TaxTMI 
TaxTMI 
2025 (8) TMI 1356
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.... under Advance Authorization Scheme ('AAS' for short) for the period from 13.10.2017 to 09.01.2019. 2. Facts as we could gather from the Appeal records are that the Appellant admittedly imported input materials viz. NON-ALLOY STEEL MELTING SCRAP against export of STEEL BILLETS under five Advance Authorizations; the Appellant appears to have made the export first and later on imported the inputs as replenishment and claimed the benefit of Exemption Notification No. 18/2015-Cus dated 01.04.2015 for the period under dispute; but however, cleared the goods without payment of IGST. The said Notification No. 18/2015-Cus came to be amended by Notification No. 79/2017-Cus w.e.f. 13.10.2017 whereby, the IGST exemption could be allowed subject only upon the fulfillment of 'pre-import condition'. The 'pre-import condition' was inserted as a condition "(xii)" to the said Notification No. 18/2015 supra for allowing exemption from integrated tax (IGST) leviable thereon under Section 3 (7) and 3(9) of CTA. 3. It is the case of appellant that four of its Advance Authorizations having been issued prior to 13.10.2017, it could under no circumstances fulfill the pre-import condition, but contin....
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.... the Union of India has further challenged the above judgment of Gujarat High Court before the Hon'ble Apex Court. 7. Appellant was again summoned by SIIB, Chennai and the appellant appears to have informed SIIB that they have obtained Redemption letters against all Advance Authorizations from the jurisdictional DGFT. Appellant was, however, served with the Show Cause Notice No. 241/2022 on 06.10.2022 apparently seeking the recovery of Customs duties (in the form of IGST) foregone on such imports with interest, Fine and Penalty for breach of the pre-import condition, by invoking the extended period under Section 28 (4) of Customs Act, 1962 and also proposing to confiscate imported goods. 8. In the meanwhile, Hon'ble Supreme Court in UOI vs Cosmo Films Ltd & Others [2023 (5) TMI 42 -SC] allowed the appeal of the Revenue and directed the aggrieved respondents to pay IGST; in the same judgment, the Apex Court also directed the Revenue to permit the respondents to claim refund of input credit. The above resulted in the issuance of CBIC Circular No. 16/2023-Cus. dated 07.06.2023, directing its field officers to re-assess the Bills of Entry to make payments of duty (IGST) along wit....
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....andbook of Procedure 2015-2020. He submitted that primary condition of the AAS was fully satisfied by the Appellant and at this stage when the goods have been exported, the demand of IGST is irrational and unsustainable in law. He also made the following submissions: A). Closure of Advance Authorizations by DGFT and closure of corresponding Bonds by Customs: i. All advance authorizations duly stood closed with issuance of Redemption Letters by DGFT and closure of the bonds by Customs as tabulated below: Sl No Advance Authorisation No. Date EODC/Redemption Letter from DGFT, Chennai Customs Bond Cancellation 1. 410163227 13.06.2017 28.01.2020 16.03.2020 2. 410163230 13.06.2017 28.01.2020 16.03.2020 3. 410163561 28.09.2017 28.01.2020 16.03.2020 4. 410163562 28.09.2017 21.10.2020 12.11.2020 5. 410163795 18.12.2017 21.10.2020 03.11.2020 ii. DGFT provides substantive policy framework for such schemes. This includes, framing of SION, procedures for pre- or post-import conditions through Handbook of Procedure, EOD....
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....MI 141 - GUJARAT HIGH COURT] • Collector of Central Excise Vs Chemiphar Drugs & Liniments [1989 (2) TMI 116 - SUPREME COURT] • M/s. Wanbury Ltd Vs CCE, Guntur [2016 (6) TMI 1056 - CESTAT HYD] • M/s Anand Nishikawa Co. Ltd Vs collector of Central Excise, Meerut [2005 (9) TMI 331 - SUPREME COURT] C) There is no machinery provision for levying and collecting interest under CTA, 1975 during the relevant time 13.10.0217 to 10.01.2019. i. An amendment in Section 3(12) of the Customs Tariff Act, 1975 has been made for providing an explicit charging section for collecting interest on the IGST collected as Customs duty under section 3(7) & 3(9) of the Customs Tariff Act, 1975 with effect from 16.08.2024. In the impugned case all the imports are prior to 16.08.2024. ii. In support, ratio in the following cases have been relied upon: • Mahindra & Mahindra Ltd (Automotive Sector) Vs. The Union of India, The Settlement Commission Mumbai & ADG, DGCEI, Mumbai [2022 (10) TMI 212 - BOMAY HIGH COURT] and Union of India & ORS. Vs Mahindra & Mahindra Ltd [2023(8) TMI 135 - SC ORDER], • M/S Himadri Specialty Pri....
