They had taken up a project for upgradation of their High Pressure Nitrate plant, as per the approval granted by Ministry of Chemical and Fertilizers. The project was financed by a loan of USD 5.5 million from Appellant 2 after approval from Asian Development Bank. Appellant 2 was the project implementation authority. For execution of the project Appellant 1, imported certain goods for which the Bill of Entries were filed by the contractor claiming exemption under notification No 84/97Cus dated 11.11.1997 as amended from time to time. The benefit of exemption under this notification was admissible, subject to production of a certificate from the Project Implementation Authority (Appellant 2) countersigned by an officer not below the rank of joint secretary in the Line Ministry so notified by the Department of Economic Affairs in the Ministry of Finance. Appe....
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....e of the imported goods and subsequent proceedings. Commissioner has himself in the impugned order recorded that the conditions of the notification were substantially complied when he states that there is no dispute,- that the project has been approved by the Government of India; goods imported were to be used in a project financed by the Asian Development Bank; project implementing authority was Appellant 2 and they had issued these certificates; Commissioner has stated that the only dispute was in respect of the countersignature of the certificates. Since the Commissioner had found that the conditions of notification had been substantially complied with, he should have allowed the benefit under the notification. Reliance is placed on the decisions in the case of,- Bombay Chemical Pvt Ltd [1995 (77) ELT 3 (SC)} Diwaliben Mohanlal Mehta Charitable Trust [2003 (162) ELT 796 (Comm Appl)] Thermax Pvt Ltd. [1992 (61) ELT 352 (SC)} Associated Cement Cos Ltd. [1999 (111) ELT 257 (T)] Impugned order is based on conjec....
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....atter with the Ministry of Chemical and Fertilizers and Department of Economic Affairs. Department of Economic Affairs has vide their letter dated 8th October 2010 again informed them that Ministry of Urban Development, is the concerned Line Ministry for counter signing these certificates as required under the Notification No 84/97-Cus. Thereafter they continuously kept pursuing the matter, however vide letter dated 18th January 2016, Ministry of Urban Development expressed its inability to counter sign these certificates. Matter was discussed in the Meeting taken by the Secretary, Ministry of Chemical and Fertilizers, on 27th July 2016, wherein the Secretary directed for early resolution of this long pending issue. Vide letter dated 29th March 2017, Line Ministry, informed them that they have decided to engage Quality Council of India (QCI) for causing third party verification of the imported goods. The cost of engagement of QCI was to be borne by the Appellant 1. The financial proposal for the engagement of QCI was obtained by the Appellant 1 and forwarded to Line Ministry, and Line Ministry had vide its O M dated 7th July 2017, informed about engage....
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....before the assistant commissioner of customs or deputy commissioner customs as case may be, having jurisdiction, (ii) in case the said goods are intended to be used in a project financed (whether by a loan or a grant) by the Word Bank or any other international organization, and the said project has been approval by the Government of India, a certificate from the executive head of the Project Implementing Authority and countersigned by an officer not below the rank of Joint secretary to the government of India, in the concerned Line Ministry in the Govt. of India, that the said goods are required for the execution of the said project & that the said project has duly been approved by the Government of India." He refers extensively to para 37 onwards in the impugned order and submits that at the time of importation, and along with the Bill of Entries, the Project Implementation Authority Certificates, with forged counter signature of the Joint Secretary of the Line Ministry was produced. The Appellant plea on substantial compliance of the notification is not acceptable so far as the notification is concerned, wherein the pre-import condition of ....
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.... Finance(No. 2) Act 1996 (33 of 1996): Provided that the importer, at the time of clearance of the goods, produces before the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, having jurisdiction, - (i) in case the said goods are - (a) Imported by an international organisation listed in the Annexure appended to this notification and intended to be used in a project that has been approved by the Government of India and financed (whether by a loan or a grant) by such an organisation, a certificate from such organisation that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India; or (b) imported for use in a project that has been approved by the Government of India and financed (whether by a loan or a grant) by an international organisation listed in the said Annexure, a certificate from an officer not below the rank of Deputy Secretary to the Government of India, in the Ministry of Finance (Department of Economic Affairs) that the said goods are required for the execution of the said project and that the said pr....
