No Exemption on Re-export of Advance Licence Goods – Notification does not Provide for the Benefits
In The High Court of Judicature at Madras
The Hon'ble Mr. Justice D. Murugesan
The Hon'ble Mr. Justice K. K. Sasidharan
Civil Miscellaneous Appeal No.2870 of 2011 and M.P.Nos.1 and 2 of 2011
The Commissioner of Customs (Export)
No.60, Rajaji Salai
Chennai 600 001. .. Appellant
M/s. Craftsman Automation P. Ltd.
15, LMC Colony, Ammankulam Road
Coimbatore 641 037. .. Respondent
Civil Miscellaneous Appeals filed under Section 130 of the Customs Act, against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), South Zonal Bench at Chennai in Final Order No.401 of 2011, dated 07.03.2011.
For Appellant : Mr. S. Yashwanth, Sr. Panel Counsel
For Respondent : Mr. V. Balasubramanian.
Re-export of un-utilised goods imported under exemption notification – Re-export under Notification No. 93/2004-Cus. permitted only when the materials are found to be defective or unfit for use – Assessee imported raw material as per Notification No. 93/2004-Cus., which cannot be considered to be the goods of assessee, as the assessee was doing only job work and ownership remains with foreign company for whose benefit the job work is undertaken – Importer would be entitled to claim the benefit of exemption form payment of duty only as per the terms of the Notification and not otherwise – Inasmuch as notification entitles re-export only on two contingencies, such an export is not permissible even in case the job work/contract is cancelled by the company and with a request to return the unused raw materials, as there is no provision in the Notification for re-export as assessee could re-export only as per the notification, they cannot rely the general clause relating to Foreign Trade Policy – Importer/assessee not entitled to exemption in the event of re-exporting the un-utilised goods, as such exemption is not available as per the Notification. [Paras 7, 8, 9]
[Judgment D. Murugesan, J.] – The Revenue has filed the above Civil Miscellaneous Appeal, raising the following substantial questions of law:
"1. Whether the CESTAT is right in holding that when the conditions of the Notification No.93/2004 Cus-dated 10.09.2004 has not been satisfied, benefit has to be extended on account of situation or circumstances of the importer?
2. Whether the CESTAT is right in extending the benefit under Para:2.35 of the Foreign Trade Policy, when the import was allowed and the Exemption Notification was governed by Para:4, 1, 3 of the Foreign Trade Policy ?
3. Whether the CESTAT is right in extending the benefit of Notification against the Hon'ble Supreme Court ruling in the case of Indian Ryon & Industries Ltd. reported in 2008 (229) ELT 3 (SC)?
4. Whether the Tribunal can allow the exemption under the pretext that the importer may be eligible for duty drawback, when the drawback provisions of Customs Act, 1962 and Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 are not applicable to the importer ?"
2. The Central Government in exercise of the powers conferred under sub-section (1) of Section 25 of the Customs Act, 1962 issued Notification No.93 of 2004, dated 10.9.2004, regarding entitlement of advance licence and exemption from payment of duty in respect of certain imported products. By that Notification, licence is granted for import of products to discharge export obligation and in such event the importer is entitled to exemption for levy of duty on such imported products.
3. The respondent/assessee had imported certain parts of printing machinery from M/s. Beijing Mitsubishi Heavy Industries Beiren Printing Machinery Co. Ltd., China, for the purpose of undertaking job work. As per the Notification, the respondent/assessee is entitled to exemption from payment of duty for importing those parts. On the ground that due to slow down in economic activities, the supplier did not want further job work to be done by the assessee and asked to return the balance of imported parts. The assessee made a request for re-export of balance of goods received by them. The said request was rejected by the Commissioner of Customs and ultimately it went before the CESTAT at the instance of the assessee. The Tribunal, by placing reliance on the judgment of the Tribunal, South Zonal Bench at Bangalore Tribunal in the case of Kerala Hi-Tech Industries Ltd. vs. CEE, Cochin (2001 (132) ELT 593) allowed the appeal, entitling the assessee for exemption from payment of duty for the parts exported.
4. We have heard the respective learned counsel for the appellant as well as the respondent.
5. As per the Notification, an importer could claim exemption from payment of duty on the products imported with the corresponding obligation to re-export the finished products. In the event the importer wants to re-export and claim exemption from payment of duty, two conditions must be complied with, namely, (i)the materials are found to be defective or unfit for use and (ii) the claim for re-export must be made within three years from the payment of duty on the imports thereof. The Tribunal has relied upon the decision of the Tribunal, South Zonal Bench at Bangalore in in the case of Kerala Hi-Tech Industries Ltd. vs. CEE, Cochin (cited supra, permitting the re-export of goods imported without payment. The question to be decided in this case is, as to whether such a re-export is allowable in terms of the Notification without payment of duty.
6. The Supreme Court in the judgment reported in 2008 (229) E.L.T. 3 (Commissioner of Customs, Calcutta vs. Indian Rayon & Industries Ltd.) has held that in the event an importer had availed the benefit of the Notification, they will have to necessarily comply with the conditions of the Notification. As per the Notification No.93 of 2004, the importer is entitled to re-export only when the materials are found to be defective or unfit for use. The Tribunal, South Zonal Bench at Bangalore had an occasion to consider the Notification No.32 of 1997 dated 01.4.1997 and found that the job work does not involve transfer of ownership of goods, which remains with foreign supplier and such job worker is entitled to re-export the unused goods subject to remittance of 10% of CIF value. This finding was on the basis of the Notification, which empowers such re-export. A similar question came up for consideration before the Tribunal, South Zonal Bench at Chennai, wherein the same Notification No.32 of 1997, Customs dated 01.4.1997 was put forth. In both the cases, importation of materials was allowed, with a benefit of exemption from payment of customs duty and a right to the importer to re-export the unused goods subject to the condition of remittance of 10% CIF value. Under those circumstances, the CESTAT had observed that such re-export was allowable.
7. In the given case, the assessee imported raw material as per the Notification No.93 of 2004, Customs dated 10.9.2004. It is true that the goods so imported cannot be considered to be the goods of the assessee, as the assessee was doing only job work and the ownership remains with foreign company for whose benefit the job work is undertaken. Nevertheless, the importer would be entitled to claim the benefit of exemption from payment of duty only as per the terms of the Notification and not otherwise. Inasmuch as the Notification dated 10.9.2004 entitles re-export only on two contingencies, which we have referred to above, such an export is not permissible even in case the job work/contract is cancelled by the company and with a request to return the unused raw materials, as there is no provision in the Notification for re-export. For the reasons stated by the assessee/importer, the Tribunal has allowed the appeal relying upon the above two decisions of the CESTAT Benches at Bangalore and Chennai and those orders are not applicable to the facts of the present case.
8. The learned counsel for the assessee would also submit that as per Clause 2.35 of Foreign Trade Policy, goods imported may be exported in the same or substantially same form, except in case of restricted goods for either import or export. Hence the assessee is entitled to re-export the unutilised goods without payment of duty. We are not inclined to accept the said submission. That Clause contemplates a situation in general and not when the import or export is covered by a specific notification. As we have held that the assessee could re-export only as per the notification, they cannot rely the general clause relating to Foreign Trade Policy.
9. In view of the above, we hold that the importer/assessee is not entitled to the exemption of benefit of the duty in the event of re-exporting the un-utilised goods, as such exemption is not available as per the Notification, by which such import has been made. The substantial questions of law raised in this appeal are answered in favour of the Revenue and against the assessee/importer. Accordingly, the civil miscellaneous appeal is allowed. No costs. Consequently, M.P.Nos.1 and 2 of 2011 are closed.