No Exemption on
Re-export of Advance Licence Goods – Notification does not Provide
for the Benefits
In The High Court of Judicature at Madras
Dated: 21.11.2011
The Hon'ble Mr. Justice D. Murugesan
and
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)
Custom House
No.60, Rajaji Salai
Chennai
600 001. ..
Appellant
vs.
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.