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.... 6. United Nations Population Fund. 7. United Nations World Food Programme. 8. United Nations Industrial Development Organisation. Notification No. 84/97-Cus.,dated 11-11-1997 as amended by Notification No. 85/99-Cus.,dated 6-7-1999 and No.119/99Cus.,dated 2-11-1999.and Notification No.75/2001 dt. 8-07-01 and Notification No. 107/2001-Cus.,dated 12.10.2001." 4.3 Appellant 1 had for execution of his project to modernize the HP Nitric Acid Plant at Trombay, imported the subject goods for which he had filed the Bill of Entries through the contractor appointed by him for this purpose. He claimed the exemption under this notification. As per proviso (ii), he produced the certificate from the Executive Head of Project Implementation Authority (Appellant 2). This certificate was duly countersigned by one Shri R Banerjee, Joint Secretary (FB) in the Ministry of Finance, Department of Economic Affairs. However, investigations carried out by the Directorate of Revenue Intelligence, on the basis of information available with them revealed that the countersignatures of the Joint Secretary on the certificates produced were forged. It was also alleged t....
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....s --­ that the appropriate line ministry was the Ministry of Finance. This not only reflects ignorance on the part of the noticees but also a total lack of basic common sense as well as ignorance of law. They cannot then claim innocence in an offence or crime committed as a direct result of their lapse, negligence & ignorance. In case of negligence of this type strict liability has to be imposed . When companies and financial institutions of this stature make such careless blunders it can only be concluded that this was done with a particular design and motive. The attendant circumstances support this conclusion. 40. The certificate in this case has been given by the ICICI bank and it was their responsibility to get the certificate countersigned by the appropriate officer in the Line Ministry. That ICICI bank were aware of this responsibility is evident from the letter addressed by them to the Jt.Sec. Ministry of Finance forwarding a copy of the certificate for countersignature. The letter from ICICI bank could have been sent by post, courier or by their representative directly to the Ministry of Finance. In their wisdom they chose to send it through the representative....
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....ersigned by the officers of the MOF it should have aroused their suspicion as the forwarding letter of the Director(ADB) (under a forged signature) was in direct contradiction to the earlier letter dated 5.7.2004 from the same Ministry saying that it was not the appropriate Line Ministry. Further, this letter did not make any reference to the Ministry's earlier letter and as to why the Ministry had reversed its stand. None of these inconsistencies aroused the suspicion of the offices of ICICI ! 44. The other point raised by the noticees is that since the certificate of the PIA is genuine, the exemption should be granted to the imports as the requirement of countersignature is merely an attestation and in fact is only a procedural requirement. Nothing could be farther from the truth. This arguments implies that the requirement of the countersignature by an officer of the level of Joint Secretary and above to the Govt of India, is redundant and at most a mere formality. The wordings of the exemption notification clearly imply that the certificate of the PIA is worthless unless it is countersigned by the appropriate officers of the LINE ministry. It cannot even be said th....
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....us M/s RCF had lots to gain if the certificates were countersigned urgently and for this they were willing to go to any lengths. M/s Uhde India Ltd would also gain because they were the . contractors and earlier the work got completed the earlier would they get their payments. Similarly, in the case of ICICI bank they would have got the payments released from ADB early. None of the noticees were involved with the project only for social service or altruistic reasons. They are all commercial entities and they were all associated with the Project for commercial gain. Everyone had something to gain from it, some immediately, some subsequently. If M/s Uhde India had nothing to gain, why did they pay a bribe of Rs.1.5 lakhs to Mr Rakesh Yadav and why did M/s RCF facilitate this ? Why did they not talk to the Joint Secretary of MOF directly to get his countersignature?" 4.5 Supporting these findings, of the Commissioner learned Authorized representative, who appeared for revenue, argued that the issue on law of interpretation of the exemption notification has been settled by the constitutional bench of the Apex Court in the case of Dilip Kumar & Other [2018 () ELT (SC)]. As per the la....
