TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1177
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....nd other components under 'Advance Authorisation' scheme of the Foreign Trade Policy (FTP) on the basis of Advance Authorisation Licenses/Scrips issued by the Directorate General of Foreign Trade (DGFT). For this purpose, the appellants are holding the Import Export Code (IEC) No. 0903003953. During the period 24.10.2017 to 24.09.2018, the appellants had imported the said raw materials in 175 Bills of Entries (B/Es) by availing the import duty/IGST exemption benefit vide Notification No.18/2015-Customs dated 01.04.2015 as amended. The imported goods were assessed at the port(s) of import and the proper officers of customs have allowed clearances of the imported goods by extending the duty exemption claimed by the appellants under the above notification dated 01.04.2015 on the strength of nineteen (19) Advance Authorisations submitted by the appellants. 2.2 DGFT vide Notification No.33/2015-2020 dated 13.10.2017 had amended the Policy provisions contained in paragraph 4.14 of the FTP 20152020, wherein imports under Advance Authorization exempted from IGST were subjected to 'pre-import condition'. Consequently, Central Board of Excise & Customs (CBIC) vide Notification No.79/2017-....
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....nce Authorisations during the relevant period have been exclusively used for manufacture of industrial valves and components for exports only. Neither the imported goods not the manufactured finished goods were cleared within the domestic area. There is no such allegation or finding either in the SCN or in the impugned order. Further, he submitted that the appellants have fulfilled the export obligation in respect of all 19 Advance Authorisations, and wherever there was a marginal shortfall in the fulfilment of export obligation, the applicable duty was paid and the Export Obligation Discharge Certificates (EODC) have been duly obtained in respect of 18 out of 19 Advance Authorisations. He further stated that based on such EODCs, the Customs Department have also cancelled the bonds executive against such 19 Advance Authorisations. He also stated that the copies of the same have been submitted by the appellants as a part of the appeal records. 3.2 Learned Advocate also submitted that the entire exercise of demanding IGST is revenue neutral, since, if the appellants had imported the goods on payment of IGST, then the entire amount would have been available to them as input tax cre....
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....ent of legal provisions as contained in the Foreign Trade Policy and Handbook of Procedures providing the scheme of 'Advance Authorisation', read with relevant notification(s) issued by the Ministry of Finance providing customs/import duty exemption. The period of dispute is from 13.10.2017 to 09.01.2019. 7. In order to address the above issues, we would like to refer to the relevant provisions of the FTP, HBP and the notifications issued in this regard. Foreign Trade Policy (FTP) FTP 2015-2020 (w.e.f.30.06.2015) "4.03 Advance Authorisation (a) Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilised in the process of production of export product, may also be allowed. xxx xxx xxx xxx 4.12 Accounting of Input (i) Wherever SION permits use of either (a) a generic input or (b) alternative input, unless the name of the specific input [which has been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill ....
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....f registration of Authorisation indicating the same details of proof of fulfilment of EO as stated in paragraph (a) above evidencing fulfilment of Export Obligation. (ii) Copy of EODC will also be endorsed by Regional Authority to Customs at the Port of Registration by post till system of transmitting these through EDI under message exchange between DGFT and CBEC is introduced. Ordinarily, redemption of BG / LUT shall not preclude customs authority from conducting random checks and from taking action against Authorisation holder for any misrepresentation, mis declaration and default detected subsequently as per the Customs Act." Notification No. 18/2015-Customs dated 01.04.2015 "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials imported into India against a valid Advance Authorisation issued by the Regional Authority in terms of paragraph 4.03 of the Foreign Trade Policy (hereinafter referred to as the said authorisation) from the whole of the duty of customs leviable thereon which is sp....
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....exemption, if the conditions are not fulfilled, including use of raw materials in manufacture of final products for export; [ii(a)] imports made after the discharge of export obligation, wherein the imports were allowed clearance on execution of bond in case the facility of rebate/CENVAT credit facilities are availed as provided therein while for use of such imported materials in their factory; or [ii(b)]without execution of bond, where no rebate/CENVAT credit was availed without execution of bond. The requirement of pre-import condition of raw material was introduced in condition No. (xii) vide amending Notification No. 79/2017-Customs dated 13.10.2017. Subsequently, the said pre-import condition was omitted by Notification No. 1/2019-Customs dated 10.01.2019. However, one another condition of the said notification which finally closes the imports against the Advance Authorization is the proof of export obligation arising on account of duty free imports having been discharged by the importer; or, in the absence of producing the evidence of such proof of export obligation, the importer shall pay the amount equivalent to the duty exemption availed by this notifi....
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.....07.2019 F. No. S45/21/2017/DEEC /GR.7ACC dated 13.08.2019 4 AA No. 0910064787 dated 10.03.2017 File No. 09/70/040/00299/AM17. Date of EODC/RL 15.10.2020 F. No. S45/74/2017/DEECACC dated 27.11.2020 5 AA No. 0910064788 dated 10.03.2017 File No. 09/70/040/00303/AM17. Date of EODC/RL 04.12.2018 F. No. S45/73/2017/DEEC dated 28.12.2018 6 AA No. 0910065009 dated 04.05.2017 File No. 09/70/040/00015/AM18. Date of EODC/RL 07.08.2019 F. No. S45/155/2017/DEEC/ GR.7ACC dated 04.09.2019 7 AA No. 0910065024 dated 11.05.2017 File No. 09AE04001259AM 24. Date of EODC/RL 01.06.2023 E.F. No. CUS/BBG/MISC/ 156/2023-EODC dated 23.01.2024 8 AA No. 0910065133 dated 07.06.2017 File No. 09/70/040/00047/AM18. Date of EODC/RL 04.11.2020 F. No. S45/210/2017/DEECACC dated 18.12.2020 9 AA No. 0910065134 dated 07.06.2017 File No. 09/70/040/00051/AM18. Date of EODC/RL 13.01.2021 F. No. S45/209/2017/DEECACC dated 14.06.2021 10 AA No. 0910065356 dated 21.08.2017 File No. 09AE04002559AM24. Date of EODC/RL 27.06.2023 F. No. S45/269/2017/DEEC/ 2017 dated 18.11.2024 11 AA No. 0910065439 dated 08.09.2017 File No. 09AE0400260....
