TaxTMI 
TaxTMI 
2025 (12) TMI 1088
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....n'ble tribunal was right in Interpreting and observing that the facts of the present case cannot be differentiated from those of M/s. Titan Medical Systems? 2) Whether the tribunal has right in relying on the ratio of the Judgment of the Supreme Court in the case of M/s. Titan Medical Systems when the goods in the present case were unpacked, tested, calibrated and exported as such and when the judgment is clearly distinguishable? 3) Whether the Tribunal was correct in considering and interpreting the above activity as manufacture within the ambit of Para 3.31 of the Export Import Policy 1997-2002? 4) Whether the Tribunal was right in allowing the benefit of exemption notification on the pretext that the licencing authorities have no objection as regards misrepresentation of facts? 5) Whether the Tribunal was right in discarding the elaborate legal submissions and the ratios of several judgments of the Hon'ble Supreme Court made by the department and in arriving at a decision which is set with an apparent error in law? 6) Whether the Tribunal has travelled beyond the settled position of law and consistent judicial opinion in the m....
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....licence was issued by the DGFT with the condition that the technical specification of the components imported should conform to those utilised in the manufacture of resultant product and should be reflected in the export documents. The first consignment was imported and was exported in December 2000. When the second consignment of imports arrived, the same were not allowed by the Directorate of Revenue Intelligence (for short 'the DRI') and they were seized to conduct certain enquiries. 6. The Directorate of Revenue Intelligence in its investigation found that the respondent instead of importing components (as declared by them under DEEC scheme), in effect actually imported complete equipment in CKD-SKD condition and the further processing, manufacture claimed to have been carried out in India was essentially a facade. It was found by the DRI that the supporting manufacturer had no manufacturing facilities to say the least. 7. The show-cause notice dated 30.07.2001 was issued alleging that the Assembly and testing undertaken on the goods imported by the first respondent was not adequate to constitute 'Manufacture'. It was only done to substantiate the value ad....
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....ayment and while drawing attention to paragraph 11.7 of EXIM policy 1997-2002, it was said that the policy provided for export of goods against payment in Indian Rupees subject to a minimum value addition of 33% with conditions specified there under. The customs authorities had brought to notice of JDGFT that several imports were made in freely convertible currency, and subsequently permission was sought by importers from the customs for export of the same goods directly to Russia against Rupee payment under the above proviso of EXIM policy and with a view to fulfilling the criteria of value addition, export documents were manipulated to increase the FOB value on paper. 10. As there was no value addition to say upto 33% for export of goods against payment in Indian Rupee as mandated in paragraph 11.7 of the EXIM Policy, the imports and exports were in violation of the EXIM Policy. The Commissioner held that the goods were liable for confiscation under Section 113(b) of the Customs Act, 1962 and penalty under Section 114 of the Customs Act, 1962 on the Partners of Export Firms i.e. respondents and supporting manufacturer and Sri. Ashok Murthy. 11. It was further held that As S....
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....Initially the Civil Petition came to be dismissed by a Division Bench of this Court vide order dated 10.04.2015 on the ground that under the provisions of Section 130A of the Customs Act, the appeal would not be maintainable, in view of the judgment in the case of COMMISSIONER OF CUSTOMS, BANGALORE-1 VS. M/S. MOTOROLA INDIA LTD., reported in 2012 (275) E.L.T 53 (KAR), as to whether the goods were covered by any exemption notification or not would not be a dispute, which would fall within the jurisdiction of the High Court under Sections 130 or 130A of the Act. 15. Against the said judgment dated 10.04.2015 passed in this Civil petition, Civil Appeal No. 9245/2015 was filed by the Department before the Supreme Court. The said Civil Appeal along with Civil Appeal No. 10083/2011 and other connected Civil Appeals came to be decided by the Supreme Court vide Judgment and Order dated 05.09.2019. The Supreme Court has been of the view that the only question involved in the case is that whether the assessee had breached the conditions, which were imposed by the Notification for getting exemption from payment of the customs duty or not. The case would not involve any question of law of g....
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....he notification for getting exemption from payment of the customs duty or not. The appeals do not involve any question of law of general public importance which would be applicable to a class or category of assessees as a whole. The question is purely inter-se between the parties and is required to be adjudicated upon the facts available. 18. In that view of the matter, we find that the High Court was not justified in holding that the appeals are not maintainable under Section 130 of the Customs Act but are tenable before this Court under Section 130E of the Customs Act." 16. Thus on remand, the matter has been taken up for hearing on a number of dates. However, the parties have either taken adjournment or have not appeared. This Court dismissed this petition for non-prosecution vide order dated 20.08.2025. The said order came to be recalled vide order dated 22.09.2025, and the matter was heard on merit, as we did not intend to adjourn the matter, which has been pending on the files of this Court, since 2003. 17. The only question which requires for consideration before this Court is that "Whether the import effected by the respondents under the licenses issued by DG....