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....ry, which it was required to do in the year 1997. i.e. even after seven years, the Department of Economic Affairs is unaware of the responsibility cast on it by the said notification. 4.7 This fact has been noted by Hon'ble Allahabad High Court, and it was only after the directions given by Hon'ble High Court that the Ministry of Urban Development was nominated as "Line Ministry". The decision of the Hon'ble High Court in Writ Petition (Tax) No 1516 of 2006 dated 05.10.2006 is reproduced below: "Certain exemptions under the Central Excise Act and the Customs Act have been granted to certain projects on the condition that the financing institution, which in this case is the ICICI Bank, issues certificate and the certificate is counter signed by an officer of the rank of not less than Joint Secretary in the "Line Ministry". "Line Ministry" has been defined as the ministry in the Government of India, which has been so nominated with respect to a project by the Department of Economic Affairs in the Ministry of Finance, Government of India. According to the petitioner, it is entitled to the exemption and the certificates for the above purpose have been issu....
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.... after consultation, will either get the certificates counter signed by the proper officer and returned to the petitioner within one month of the date on which the certificates are received by the "Line Ministry" along with a certified copy of this order, or the "Line Ministry" or the proper officer of the "Line Ministry", not below the rank of Joint Secretary, will pass a reasoned order for refusing to countersign all the certificates or any of the certificates. For a period of three months from today, proceedings pursuant to the impugned notices issued by the Central Excise Department and Customs Department in this regard will remain stayed. With the aforesaid directions, this writ petition is disposed of." 4.8 Interestingly, even after the nomination of "Line Ministry", the Joint Secretary in the Ministry of Urban Development was not countersigning the Project Implementing Authority Certificates. As is seen from the order of Hon'ble High Court of Allahabad, supra, court was compelled to direct for nomination of another line ministry whose Joint Secretary would counter sign the Project Implementing Authority Certificates. Matter was again taken up with the De....
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....A of the Central Excise Act, 1944 read with Section 3(3) of the Additional Duties of Excise Act while the other dated 11 November 1997 was under Section 25 of the Customs Act. The goods intended to be supplied to a project financed by the World Bank or Asian Development Bank or any International Organization other than those listed in the Annexure to the notification have been exempted from Central Excise Duty / Customs Duty / Additional Duty subject to the fulfillment of the following conditions:- "(i) if the said project is approved by Government of India, a certificate from the executive head of the Project Implementing Authority and countersigned by an officer not below the rank of a Joint Secretary to the Government of India, in the concerned Line Ministry in the Government of India, that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India" is produced." In 2003, the petitioner planned to set up a 22 MW Bagasse based co-generation Power Plant 2 at its Sugar Unit at Deoband in district Saharanpur. The petitioner approached the ICICI Bank for funding the Project to the ext....
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.... either get the certificates countersigned by the Appropriate Officer and return the same to the petitioner or pass a reasoned order for refusing to countersign the certificates. It is stated that the Ministry of Urban Development sent a letter dated 21 September 2011 to the Uttar Pradesh Power Corporation Limited with a request to certify that the imported equipments purchased by the petitioner were installed at the Sugar Unit and that they were being used for the required purpose. The Power Corporation was also asked to enquire as to what was the co-generation at the unit and supplied to the grid by the petitioner. According to the petitioner, the Power Corporation by letter dated 12 January 2012 expressed its inability to supply information relating to the installation of the equipments at the Sugar Unit. A communication dated 7 April 2012 was also sent by the Power Corporation clarifying that the matter related to the utilization certificate for imported goods for which neither the Corporation had issued the essentiality certificates nor it was aware of the Project Sponsoring Authority that gave the permission. The records of the writ petition indicate that th....
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....elopment. The Court, accordingly, directed the Ministry of Finance and the ICICI Bank Limited to file their counter affidavits within four weeks as to whether any approval was required to be given by the Ministry of Finance and whether "Line Ministry" was required to examine the said Project. A short counter affidavit has been filed by the Ministry of Finance. In paragraph 4 of the short counter affidavit it has been categorically stated that there was no requirement of giving any approval by the Ministry of Finance, Department of Economic Affairs with regard to the loan of US 80 million dollars by the Asian Development Bank for the Urban Environmental and Infrastructural Project to ICICI Bank and that the "Line Ministry", namely the Ministry of Urban and Development, has no specific role with regard to the Project and the loan that was granted by the ICICI Bank to the petitioner. It has also been stated that the sub-project loan agreement between ICICI Bank and the petitioner did not require the approval of the Department of Economic Affairs. A short counter affidavit has also been filed by the ICICI Bank. Paragraphs 7, 8 and 9 are reproduced below:- "7.....
