TaxTMI 
TaxTMI 
2024 (12) TMI 367
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....from the warehouse, in terms of Section 15(1)(b). In support of this proposition the following cases are being relied upon. Ferro Alloys Corpn Lid vs. Collr. of Customs (Appeals), Bhubaneswar, 1995 (77) E.LT. 310 (Tribunal - LB) (Refer to Sr No. 11 of the Compilation) Cosmo Ferrites Ltd. Versus Commissioner of Central Excise, Chandigarh. [2014 (8) E.LT. 633 (Tri-Del.) (Refer to Sr No. 12 of the Compilation) 2.1 Learned Counsel for the appellant further submits Where the warehouse is situated in a place where there is no Customs Port or Custom Station or Commissionerate exists, then the Central Excise Officers act as customs officers too, deriving powers from the Customs Act, 1962. In this regard, Notifications mentioned at Sr No. 5 of the Compilation may be referred to. Thus, the Central Excise officers having jurisdiction over the warehouse are also Customs Officers, for administering the Customs Act. In the present case too, at every stage, even prior to receipt of the imported goods under the into-bond bill of entry, till the finished goods manufactured in bond, are supervised and approved by the Central Excise Officers, who acted as customs officers too. The Appellants sub....
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....ht clarification, and pending theclarification the Commissioner, Surat had given the Appellants a verbal assurance to maintain status qua until revert from the CBEC. (vi) Appellants' vide pplication dt. 31.7.2017 wrote to the Commissioner, Surat, and explained about the manner of manufacturing in detail and again sought amendment of the private bonded warehouse license, to include the complete manufacturing premises. 2.2 The Appellants further submit that following inter-departmental Communications and reference to the Central Board of Excise and Customs/Central Board of Indirect Taxes and Customs, clearly show that since 1986 manufacturing activities were permitted to be carried out within the Central Excise registered premises, with the knowledge and approval of the Central Excise /Customs officers concerned: i. Letter of the Commissioner, Central Excise, Customs and Service Tax, Surat-II to Chief Commissioner of Central Excise, Customs and Service Tax, Vadodara dated 6.6.2017mentions the following: That since 1986 manufacturing in the premises has been taken place outside the warehousing premises. The same is with the knowledge and approval of Commissioner of Customs/....
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....bai)] Maintained by the Hon'ble Supreme Court of India in Commissioner v. Sedco Forex International Drilling Inc. [2005 (179) ELT. A39 (SC)] (Refer to Sr No.18 of the Compilation). Commissioner of Customs, Kandia vs PSL Lid [2015 (327) ELT 706 (Tri. Mumbai)] (Refer to Sr No. 19 of the Compilation). Hindalco Industries Ltd vs CC Ahmedabad [2024 (2) TMI 25] (Refer to Sr. No.20 of the Compilation). Aban Loyd Chiles Offshore Limited vs Commissioner of Customs [2006 (200) ELT 370 (SC)] (Refer to Sr No.21 of the Compilation). Ram Parvesh Singh & Ors vs State of Bihar & Ors [2006 (8) SCC 381] (Refer to Sr No.22 of the Compilation) 2.3 The Appellants submit that the license issued to the Appellant under Section 58 of the Customs Act, 1962 was amended on 1.9.2017 with corresponding amendment in the permission granted under Section 65 too, on 1.9.2017. These amendments were made to the licence and permission earlier granted on 28.5.2014. By this amendment, the request made on 6.11.2015 to include the complete manufacturing unit located at Hazira port was accepted and approved, in addition to the subsequent requests made in this regard. Post the amendment, without any change in....
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....lied to petroleum operations.The Appellants submit that once the goods have been supplied to ONGC projects, the end-use condition attached to Sl. No. 357 of Notification No. 12/2012-Cus has been fulfilled. These goods are also otherwise covered by list 13 attached to Sl. No. 356 of Notification No. 12/2012-Cus, exempting from payment of both BCD and CVD.The Appellants further submit that, once manufactured goods have been exported, the desired purpose has been achieved and duty ought not to be demanded. 2.5 The Impugned Order has denied the benefit of Notification No. 12/2012-Cus dated 17.03.2012 to the Appellant on the ground that the Appellant failed to follow the conditions scrupulously and accordingly placed reliance on the order in CE v. Hari Chand Shri Gopal [2010 (260) ELT. 3 (SC)]. The Appellants submit that this decision is not applicable to present case as the Department was all along well aware of the fact that the Appellants were carrying out the activity outside the Private Bonded Warehouse as the goods imported were bulky and oversized and manufacturing could not be undertaken in the bonded warehouse premises. Thus, as the activities were always undertaken with the k....