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....hat is 28.01.2000. 21. The Commissioner having examined the evidence and statements recorded by the Directorate of Revenue intelligence, held that the goods imported were subsequently exported without any intrinsic value addition, and merely the FOB value of the goods was backed up to show the value addition. In the light of the clarification issued to paragraph 11.7 of the EXIM Policy 1997-2002, some of the goods were liable for confiscation under Section 113(d) of the Customs Act, 1962 and penalty under Section 114 of the Customs Act, 1962, on the partners of exporter firm and the supporting manufacturer and Sri. Ashok Murthy. 22. Against the Order-in-Original, the appeals were filed before the Tribunal as noted above. The Tribunal considered the definition of 'Manufacture' as provided in paragraph 3.31 of the EXIM Policy for the period 1997-2002, which defined 'Manufacture' as under :- "Manufacture" means to make, produce, fabricate, assemble, process or bring into existence by hand or by machine, a new product having a distinctive name, character or use and shall include processes, such as refrigeration, repacking, polishing, labeling and segregat....
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....c. These items were also assembled on to the Base Unit. B.4 The next process involved replacing the EPROMs loaded with the Russian software that were contained in the components imported and replacement with the EPROMs that were loaded with the English language version of the software in the Controller PCB. B.5 The next process involved the testing of the electrical and pneumatic parameters as per the system specifications in which the consumables like oxygen gas, purified air etc., were used as also a system testing which consisted of verification of the modes of ventilation, Set Alarm conditions, pressure volume etc. These tests were carried out using general purpose, and custom-built test equipment like digital multimeter, oscilloscope etc. B.6 In the next process, the assembly of locally procured material was done in which the communication panel of the Base Unit was removed from the Base Unit and connector cutouts were made using drilling machines. The cutouts were then connected with the cables to transmit the analog signals from the controller PCB of the Base Unit to the display monitor. After testing the signals, the display monitor was assembled ....
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....low the appeal with consequential benefits to all the appellants. b) In the present case we find that M/s GE Medical Systems has provided for the certification by Central Excise Officers of manufacture having taken place in their premises. The DRI Officers have permitted exports on and after verification. This would indicate following the BPL case, that manufacture in this case did take place and there was no case or cause to have issued the Show-cause Notice. c) Since no duty demands and show cause notice is being upheld, there is no case for penalty on any appellant." 27. When the value addition was only 5.18% as recorded by the Tribunal, which was much below 33% for export of goods against payment in Indian Rupee under paragraph 11.7 of the EXIM policy, it could not be said that there was any increase in the intrinsic value of the export product by the respondent. 28. The Supreme Court in EAGLE FLASK INDUSTRIES LTD., Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE, reported in (2004 SCC 7 377) as well as in the STATE OF JHARKHAND AND OTHERS VS. AMBAY CEMENTS AND ANOTHER reported in [(2005) 1 SCC 368] has held that if an exemption is available on complying with c....
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.... and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction." 17. This Court in Gammon (I) Ltd. v. Commr. of Customs [Gammon (I) Ltd. v. Commr. of Customs, while rejecting the plea of the appellant that the exemption notification should receive a liberal construction to further the object underlying it relied upon the decision of a three-Judge Bench of this Court in Novopa....
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....ms (Preventive) v. Malwa Industries Ltd. and CCE v. Rukmani Pakkwell Traders. 30. In SANGHVI RECONDITIONERS PRIVATE LIMITED Vs. UNION OF INDIA AND OTHERS ((2010) 2 SCC 733) it has been held that an assessee claiming benefit of exemption notification must show that he satisfies the conditions of exemption as prescribed in the exemption notification. The exemption notification has to be strictly construed being the foundation for availing the benefits to the exemption notification, the conditions prescribed therein had to be strictly complied with. 31. Thus, from the aforesaid judgments, it is evident that when an assessee is claiming the benefit of exemption notification, the assessee must show that he has satisfied all the conditions of exemption as prescribed in the notification. In the present case, the exemption from payment of customs duty on import was on the condition of value addition at the minimum rate of 33% made before the exports could have been effected. As noted above, the value addition was only upto 5.18% and there was no change in the intrinsic value of the imported goods. Therefore, the respondent-assessee was not entitled for exemption of payment of customs....