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....of provided the information was requesting the Government of India to get the details from the ICICI Bank, has also been referred to. Paragraph 9 of the counter affidavit is reproduced below:- "That in reply to the contents of Para 43 of the writ petition it is stated that as the Ministry of Urban Development has no expertise with regard to the kind of equipment that is required for setting up a bagasse base plant, therefore it must depend on others to verify that the equipment imported / fabricated for the TIEL are actually meant for the stated purpose. It must also rely on another government agency to verify that the said equipment has been installed and is being used for the said sub-project. Hence, evidently the Ministry has to rely on others to verify the equipment. The certification for intended use is relevant only when the equipment is being imported for the purpose of setting up the plant. Once, the plant has already been set up and has been functional for a long period of time, the counter signature required to be done, should be done only if the equipment has been actually used for the project because actual use is what makes the project eligible for th....
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....cates. However, according to the petitioner it has no objection if an inspection is carried out and it is the Uttar Pradesh Power Corporation Limited which is not cooperating in the matter for which the petitioner has even made a request for the appointment of a third party agency. This limited issue can appropriately be resolved as the petitioner has no objection to any inspection being carried out for the purpose of satisfying the "Line Ministry" about the equipments that have been installed by the petitioner at its sugar unit, Deoband in district Saharanpur and other related queries. We would, therefore, order that the State Government and the Uttar Pradesh Power Corporation shall take immediate steps to furnish the information that has been sought by the "Line Ministry" and in case they are not in a position to furnish the information then to consider the feasibility of getting the information by appointing a third agency at the cost of the petitioner, as has been suggested by the learned counsel for the petitioner. This process should be undertaken and concluded at the earliest and not later than three months from the date a certified copy of the order is filed by the....
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....a meeting on 27th July 2016, which was attended by the representative of Department of Economic Affairs, and the representatives of Appellant 1. Minutes of the said meeting are reproduced below: "MINUTES OF THE MEETING HELD UNDER CHAIRMANSHIP OF SECRETARY (FERTILIZERS) ON 27TH JULY, 2016 AT 11.30 A.M. IN CHAMBER NO.217, A-WING, SHASTRI BHAWAN, NEW DELHI REGARDING ISSUE OF PROJECT IMPLEMENTATION AUTHORITY CERTIFICATE (PIAC) TO RCF FOR AVAILING CUSTOM DUTY EXEMPTION: List of participants enclosed. At the outset, Secretary (Fertilizers) welcomed all the participants and desired to know the status of issuance of Project Implementation Authority Certificate (PIAC) for availing Custom Duty Exemption for Goods imported in 2003 04 under Asian Development Bank (ADB) loan by Rashtriya Chemicals and Fertilizers Limited in respect of modernization of HP Nitric Acid Plant at Trombay. 2. Director (Finance) RCF made a presentation on the subject giving a brief history of the matter: a) Rashtriya Chemicals and Fertilizers Limited (RCM) had taken up the modernization of its HP Nitric Acid Plant at Trombay at an approximate cost of Rs.85 Crore and accordi....
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....served with a Show Cause Notice dated 09.03.2005 by Additional Director General, DRI, as to why benefit of the Notification as amended should not be denied, why goods should not be confiscated, why penalties should not be imposed on all the Notices and why the amounts deposited should not be appropriated. Show Cause Notice was confirmed by the Commissioner of Customs. Appeal was filed by RCF before the Customs Excise and Service Tax Appellate Tribunal against the order dated 30/11/2005. f) The above matter is pending before CESTAT since 2006 and we have been seeking adjournment in the matter from time to time on the plea that the issue of PIAC is pending for consideration before the line ministry. In the hearing before the Tribunal held on 17.2.2016, the Tribunal had taken a stand that since the matter is pending from 2005-06, they are required to dispose of the matter without any further delay. The next date of hearing in the above matter is fixed on 2nd August 2016. In case of non-.production of PIAC certificate at the hearing, our appeal may be rejected by CESTAT causing us unnecessary loss. g) The matter was taken up with Department of Economic Affairs, Minist....