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....icable to usual and non-exceptional circumstances. 14. Shri Anoop Singh would also submit that the coordinate Chennai Bench in the case of M/S. FLEXTRONICS TECHNOLOGY INDIA PVT. LTD (supra) has clearly held that the amendment to Section 3(12) of CTA is prospective and therefore, no interest is payable on Customs duty (collected as IGST) under sub-sections (7) and (9) of Section 3 of CTA in the absence of any specific machinery provision in section 3(12) of CTA (prior to 16.08.2024); that in the ACER INDIA, this Bench has also relied on the ratio of the judgment in Mahindra and Mahindra (Supra). 15. Having heard both sides at length, after going through submissions made by both the learned counsel and perusing the documents placed on record, we find that the issue involved in the Appeal is regarding the liability to pay the Duty [IGST], Interest, Redemption Fine and Penalty which are confirmed in the impugned Order, for alleged violation of 'Pre-Import Condition' in the imports made against AAS during the period from 13.10.2017 to 09.01.2019. 16. We find that prior to introduction of GST, the AAS allowed exemption of additional duty of customs levied under Section 3 of CTA ....
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....hough in UOI vs Cosmo Films has held that the IGST is payable under all circumstances, but has allowed the input credit of the IGST paid and accordingly directed the CBIC to issue instructions for re-assessment of Bills of Entry. The CBIC has accordingly issued Circular 16/2023 - Customs dated 07.06.2023 directing the filed formations to cancel out-of-charge and re-assessment upon payment of IGST along with applicable interest. 20. In the impugned order, the Adjudicating Authority has confirmed the demand of duty to be paid along with interest, imposed redemption fine and penalty, but at the same time gave importer an opportunity to follow the procedure prescribed in Circular No. 16/2023-Cus. dated 07.06.2023 within 30 days from the receipt of the order. Appellant, however, appears to have not opted for the benefit of circular 16/2023-supra, perhaps apprehending that the same would mean payment of IGST along with applicable interest. In respect of IGST in any case, the appellant could have taken input credit, but the cumulative interest would have been a direct cost since the goods had already been exported and the export obligation stood discharged even before issuance of Show ....
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.... misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf." 21.5 Hon'ble Delhi High Court in M/s Designco, M/s Amit Exports and M/s Sharma International Vs. Union of India & Others 2024 [110 TMI 1150 - Delhi High Court] has observed that it would be impermissible for the Customs Authorities to either doubt the validity of an instrument issued under the FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by the DGFT. Any action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained. 21.6 Further, in PSL Limited Vs Commissioner of Customs, Kandla [2015 (328) ELT 177 - Tri-Ahmd.] a similar question came to be answered by the Bench in the following words: - ' .. 6.3 The next issue for consideration is whether once the licensing authority certified that export obligation has been fulfilled whether such certification is final and binding on the Customs authorities? This issue came before this Tribunal in ....
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....tems Pvt. Ltd. (supra). The Hon'ble Supreme Court held that once an advance licence was issued and not questioned by the licensing authority, the Custom authorities cannot refuse exemption on an allegation that there was any misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. The ratio decidendi laid down in the above judgments applies to the facts of the present case. In the instant case also, the licensing authority has accepted the fulfilment of export obligation and have issued export obligation discharge certificates and have discharged the appellants from any further obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the advance licensing scheme. If at all they felt that the appellant had violated any of the terms and conditions of the licences, they should have referred the matter to the licensing authority for appropriate action rather than taking action suo motu. 21.7 In the present Appeal, we do not find any such reference being made by the Customs to Licensing Authority calling back the redemption or....
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....here facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. [Emphasis supplied] 23.4 In the case of Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay [1995 (3) TMI 100 - SUPREME COURT], the Apex Court has held that where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. 23.5 Ld. Counsel has also relied on Himadri Specialty Chemical Ltd Vs Commissioner of Customs [2024 (4) TMI 383 - CESTAT HYDERABAD] on the issue of demand of Customs Duty (collected in the form of IGST), penalty and fine invoking extended period of limitation, for wrongly availing IGST exemption at the time of imported inputs made in Advance Authorization Scheme. The Be....