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....erpretation of an exemption notification applies in this case. 2.6 The Appellants further submit that the duty demand in present case is revenue neutral, as evidenced by below: a. In case of manufactured goods which have been exported, duty drawback is available b. In case of manufactured goods which have been supplied to ONGC projects, the supplies are against ICB Contracts. Thus, the same are deemed export, and deemed export benefits qua the same are available. The Appellants further submit that the following export benefits are available to the Appellant for physical as well as deemed exports. a) Brand Rate of Duty Drawback- reimbursing the duties paid on the finished goods exported out of India b) Merchandise Exports from India Scheme (MEIS) c) Advance Authorization Scheme-granting completion exemption from payment of import duties on inputsphysical/Export benefits available on deemed exports (Supplies to ONGC under ICB set out in paragraph 7.3 of FTP d) Advance Authorization for deemed exports -granting exemption from payment of import duties on inputs e) Deemed Export Drawback - if duty paid inputs are used, drawback is granted by the DGFT f) Refund of Termi....
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....t the goods in question are not liable to confiscation as no wrong has been committed. Accordingly redemption fine also is not payable. Confiscation has been proposed under Section 111(j) and 111(o) of the Customs Act.Section 111(j) is only applicable to goods removed from warehouse without permission from Proper Officer. As set out above and in the Appeal in detail, the goods were removedfrom the warehouse with permission from the concerned Proper Officer. Thus, Section 111(j) is not applicable.The Appellants further submit that Section 111(0) is applicable only if any post import condition set out in the exemption has been violated, unless the non-observance of the condition was sanctioned by the Proper Officer. The post import condition allegedly violated in the present case is that the goods were not used for further manufacture in bonded warehouse. However, the undertaking of manufacturing outside the premises of bonded warehouse was permitted by the Proper Officer. Thus, the non-observance of the condition was sanctioned by the Proper Officer. Thus, there is no violation of Section 111(0). Further, it is not disputed that the manufactured goods were supplied to ONGC for under....
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....toms has not been fulfilled. The notification is to be interpreted in terms of the language used therein and is to be strictly followed. 3.1 Learned Authorized Representative further stated that the appellants have also relied upon procedure adopted by them since 1988 and the documents filed by them at different stages before the Central Excise/Customs officers. He submits that this argument cannot justify the wrong practice followed by them. The SCN has been issued subsequent to the issue of licences under section 58 and Permission to manufacture under section 65 of the Customs Act in 2014. Any wrong practice for an earlier period cannot justify the wrong done after 2014. He submits that as far as their claim that the procedure adopted by them was in the knowledge of department, the adjudicating authority has given clear and unambiguous findings in this regard (Para 6.5.1 and 6.5.2 at page 257 of the Appeal). The documents presented before the Customs authorities at the time of import of goods and claiming exemption under notification no. 12/2012- Customs did not establish that the goods were being used for the manufacturing process outside the bonded warehouse. As far as document....
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.... from 2014, is also not tenable. There is nothing in the Act or Rules which empower any authority granting licence or permission to give it with retrospective effect. The case laws relied upon by the appellants have been distinguished by the adjudicating authority. In para 6.8 of Order-in-original. 3.7 He further submits that the principle of revenue neutrality will be applicable in this case. All the supplies by the appellants to ONGC are supplies to projects under ICB. Whatever duty is paid on the inputs is available as deemed export benefit to the appellants. Thus the demand of the duty itself is revenue neutral. The imported goods were used for supply to offshore oil exploration or exploitation projects. Thus the ultimate purpose of the imported goods has been fulfilled without causing any loss of exchequer. 3.8 Learned Authorised Representative further submits that their argument that had they paid duty, they would have been eligible for deemed export is not tenable. This cannot be an argument in favour of justifying the illegal act of removing goods from warehouse without payment of duty. Similarly, their argument of revenue neutrality cannot justify their violation of fulf....
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.... duty free goods availing benefit of Notification 12/2012-Cus dated 17.03.2012. One of the condition of the said notification is that the parts and raw materials imported should be used in the manufacture of goods in accordance with Section 65 of the Customs Act. The notification prescribes as under: S. No. Chapter or Heading or Sub-heading or tariff item Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 357 84 of any other Chapter Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of offshore oil exploration or exploitation Nil Nil 41 Condition No. Conditions 42. If,- (a) The parts and raw materials are used in the manfaucture of goods in accordance with the provisions of section 65 of the Customs Act, 1962 (52 of 1962); and (b) A certificate is produced in each case to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, from a duly authorized officer of the Directorate General of Hydrocarbons in the Ministry of Petroleum and Natural Gas, Government of India, to the effect that the good....
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....ouse or be cleared for home consumption or export : Provided that the provisions of this Chapter shall continue to apply to the goods already deposited in the warehouse till they are removed to another warehouse or cleared for home consumption or for export, during such period.] The section 65 of Customs Act 1962 read as under: SECTION 65. Manufacture and other operations in relation to goods in a warehouse. - (1) [With the permission of the Principal Commissioner of Customs or Commissioner of Customs and subject to the provisions of section 65A] and such conditions] as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods. (2) Where in the course of any operations permissible in relation to any warehoused goods under sub-section (1), there is any waste or refuse, the following provisions shall apply : - (a) if the whole or any part of the goods resulting from such operations are exported, import duty shall be remitted on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exp....