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....was the "Line Ministry and refused to countersign the PIAC, the party had approached Hon'ble Allahabad High Court by filing Writ Petition. While disposing of the said petition, Hon'ble Allahabad High Court in its judgment dated 29th April, 2016, inter-alia, ordered that the state Government of U.P. and the Uttar Pradesh Power Corporation( The parties who were requested by MOUD to certify that the equipment's purchased by Triveni Engg. were installed at their sugar unit and that they were being used for the required purpose) to tale immediate step to furnish the information sought by MOUD and in case they are not in a position to furnish then to consider the feasibility of getting the information by appointing a third agency at the cost of petitioner. This is required to be done within a period of 3 months from the date of certified copy of this order is served on MOUD by the petitioner. 3. Secretary (Fertilizers). expressing his concern over the delay in countersignature on PIAC suggested that in the light of the above judgment of Hon'ble Allahabad High Court, MOUD as "Line Ministry" can consider, if required, to appoint third party/agency i.e. independent ....
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.... of Fertilizers, who by their letter dated 13th April 2015 recommended to the 2nd Respondent to issue the said certificates as requested for by the 1st Petitioner. The 2nd Respondent vide his communication dated 18 January 2016 addressed to the Department of Fertilizers turned down the request on the ground that they did not have expertise to certify the import of such goods from the necessity point of view. They further stated that the 2nd Respondent was also not consulted at the time of loan negotiation and therefore the 2nd Respondent was not in a position to sign the certificates. The 2nd Respondent was also requested by the Department of Fertilizers that they could appoint a 3rd Party/Agency, i.e., an independent government agency of their choice to carry out inspection of the imported equipment installed at the 1st Petitioner's plant to enable the 2nd Respondent to issue the certificate. Despite the fact that the 2nd Respondent was categorically informed that the matter was adjourned in view of the pending appeal before the CESTAT no action has been taken by the 2nd Respondent." Thereafter in para 26, made following prayer,- "26. The Petitioners therefore pray....
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....vernment of India. 3. In this context, I am directed to say that it has been decided to engage Quality Council of India (QCI) for a third party verification of the goods imported by RCFL for the said project including the same are required for execution of the project and are being used for the said purpose. QCI is requested that a financial proposal in this regard may be prepared and forward to this Ministry on priority." 4.15 Vide their letter dated 7th July 2017, they informed Ministry of Chemical and Fertilizers, about the said decision for engaging QCI, and sought for necessary funds . The text of this letter is reproduced below: "Subject: Issue of Project Implementation Authority Certificate (PIAC) for availing customs duty exemption for goods imported under ADB loan, Rashtriya Chemicals & Fertilizers Limited (RCFL)- proposal for third party verification -reg The undersigned is directed to refer to Ministry of Chemical and Fertilizers Department of Fertilizer O. M. No 18016/4/2015-FCA dated 07.02.2017 on the subject mentioned above and to convey that it has been decided by the competent authority to engage Quality Council of India (QCI) for third....
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.... 2. On the basis of the report submitted by QCI, I am directed to convey the approval of the competent authority on issue of Project Implementing Authority Certificate (PIAC) for availing Custom Duty Exemption for goods Imported under ADB Loan. The true copy of the Project Implementation Authority Certificate (PIAC) counter signed by ICICI Bank limited has duly been signed by the Additional Secretary (Fertilizers) on behalf of Ministry of Finance (Copy enclosed). 3. You are requested to submit the PIAC certificate with the concerned authorities and also appraise the same status before Hon'ble Bombay High Court vide WP No 1534/2017 earlier No WP (L) No 737/2017." 4.18 Thereafter Appellant 1, moved to Hon'ble Bombay High Court in their writ petition No 1534 of 2017, seeking their leave and permission to file these additional documents before the tribunal in the pending appeal. Hon'ble Bombay High Court while deposing the writ, passed the following order: "... the request of the petitioners are, therefore, that these documents be allowed to be produced before the Tribunal and the tribunal may be requested to proceed further with the pending appeal. 3. Lea....