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....ils including the accounting of inputs, fulfilment of pre-import conditions for issuance of EODC certificates by DGFT authorities in terms of paragraph 4.47 of HBP, for discharging the export obligation, we find that there is no ground for the impugned order to claim that there is non-fulfilment of the conditions of the Notification No.18/2015-Customs dated 01.04.2015 as amended. Furthermore, in all cases the EODC certificates have been taken into account, after due verification by the jurisdictional customs authorities, and the bond executed by the appellants to comply with the condition including the requirement of payment of amount equal to the duty exempted under the notification, have been duly cancelled. Further, for a small part of the IGST where the appellants were unable to substantiate with the documents for compliance with the conditions of notification, they had paid an amount of Rs.1,26,458/- to the government exchequer. For the above reasons, we are unable to agree with the learned adjudicating authority, that the conditions of the notification No.18/2015-Customs dated 01.04.2015 as amended including the 'pre-import condition' have not been fulfilled by the appellants....
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....t there are merits in the impugned order for denying the duty exemption benefits on the basis of the said relied upon judgement which had gone in favour of Revenue on the basis of different facts. 9.3 In this regard, we find that the Co-ordinate Bench of the Tribunal in the case of Sakar Industries Limited (supra) have examined the disputed issues in an identical set of facts vide Final Order No. 12422/2024 dated 22.10.2024 and held that the demand of duty is not sustainable. The relevant paragraphs of the said order are quoted below: "4.12 From the above factual position it is clear that in almost all the cases, the appellant have fulfilled the pre-import condition, in some cases the bill of entry was re-assessed and appellant have paid the IGST for which they are not contesting on the ground that they are eligible for ITC under GST. In view of the above on the factual aspects of the case the demand of IGST along with the interest, fine and penalties are not sustainable. As regard the penalty corresponding to the IGST paid by the appellant since, the same is availed as ITC under GST there is no malafide on the part of the appellant. Hence, penalty corresponding to the ....
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....28-11630/2024 dated 23.07.2024. In view of the said judgment also, the appellant are also entitled for waiver of interest, penalty and redemption fine. 5. As per our above discussions and findings, the impugned order is not sustainable. Hence, the same is set aside, appeal is allowed in the above terms with consequential relief." 10.1 In the impugned order dated 20.12.2023, learned Principal Commissioner has confirmed the adjudged demands on account of demand of interest against the IGST demand and for imposition of redemption fine, penalty covering the imports during the disputed period 24.10.2017 to 24.09.2018, which is prior to the amendment of Section 3 of the Customs Tariff Act, 1975 providing necessary machinery provisions w.e.f. 16.08.2024. In this regard, we also find that the Hon'ble High Court of Bombay had examined the issue regarding the question of levy of interest on the demand of CVD, SAD and surcharge being recovered under Section 28 of the Customs Act, 1962 cannot be sustained and have held that since the charging section for levy of CVD is Section 3(1) of the Customs Tariff Act, 1975; and that unless by specific borrowing of such machinery provisions o....
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....d into India at such rates as may be specified in the Customs Tariff Act, 1975. When we turn to Customs Tariff Act 1975, it is Section 2 which states that the rates at which duties of customs are to be levied under Customs Act 1962 are those which are specified in the First and Second Schedules of the Customs Tariff Act, 1975. In Section 12 of the Customs Act there is no reference to any specific provision of the Customs Tariff Act 1975. In other words for the purpose of determining the levy of customs duty on goods imported into India what is relevant is Section 12 of the Customs Act read with Section 2. 13. On the other hand levy of additional duty under section 3 is equal to the excise duty for the time being leviable on the like article which is imported into India if produced or manufactured in India. The rate of additional duty under section 3(1) on an article imported into India is not relatable to the First and the Second Schedule of the Customs Act but the additional duty if leviable has to be equal to the excise duty which is leviable under the Excise Act. This itself shows that the charging section for the levy of additional duty is not Section 12 of the Customs....
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....he appeal filed by the Revenue against the above judgement of the Hon'ble High Court of Bombay, before the Hon'ble Supreme Court in Special Leave Petition (Civil) Diary No. 18824/2023, the Hon'ble Supreme Court had dismissed the SLP as being devoid of any merits. Further, in the Review Petition Diary No. 41195/2023 preferred by the department, the Hon'ble Supreme Court had also held that there is no error apparent on the face of the record or any merit in the Review Petition warranting reconsideration of the order impugned. Therefore, the Hon'ble Supreme Court dismissed the Review Petition preferred by the department. 10.3 We further find that the legal provisions under Section 3(12) of the Customs Tarif Act, 1975 was suitably amended vide Finance (No. 2) Act, 2024, w.e.f. 16.08.2024, so as to specifically include the provision for levy of interest, penalty etc. The said amended provision under sub-section (12) of Section 3 of the Customs Tariff Act, 1975 is extracted and given below: Section - 106 of the Finance (No. 2) Act, 2024 "Customs Tariff Amendment of section 3. 106. In section 3 of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as t....