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....s are so removed from that other warehouse; (iv) the provisions of section 59, subject to the following modifications therein, have been complied with, namely :- (a) for the words "bill of entry for warehousing", the words "bill of entry for home consumption" shall be substituted; and (b) for the words "amount of the duty assessed", the words "amount of duty assessed, but not paid" shall be substituted; (C) the duty payable in respect of warehoused goods referred to in clause (A), to the extent not paid, is paid before the goods are removed from the warehouse in such manner as may be prescribed. (2) The provisions of sub-section (1) shall not apply for the purpose of manufacturing process or other operations in terms of section 65 to dutiable goods which have been deposited in the warehouse or permitted to be removed for deposit in the warehouse prior to the date notified under that sub-section. (3) The Central Government may, if it considers necessary or expedient, and having regard to such criteria, including but not limited to, the nature or class or categories of goods, or class of importers or exporters, or industry sector, exempt, by notification, such goods in re....
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....t raised the said ground for amending their license under Section 58 to cover the entire manufacturing unit registered under Central Excise vide their letter dated 06.11.2015. In the said letter they suggested as follows: "8. While the aforementioned licensed ware house has limited area within this central excise registered manufacturing yard, the actual manufacturing takes place across the excise registered yard as a matter of practice followed till date. In this regard your good self may appreciate the fact that the Oil Exploration Platforms/Rigs/Floating Vessels/Ships cannot be manufactured with the four falls of warehouse as their multi complex manufacturing process is done in various stages and this require occupies ample space across the yard. 9. Now considering the extent of fabrication that we would be undertaking for the existing orders, huge amount of raw material would be coming under the bonded warehouse for further fabrication. In this regard a doubt has been raised over the availability of the space within the limited bonded ware house, where the licence was actually granted under section 58 of the Customs Act 1962. 10. To overcome this uncertainty we hereby w....
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.... renewed every year by the Assistant Commissioner of Division with the approval of the Commissioner, Central Excise, Customs & Service Tax, Surat-II. (C) Therefore, it is not feasible to manufacture the huge structures required for ONGC Platforms, Oil Exploration Machineries in the Private Bonded Warehouse as permitted manufacturing operations in the Private Warehouse space under section 65 of the Customs Act, 1962 due to the limited space of Private Bonded warehouse. In the case of ship building, a new Sr. No. 469A in place of Sr. No. 469 has been inserted in original Notification No. 12/2012-Customs dated 17.03.2012 vide Notification No. 54/2015-Customs dated 24.11.2015, by which import duty has been exempted subject to condition No. 5 i.e. the Importer has to follow the procedure set out in the Customs (Import of goods at concessional rate of Duty for manufacture of Excisable Goods) Rules, 2016 (Notification No. 32/2016-Customs (NT) dated 01.03.2016). In short, the Condition stipulated in the Sr. no. 469 A if made applicable in this case also, will sort out all the problems." 8. The matter was again taken up by the Commissioner (Surat) with the Chief Commissioner, Vadodara Zo....
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.... these situation I am requesting Division and range officers for maintaining status quo in respect of existing procedure till the new and revised procedure solving aforesaid difficulties are prescribed by the Board. Therefore the matter may be treated on urgent basis as in the coming GST scenario, in such situations issues will become highly confused and difficult to comprehend. Accordingly, it is kindly requested to address the situation as soon as possible in the interest to safeguard revenue as well as national strategic interest." 9. Subsequently, the request of the appellant dated 06.11.2015 was accepted and the entire premises registered under Central Excise Act were converted into bond licensed under Section 58 of Customs Act on 01.09.2017. 10. From the above facts, it transpires that the activity for which the appellants are being charged was happening in full knowledge of the Revenue. The Conditions imposed under Section 58 and 65 licenses were imposable to follow and that fact was acknowledged by Revenue. The Revenue knew all these facts and allowed the appellants to use the area outside the bonded warehouse for the purpose of manufacturing activity. The Revenue did not....
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....ous licenses were held to be applicable from the date when the original license was issued. Telkar Food Products Pvt Ltd. 2007 (211) ELT 450 (Tri. Chennai) "2. After hearing both sides and considering their submissions, we find that the appellants were obliged to export "Pickles" in terms of the licence issued on 31-8-1995 so as to be entitled to exemption from payment of duty on the capital goods imported by them under EPCG Scheme. The period allowed for this purpose expired on 31-8-2000. The licence was amended by DGFT on 2-7-1999 substituting "Detergent" for "Pickles". This amendment dates back to the date of issue of the licence in the absence of any remarks to the contrary, of the licensing authority. It is also pertinent to note that the licensee did not ask for any clarification of the DGFT on the question whether the amendment would have only prospective effect. This conduct of the party amounts to acquiescence in the retrospective operation of the amendment. Admittedly, in this case, the requirement of exporting 10% of goods in the second year, 20% of the goods in the third year, 30% of the goods in the fourth year and 40% of the goods in the fifth year was not fu....