Commnr. Of Customs, Calcutta vs M/S. Indian Rayon & Industries

Commissioner of Customs, Calcutta .....Appellant

- Versus -

Indian Rayon & Industries Ltd. .....Respondent

J U D G M E N T

BHAN, J.

1. The instant appeal has been filed by the

Revenue under Section 35L of the Central Excise

Act, 1944 against the final judgment and order

No.1-1255/KOL/2001 dated 23rd November, 2001 passed

by the Customs, Excise and Gold (Control) Appellate

Tribunal, Eastern Bench, Kolkata (for short "the

Tribunal"), whereby the Tribunal has set aside the

order passed by the Commissioner.

1

2. The three Bills of Entry which are the bone of

contentions in the present case are detailed

below:-

(i) Bill of Entry Sl. No. 2256 dated 30th April,

1998, per Vessel X-Press Singapore Voy-257,

Rot. No. 258/98 dated 7th April, 1998, Line

No. 97, Country of origin - India, Goods 135

cartons 2/64 NM Merino Wool 100% Raw White

on paper cone, Assessable Value -

Rs.36,63,829/-.

(ii) Bill of Entry Sl. No. 2440 dated 29th May,

1998, per Vessel S.S. Acacia V. 818, Rot No.

370/98, Line No. 154, Country of Origin -

India, Goods - 20 pallets Polyester 100%

Semi Dull Ring Spun Yarn for weaving NE

24/2, Assessable value - Rs.16,88,481.23

(iii) Bill of Entry Sl. No.930 dated 12th August,

1998 per Vessel Breeze, Rot. No. 549/98,

Line No. 26, country of origin - India,

2 Goods 765 Ctns. of 100% polyester yarn,

Assessable value liable to duty

Rs.27,37,954.76.

FACTS:

3. The goods were initially exported by the

respondent-assessee, which were rejected by the

foreign buyer being defective and the assessee re-

imported them back to India.

4. Assessee had initially claimed in the Bills of

Entry the benefit of Notification No. 158/95-Cus

and also executed bonds for re-export, as required

under the said notification. The Bills of Entry

were assessed provisionally. The assessee could

not re-export the goods due to recessionary

conditions in the textile industry. It claimed

before the adjudicating authority that since it was

not possible for it to re-export the goods, it may

be allowed the benefits of another Notification No.

3 94/96-Cus., which was in force at the time of the

clearance from the factory originally.

5. Three show cause notices were issued in respect

of the three Bills of Entry for realization of the

amounts which were guaranteed under the bonds

executed by the assessee at the time of

importation. The demands under the show cause

notices were in terms of Notification No. 158/95-

Cus. referred to above. Confronted with the

liability to pay the duty as enjoined under the

notification, in view of non re-export of the goods

within six months of the date of re-importation as

stipulated, the assessee took the ground before the

adjudicating authority that Notification No.

158/95-Cus. was not in force at the time of the

importation. Having realized this to be incorrect,

the assessee shifted its stand and submitted that

Notification No. 94/96-Cus. dated 16th December,

1996 was applicable to the goods in question and

the benefit thereunder should be given to it.

4

6. The main contention raised by the assessee was

that if the benefits were available under the two

Notifications to the assessee, then the assessee

could avail of the benefits under either of them.

Revenue's reply to the said contention was that it

was not correct to say that if the two

Notifications are applicable, assessee after having

opted to take benefit under one of the

Notifications, could change its option and avail

the benefit under the other scheme. In any case,

this would depend upon the nature and contents of

the Notifications. It was revenue's contention that

the assessee could not change its option because of

the nature and contents of the notifications.

7. The Authority-in-Original confirmed the demand

against (i) Bill of Entry No. 930 in the sum of

Rs.20,76,111/- and (ii) Bill of Entry No. 2440 in

the sum of Rs.13,86,355.24. The assessee was given

the benefit of Notification No. 94/96-Cus. in

respect of Bill of Entry No. 2256 of 1998 as the

goods were re-exported under Incentive Scheme,

5 i.e., Duty Exemption Entitlement Scheme (DEEC).

Thus, in relation to Bill of Entry No. 2256 dated

30th April, 1998, the duty was confirmed in the sum

of Rs. 4,99,188.79. The benefit was not extended

to other two Bills of Entry as the goods in these

cases were covered under Duty Entitlement Passbook

Scheme (DEPB). Contention raised on behalf of the

assessee that the benefits of the Notification No.