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....sioner found these signatures as forged and has proceeded against the importers and all others concerned with importation. 4.21 There is no dispute about the finding recorded by the Commissioner that the certificates produced before the Customs Authority for clearance of the goods at time of importation were having counter signatures which were forged. Commissioner has strongly relied upon the decision of the Apex Court in the case of Eagle Flask Industries Limited wherein Hon'ble Apex Court has observed as follows: "6. We find that Notification 11/88 deals with exemption from operation of Rule 174 to exempted goods. The Notification has been issued in exercise of powers conferred by Rule 174A of the Rules. Inter alia it is stated therein that, where the goods are chargeable to nil rate of duty or exempted from the whole of duty of excise leviable thereon, the goods are exempted from the operation of Rule 174 of the Rules. The goods are specified in the Schedule to the Central Excise Tariff Act, 1985 (in short 'the Tariff Act'). The proviso makes it clear that where goods are chargeable to nil rate of duty or where the exemption from the whole of the duty of excise levi....
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....ufacture of final product on the ground that the records kept by it at the recipient end would indicate its "intended use" and "substantial compliance" with procedure set out in Chapter 10 of the Central Excise Rules, 1944, for consideration? The Constitution Bench answering the said question concluded that a manufacturer qualified to seek exemption was required to comply with the preconditions for claiming exemption and therefore is not exempt or absolved from following the statutory requirements as contained in the Rules. The Constitution Bench then considered and reiterated the settled principles qua the test of construction of exemption clause, the mandatory requirements to be complied with and the distinction between the eligibility criteria with reference to the conditions which need to be strictly complied with and the conditions which need to be substantially complied with. The Constitution Bench followed the ratio in Hansraj Gordhandas case (supra), to reiterate the law on the aspect of interpretation of exemption clause in para 29 as follows- "The law is well-settled that a person who claims exemption or concession has to establish that he is entitled to that exe....
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....ct compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to....
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....ial conditions and procedural conditions prescribed by the exemption notification. The substantial conditions need to be strictly interpreted and no latitude is available for interpreting the same, to allow the benefit of exemption in case of the non compliance with these conditions. However Hon'ble Apex Court clearly holds that non compliance with the procedural conditions should be viewed liberally and substantial benefit of exemption otherwise available should not be denied. 4.22 With the above understanding of the law as declared by the Hon'ble Apex Court, we examine the provision of notification, which leads to present controversy. For ease of reference we reproduce the same again though it has been referred to earlier also in this order. "Provided that the importer, at the time of clearance of the goods, produces before the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, having jurisdiction, - (i) ...... (ii) in case the said goods are intended to be used in a project financed (whether by a loan or a grant) by the World Bank, the Asian Development Bank or any other international organisation other th....
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....evant entries and applies his mind to determine the duty leviable under the Act and passes an order accordingly (whether such an order is passed separately or on the Bill of Entry itself so long as the duty liability is determined thereby), then an appeal lies under Section 128 of the Customs Act, against such order. As the Appraisers make the assessment and the counter signature of the Asstt. Collector is merely a token of a check exercised by him, it cannot be said that this check makes the assessment order that of the Asstt. Collector. If, however, the Asstt. Collector changes the assessment in any manner whether by way of revised classification, valuation or rate of duty, then the order of assessment will be that of the Asstt. Collector. In the latter case, recourse to Section 27, Customs Act is ruled out and the Appellate procedure will only be appropriate. In the latter type of cases, the assessing officers concerned shall endorse the importer's copy of the Bill of Entry suitably to indicate the fact of decision being taken by an Asstt. Collector." In Black's Law Dictionary, the term "countersign", is explained as follows: "COUNTERSIGN. As a noun, the signatur....
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....ps://www.merriam-webster.com/legal/procedural%20law. Accessed 3rd August 2021. 4.25 From the definition of Procedure and Procedural Law, as referred to in the above dictionaries, it is quite evident that the manner in which the certificate needs to be produced is nothing but the matter of procedure and procedural law. The manner in which the certificate is signed and countersigned is a matter of procedural law, while the contents of the certificate is substantive law. In this case Commissioner, do not find any discrepancy in the contents of certificate produced by the importer at the time of clearance of the imported goods before the jurisdictional Assistant/ Deputy Commissioner. Since we find that the requirement of counter signature by the Joint Secretary of the concerned Line Ministry is nothing but a matter of procedure, we are not in position, to agree with the findings recorded by Commissioner while disallowing the benefit of exemption, by placing reliance on the decision of Hon'ble Apex Court in case of Eagle Flask Industry Ltd. 4.26 It is very interesting to note that this Notification was issued in the year 1997 and thereafter amended in the year 1999 and 2001. While....