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....ed by the Revenue also stands rejected by the Apex Court. Therefore, the decision of Bombay High Court in Mahindra & Mahindra (supra) is a binding law for all purposes. 25.2 We find that the ratio of Mahindra & Mahindra (supra) has been widely followed by many benches of CESTAT including Chennai bench, in the following cases involving payment of CVD with interest, fine and penalty: (a) M/s. Acer India Private Ltd. Versus the Commissioner of Customs, Chennai. - 2023 (9) TMI 1553 - CESTAT CHENNAI the same legal issues arose regarding demand of interest on additional duty of customs (CVD) under the provisions of Customs Act, 1962. It has been held that that penalty, interest etc. cannot be levied in regard to collection of CVD and SAD. In Para 25 & 29 the Tribunal has held: '.. 25. The above judgment of the Hon'ble High Court was affirmed by the Hon'ble Apex Court in UOI Vs Mahindra & Mahindra Ltd. - 2023 (8) TMI 135 (SC.). Applying the ratio laid in the above judgment, we are of the considered view that the demand of interest (on the total differential duty of Rs. 4,81,74,877/-) cannot sustain and requires to be set aside. For the same reason, the confis....
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....rocess of Bill of Entry for the period from 13.10.2017 to 09.01.2019 are without authority of law and the same are unsustainable. (b) In M/S. Sakar Industries Pvt Ltd Vs Commissioner of Customs [2024 (10) TMI 1141 - CESTAT, AHMEDABAD], the Bench has followed its own earlier order in Chiripal (supra). 25.4 We also note that the decision in Mahindra and Mahindra (Supra) is distinguished on the ground that CVD is different from IGST in terms of Section 3 of the Customs Tariff Act, 1975 in the following cases - (a) In M/s Mayur Uniquoters Limited And M/S JLC Electromet Private Limited Versus Commissioner (APPEALS), Central Excise & CGST, Jaipur [2024 (8) TMI 1060 - CESTAT NEW DELHI], the bench has observed that IGST is not a customs duty and has held as under: ' ... 28. The last question to be answered by us if interest is payable on IGST which is paid late. The submission of the learned counsel for the appellant is that Bombay High Court held in Mahindra and Mahindra that no interest is chargeable on the additional duty of customs levied under section 3 of the Customs Tariff Act, 1975 and therefore no interest can be charged on the IGST. We find ....
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....ial forum is available which is also approved by the Apex court, the same is binding and therefore, reliance on orders of Co-ordinate Benches are of no consequence, insofar as the issue is concerned. 26. This apart, an amendment in Section 3(12) of the Customs Tariff Act, 1975 is carried out by the Government of India through Finance Act, 2024 and in the amended version, a strict construction is construed for charging and collecting interest and penalty w.e.f. 16.08.2024. The amended section 3(12) reads the following: "(12) The provisions of the Customs Act, 1962 (52 of 1962) and all rules and regulations made thereunder, including but not limited to those relating to the date for determination of rate of duty, assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall, as far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to duties leviable under that Act or all rules or regulations made thereunder, as the case maybe." 27.1 But the Delhi Bench apparently did not mention this amendment in Section 3(12). It is evident that the prospective ame....
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....overy etc. in order to overcome the lacunae pointed out in the above said judgement of the Hon'ble High Court and Hon'ble Supreme Court. (12) The provisions of the Customs Act, 1962 (52 of 1962) and all rules and regulations made thereunder, including but not limited to those relating to the date for determination of rate of duty, assessment, non-levy, short- levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall, as far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to duties leviable under that Act or all rules or regulations made thereunder, as the case may be.]" Since, the dispute in the present case relates to levy of additional duty of Customs (IGST) on imports during the period 29.07.2017 to 26.02.2022, such amended provisions do not have any application on the demand of differential additional duty of customs adjudged by the impugned order. Therefore, we are of the considered opinion that on this ground alone the impugned order does not stand the scrutiny of law and thus we do not hesitate in holding that it is liable to be set aside. ...'....
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....ngly issued Circular 16/2023-Customs dated 07.06.2023 allowing re-assessment of Bills of Entry and pay IGST with applicable interest. In the case of Himadri Specialty Chemical (supra) on the similar issue of exemption of IGST at the time of import of the input materials under Advance Authorizations, the CESTAT Bench has held that once the DGFT has issued EODC and the fact that taxes cannot be exported, the situation in this case becomes undisputedly revenue neutral. There cannot be any case of malafide against the appellant as the CBIC Circular allows input credit upon re-assessment of Bills of entry. Reliance placed by the appellant on Nirlon Ltd vs Commissioner of Central Excise, Mumbai [2015 (5) TMI 101 - SUPREME COURT] is therefore apt, wherein, it is observed that 'when an entire exercise is revenue neutral, the appellant could not have achieved any purpose to evade duty'. So, it is a case of revenue-neutrality and more so, when the interest is not payable in the absence of any machinery provision. 31. As stated above, there is no malafide proved in this case or any intent to evade customs duty, there is no justification for confiscation of goods or imposing redemption fine....