94/96-Cus. having been given to the assessee in

regard to Bill of Entry No. 2256, could not be

denied on Bills of Entry Nos. 930 and 2440, was

rejected.

8. The assessee being aggrieved filed an appeal

against the order of the Commissioner, which has

been accepted by the Tribunal by its impugned

order. The Revenue being aggrieved has filed the

present appeal.

9. Counsel for the parties have been heard.

6

10. Section 20 of the Customs Act, 1962, which

deals with re-importation of the goods, provides:-

"20. Re-importation of goods. - If goods were imported into India after exportation therefrom, such goods shall be liable to duty and be subjected to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof."

11. By Notification No. 158/95-Cus. dated 14th

November, 1995, goods manufactured in India and re-

imported in India for repairs or for re-

conditioning are exempted from whole of the duty of

customs leviable on them as well as additional duty

subject to the condition, inter alia, that the

goods are re-exported within six months of the date

of re-importation or any extended period as may be

allowed and a bond is executed at the time of

importation to export within the said period and,

in the event of failure to do so, pay an amount

equal to the difference between the duty levied at

the time of re-import and the duty leviable on such

7 goods at the time of importation. The assessee

executed a bond with the President of India,

complying with the aforesaid condition of

notification and undertook to pay, on demand in the

event of its failure to comply with any of the

conditions of notification, an amount equal to the

difference between the duty levied and leviable on

such goods. In respect of each of the Bills of

Entry, separate bonds were executed indicating Bill

of Entry No., description of goods, country of

origin, CIF Value, the assessable value and the

bond value.

12. The Revenue contends that the assessee could

not avail the benefit under Notification No.94/96-

Cus and that it could not change its option.

According to the assessee, the assessee could

change its option even at a later stage and it

could avail of the benefit under Notification

No.94/96-Cus which was in force at that time.

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13. We do not find any substance in this submission

advanced on behalf of the assessee. The only

notification which was available to the assessee at

the time of import which granted the assessee the

right to import duty free goods was Notification

No. 158/95-Cus. Having availed of the benefit of

notification, the assessee has necessarily to

comply with the conditions of the notification. It

goes without saying that the assessee cannot

approbate and reprobate. In Tractors and Farm

Equipment Ltd. v. Collector of Customs, Madras,

[1998 (9) SCC 665], it was pointed out by this

Court that once the assessee's case was that what

it had imported do not constitute internal

combustion piston engines but only certain

components, the importer cannot turn around and say

that what was imported constitutes piston engines.

Of course, there is no estoppel against the law but

having sought for and taken the benefit of the

notification to import goods without payment of

duty, it is not open to the assessee to contend

9 that the conditions in the said notification need

not be fulfilled, be it on the ground that the

benefit under another notification is available to

him or otherwise.

14. In any event, Notification No. 94/96-Cus. is,

on its own terms, not applicable to the facts of

the present case. The assessee has claimed the

benefit under clause 1(e) of Notification No.

94/96-Cus. The description of the goods claimed in

Serial No. 1(e) under Notification No. 94/96-Cus.,

which reads as under:

Sl. Description of goods Amount of duty No. (1) (2) (3)

10

1. Goods exported- XXXXX

(a). XXX XXXXX

(b). XXX XXXXX

(c). XXX XXXXX

(d). XXX XXXXX

(e). under duty Amount of excise duty exemption scheme leviable at the time (DEEC) or export and place of Promotion Capital importation of goods Goods Scheme (EPCG) and subject to the following conditions Applicable for such Goods

(I) DEEC book has not been finally closed and export in question is delogged from DEEC book.

(II) In case of EPCG scheme the period of full export performance has not expired and necessary endorsements regarding reimport have been made.

(III)The importer had intimated the details of the consignment re-imported to the Assistant Commissioner of Central Excise in charge of the factory where the goods were 11 (2) XXX XXX (3) XXX XXX

refers to the goods exported under DEEC or Export

Promotion Capital Goods (EPCG) Scheme and not under

DEPB Scheme. In the present case, out of the three

Bills of Entry covering goods which had to be re-

exported, only one of them was for goods earlier

exported under DEEC scheme while the other two were

under DEPB scheme. The adjudicating authority had,

in respect of goods initially imported under DEEC

Scheme, given the benefit of the Notification No.

94/96-Cus, while rejecting the claim in respect of

the goods exported under a DEPB Scheme. This is in

accordance with the language of Notification No.