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....their cause for the countersignature on the Project Implementation Authority Certificate genuinely and properly issued by the Appellant 2, that he is in position to arrange for the countersignature against gratification he demands. Such sharks have their eyes wide open searching for such opportunities, which occur and reoccur on account of bureaucratic red tapism and vague conditions as this one in the exemption notification. 4.28 We observe from plain reading of notification, that the intention of the notification is to exempt the goods imported for a project approved by Government of India and funded by the loan from an international organization. India has embarked on the path of liberalization of economy in the year 1991 with rationalization of tariff etc, to increase foreign investments in the country. This notification seeks to carry forward this spirit and promote foreign investments for the development and evolution of Indian economy. The condition of production of a certificate from the Executive Head of the Project Implementation Authority suffices the purpose of notification in all such cases where the line ministry was not nominated by the Department of Economic Affa....
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....nality, is a well known interpretative technique often times employed by the Court. Even otherwise, the interpretation that we have adopted is reasonable. No person can be expected to perform a task beyond his control. On one hand, the statute requires the certificate of the concerned Ministry before exemption from duty can be claimed, at the same time, the statute mandates that the refund application must be made within a certain time frame. We are, therefore, of the opinion that the time consumed by the ministry in processing and granting certificate, as referred to in subsection (1) of Section 103, must be ignored for the purpose of computing the limitation for making refund application under sub-section (3) of Section 103 of the Finance Act, 1994. 4.30 In case Wipro Ltd [2015 (319) ELT 177 (SC)], applying the principle of "reading down" Hon'ble Apex Court observed as follow: "36. We are, therefore, of the opinion that impugned amendment, namely, proviso (ii) to sub-rule (2) of Rule 9 introduced vide Notification dated 5-7-1990 is unsustainable and bad in law as it exists in the present form and it has to be read down to mean that this clause would apply only when ac....
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....shall be liable to confiscation: - (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer; SECTION 112. Penalty for improper importation of goods, etc.- Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or 4.35 Since we have as stated earlier delinked/detagged the appeals filed by co-noticees against whom the charge has been made for imposition of penalty, for their acts of omission and commission, which led to production of the certificate with forged countersignature, we would limit our order on the offence part as it relates to the Appellant 1 and Appellant. Prerequisite for invoking the provisions of Section 112 (a) of the Customs Act, 1962 is that the goods should be held liable for confiscation. Section 111 (o) clearly states that in case of ex....
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....osed, was to be passed on to RCF. Therefore, M/s RCF had as much interest in getting the consignment cleared expeditiously without payment of duty as did M/s Uhde India Ltd , if not more. They were also a party to giving of bribe to Shri Rakesh Yadav to get the forged/fabricated certificates. But not being the direct importers their role becomes secondary compared to that of M/s Uhde India Ltd. They are clearly abettors in this case liable for penal action u/s 112 (a) of the Customs Act 1962. 55. As regards the role of M/s ICICI bank Ltd. though they might not have been directly involved in the act of bribe giving, their acts of omission and commission have been discussed in para 19(viii) above and their gross negligence resulted in forged certificates being produced for seeking exemptions from Customs. Had they taken their responsibilities properly and acted with due diligence, as was expected of a PIA, this fraud would not have been effectuated. They are therefore liable for penal action 112(a) of the Customs Act,1962, for abetment as their acts of commission and omission resulted in making the imported goods liable for confiscation u/s 111(o) of the Customs Act, 1962. F....
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....icate. It is not even the case against them that they had themselves forged the countersignatures on the certificate. They were given assurance by the officers in the Ministry of Finance, Department of Economic Affairs, that the countersignatures on these certificates will be arranged. Thereafter the countersignatures were forged in the Department of Economic Affairs, with the Appellant 1 and Appellant 2 having no means to find out about the forgery done. Further after the impugned order was passed by the Commissioner, a lot of correspondence has been placed on record by the Appellant 1, through their miscellaneous application. All this correspondence has been discussed by us in the preceding paras. This correspondence indicates the bonafide efforts being made by the Appellant 1, for obtaining the countersignature of Joint Secretary of Line Ministry nominated by Department of Economic Affairs. In this process the complete inspection of goods and their use in project approved by the Government of India was carried through third party namely Quality Council of India as per the directives of the Line Ministry i.e. Ministry of Urban Development. Even the Secretary in the Ministry of Ch....
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....fied. So we set aside the penalty imposed on Appellant 1 under Section 112 (a). 4.39 As evident from para 55 of impugned order, the Commissioner has imposed a penalty under Section 112 (a) on the Appellant 2, by charging him for "negligence". As discussed earlier, the forged signatures on the Project Implementation Authority Certificate were done by the officer in the Department of Economic Affairs. In absence of any nomination of line ministry by the Department of Economic Affairs, the Appellants were left with no other option but to approach them for getting the countersignature on the Certificates issued by them. Commissioner holds Appellant 2, responsible for negligence, as he had handed over the Certificates issued by him to officers of Appellant 1 for getting them countersigned by the Joint Secretary in the nominated Line Ministry. Appellant 2, was under bonafide belief that the Department of Economic Affairs, Ministry of Finance was the nominated line ministry, for the reason that similar certificates issued by him in past were also countersigned by officers not below the rank of Joint Secretary in that Ministry. Having entertained such bonafide belief, he handed over the....
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.... referred cases, relied upon by the learned Counsel, in our view, is not attracted to the facts of the present case. In the case of P.K. Abraham, supra, it has been only observed that inefficiency of the port trust or negligence in the functioning of the system, could not justify penalty under Section 112 of the Act and this very view has been expressed in the case of Air India, supra. Similarly, the law laid down in the case of Central Warehousing Corpn., supra, is not of much avail to the appellants, as in that case the deliberate negligence on the part of the appellants was not proved. But in the instant case, as observed above, the deliberate negligence does stand proved on the part of the appellants. In the case of Killick Air Courier & Forwarders Ltd., supra, the appellants therein were held to be nowhere directly involved in the importation or Customs clearance. They were only the couriers and for that reason, the penalty under Section 112 of the Act was not imposed on them. But such is not the situation in the instant case. The law laid down in the case of Gian Mahtani, supra, that no one could be convicted for the smuggling of something which was not known, is not attracte....
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....of the officers responsible for implementing those bureaucratic rules and procedures. This is something which we observe in the present case. However we would be happy if the Czars of bureaucracy and polity, Czars of bonds and filed formation challenge this order before the Apex Court and then Apex Court pronounces on what is best for liberalized economy in this country. Whether bureaucratic chains and shackles which provide for half hearted approach to liberalization, in form of the condition of countersignature by the un-nominated line ministry or market regulation which shuns this approach? 4.44 Certain officers of Appellant 1 and Appellant 2 and the officers of Department of Economic Affairs have been charged for getting forged signatures on the Project Implementation Authority Certificate. Our order in respect of the Appellant 1 and Appellant 2, should not be treated as giving relief to them in their appeals, which as stated earlier were delinked from these two appeals. Hon'ble Supreme Court has in case of Essar Oil Ltd [2004 (172) ELT 433 (SC)] held as follows: "43. So far the respondents 2 to 4 are concerned, the Commissioner's findings were as follows : ....
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....ng specific direction of Superintendent (Tech). Jamnagar to the effect that date of cancellation should be taken to be the date of "actual removal of goods from warehouse". It was concluded that Sri Chaudhuri failed to ensure "actual removal" for the purpose of cancellation of warehouse licence. All the three officers failed to take note that physical removal of approximately 20.000 Mts. Cargo covered under 84 Bills of Entry from the bonded warehouse could not have been possible in a short span of one day. The officers acted in undue haste and resorted to backdating as accepted by them in their statements. It was noted that the three officers were located far apart from each other. Therefore, processing the files at various stages and/or places on the same day is not practicable. The sequence of processing files confirmed the backdating of documents which was admitted by the officers. The prime responsibility for scrutinizing the relevant documents was on Sri A.C. Sharma who failed to do that. The other officers committed acts of omission under the overall guidance and supervision of Sri Sharma. The plea for protection under Section 155 of the Act was rejected. Penalty under Sectio....