94/96-Cus. The difference between DEEC and DEPB

Schemes can be seen from the following :-

"DEEC Scheme

Under this scheme the importer is issued an Advance Licence to procure the raw material for a manufacturer of the export product. The goods which are cleared

12 under Advance Licence are meant for use in the manufacture of export product or replenishment of the raw materials already used. The clearance is allowed duty free. The details of items allowed for import against a specific export product are published by the Ministry of Commerce in their Input Output Norms which are part of the Exim Policy.

DEPB Scheme

Under this scheme the exporters are issued DEPB scrips which allows them the specific amount to be utilized for payment of Customs duty. The amount for which DEPB scrip is issued depends upon the rate for a particular export product. The Ministry of Commerce notifies DEPB credit rates for export of an item. The DEPB scrip is freely transferable and can be used to debit the payment of duty at the time of clearance of goods except capital goods and goods mentioned in negative list."

15. An attempt was made on behalf of the assessee

to refer to Sl. No.1(d) of the said notification

which refers to goods exported under bond without

payment of excise duty. It is only Sl. No. 1(e)

which deals with benefit under the EXIM Policy but,

at the same time, confines to DEEC and EPCG Scheme

and not to the DEPB Scheme. Sl. Nos. 1(a), (b),

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(c) and (d), all deal with export of goods in the

normal course, where duty becomes payable under the

provisions of Central Excise Act, 1944 or the

Customs Act, 1962, as the case may be, and to the

Customs or Excise duties leviable on goods so

exported. They do not deal with imports or exports

under the EXIM Policy which fall in Sl. No. 1(e).

16. Rule 13 of the Central Excise Rules, 1944,

which was in force at the time of initial export of

goods in question (February 1998), provides as

under:

"RULE 13- Export in bond of goods on which duty has not been paid-

(1)The Central Government may, from time to time, by notification in the Official Gazette-

(a)permit export of specified excisable goods in bond without payment of duty, in the like manner, as the goods regarding, which the rebate is granted under sub-rule (1) of rule 12 from a factory of manufacture or warehouse or any other premises as may be approved by the Commissioner of Central Excise;

(b) specify materials, removal of which without payment of duty from the place of manufacture or storage for use in the manufacture in bond of export goods, may be

14 permitted by the Commissioner of Central Excise;

(c)allow removal of excisable material without payment of duty for the manufacture of export goods, as may be specified, to be exported in execution of one or more export orders; or for replenishment of duty paid materials used in the manufacture of such export goods already exported for the execution of such orders, or both;

subject to such safeguards, conditions and limitations as regards the class or description of goods, class or description of materials used for manufacture thereof, destination, mode of transport and other allied matters as may be specified in the notification which the exporter undertakes to abide by entering into a bond in the proper form with such surety or sufficient security, and under such conditions as the Commissioner approves.

(2)The Central Government may, from time to time, by notification in the Official Gazette, permit export of specified excisable goods in bond, without payment of duty from a factory of manufacture or warehouse, to Nepal or Bhutan, subject to such conditions or limitations as regards the class of goods, destination, mode of transport and other matters as may be specified therein.

Explanation I.- In this rule, the expression "manufacture" includes the process of blending of any goods or making alterations or any other operation thereon.

Explanation II.- In this rule, the term `materials' shall include raw materials, consumables, components, semi- finished goods, assemblies, sub- assemblies, intermediate goods,

15 accessories, parts and packaging materials used in the manufacture of export goods but does not include capital goods used in the factory in or in relation to manufacture of export goods."

17. Rule 14 provides for entering into General

Bond, for permission to export goods from India

under the prescribed conditions and Rule 14A

provides for penalty for failure to furnish proof

of export within the prescribed period. Sl. No. 1

(d) of Notification No. 94/96-Cus. covers these

instances where goods are manufactured in India and

exported without payment of duty in accordance with

the procedure set out in Rule 13, as indicated

above. Sl. No. 1(d) has, therefore, no relevance

to exports made under Export Import Policy Schemes.

18. Since the two consignments vide Bills of Entry

Nos. 930 dated 12th August, 1998 and 2440 dated 29th

May, 1998 under DEPB Scheme do not get the benefit

of Notification No.94/96-Cus., the order of the

Tribunal deserves to be set aside and the order of

16 the Commissioner of Customs restored. Ordered

accordingly. Appeal is allowed with costs.

...................J. (ASHOK BHAN)

...................J. New Delhi; (DALVEER BHANDARI) July 16, 2008

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