Usms Saffron Co. Inc vs Commissioner Of Customs (Export)

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.C/90203 & 90204/14 & C/85353/15

(Arising out of Order-in-Original No.CAO/CC/AKG/02/2014 ADGN (X)/ACC dated 28/10/2014 passed by Commissioner of Customs (Export), Mumbai)

For approval and signature:

Honble Mr.Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

USMS Saffron Co. Inc. Jani & Co. Appellant

Vs.

Commissioner of Customs (Export), Respondent Mumbai

Commissioner of Customs (Export), Appellant Mumbai

Vs.

USMS Saffron Co. Inc. Jani & Co. Respondent

Appearance:

Shri.Anil Balani, Advocate for appellant Shri.S.J. Sahu, Asst. Comm. (AR), for respondent

CORAM:

Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

Date of Hearing : 20/03/2015 Date of Decision : /2015

ORDER NO

Per: P.S.Pruthi

1. Appeal has been filed by first Appellant USMS Saffron Co, against Order-in-Original No.CAO/CC/AKG/02/2014 ADGN (X)/ACC dated 28/10/2014 passed by Commissioner of Customs (Export), Mumbai, denying benefit of notification No. 98/2009-Cus dt. 11.9.2009, confirming duty demand of Rs.1,59,89,118/-, imposing equivalent penalty under section 114A of the Customs Act and penalty of Rs. 15 lakhs under Section 114AA.Appeal has also been filed by second Appellant M/s. Jani & Co., CHA (hereinafter referred to Jani) on whom penalty of Rs.5 lakhs and Rs.2lakhs was imposed under Sections 112(b) and Section 114AA respectively, of the Customs Act, 1962. Revenues appeal seeks higher penalty against the first Appellant.

2. The appellant M/s. USMS Saffron Co. imported Saffron under 10 Bills of Entry and availed nil rate of duty benefit under Notification No. 98/2009. They submitted transferable DFIAs Licenses for grant of benefit under the said notification. The DFIAs are transferable after redemption. The DFIAs were issued against the export of assorted confectionary and biscuits covered under standard input output norms (SION) E.1 & E.5 respectively. The import of Saffron against DFIAs issued in relation to export of assorted confectionary is subject to Note 2 under SION E.1 which reads as import of Saffron as flavour shall be allowed for 100gms against export of 100 kg of assorted confectionary subject to the condition that the quantity of saffron is actually used in the export product is mentioned in the Shipping Bills. This shall be applicable on the exports made w.e.f. 25.4.2007. Similarly the export product biscuit is covered under SION E.5 in the Handbook of Procedure Volume II (2009-2014). This SION E.5 was amended vide DGFT Public Notice No. 84/2009-14 dt.23.7.2010 by inclusion of a Note which reads as import item at Sr.

No. 1,2,3,4 &5 shall be allowed with actual user condition and with accountability of actual use on the export side. The item Saffron is covered under the product Food Flavour against S.No 5 (d) of the SION E-5.According to Revenue, in respect of imports against the DFIAs covering assorted confectionary as export product under SION E.1, it was mandatory for the importer to produce evidence that the S/B mentioned that Saffron was actually used in the export product. Similarly, in respect of imports against DFIAs relating to export of biscuits covered by SION E.5 , the import of food flavour under Sr. No. 5(d) was subject to actual user condition with accountability of actual use. Further, the DFIA issued under SION E.5 could not have been made transferable in terms of Clause (b) of Para 4.2.6 of the Foreign Trade Policy. It was noticed that the import product food flavours appeared at Sr. No. 8 of the DFIA authorization presented by the appellant whereas it should have been appearing at SrNo. 5 (d) as per SION E.5 norms. The allegation against the appellant is that they are not the exporter of goods, have not accounted for actual use of saffron in the export product, thus violating the SION Norm E.5.

Similarly, they did not produce evidence regarding actual use of saffron in the export product i.e. assorted confectionary and its mention in the S/B as mandated by SION E.1 Norm. A show cause notice was issued to the appellant for demanding duty and imposing penalties under the provisions of Customs Act for violating the Foreign Trade Regulation Rules and contravening the para 4.2.6. of Foreign Trade Policy 2009-2014. Show cause notice was also issued to the CHA M/s. Jani& Co. for not guiding the importer properly regarding non- importability of saffron without payment of duty against the DFIAs. The matter was adjudicated by the Commissioner as mentioned in para 1 above.

3. Heard both sides. Both sides gave written submissions also.

4. The main contention of the appellant is that the DFIAs issued against SION E.1 did not mandate the requirement of actual use of Saffron in the export products and its mention in the Shipping Bill. Further, that the licensing authorities also did not endorse the requirement of Public Notice No. 84/2009-14dt.23.7.2010 on the body of DFIAs. Further, it is contended that even when, in one case of DFIA No. 0310597237 dt. 15.10.2010 issued to M/s. Laxmi International, where the actual user condition is incorporated on the DFIA, it may be seen that the said condition is confined to Sr. Nos. 1 to 5 of the import items listed in the DFIA but in the amendment sheet dt.25.11.2011 attached to the said DFIA, the entry food flavour which includes saffron is listed at Sr. No.8. Therefore, the import of saffron is not restricted by any actual user condition in the DFIA.

4.1. The Ld. Counsel emphasized that the six DFIAs under consideration relating to the 10 Bills of Entry were duly examined by the assessing authorities and duty free import was allowed without any post-import actual user condition. The adjudicating authority confirmed the demand under Section 28 of the Customs Act, holding that a fraud had been committed but the demand notice dt. 30.11.2013 did not allege any fraud and was issued within one year of the clearance of goods. The Commissioner denied duty free benefit to the appellant on account of alleged fraud committed by the original license holder even though the transferee importer i.e. the appellant, is not connected with any fraud. As the order has travelled beyond the show cause notice by alleging fraud, it is not sustainable. He relied on CCE Vs. Ballarpur Industries Ltd. 2007 (215) ELT 489 (SC) and CCE Vs. Toyo Engineering India Ltd. 2006 (201) ELT 513.

4.2 According to the Ld. Counsel, the DFIAs were referred to the DGFT who have not cancelled or amended any of the DFIAs. Therefore the Commissioner has pre-judged the issue in coming to the conclusion that the DFIAs were not valid for duty free import of saffron. In their written submissions submitted on 30th March, the appellant presented evidence to claim that the practice of issuing similar DFIAs with endorsement of transferability is universally followed by DGFT at Rajkot, Hyderabad, Mumbai, Bangalore, Ludhiyana, Kolkata, Bhopal, New Delhi, Pune. Therefore in the face of universal practice, it cannot be construed as manipulation in obtaining the DFIAs.

4.3 In support of their stand that the Customs have to honour the DFIA in the form it is issued, the appellant relied on the decision of the Honble Bombay High Court in the case of A.V. Industries 2005 (187) ELT 9 (Bom.). The Customs have no authority to cancel the transferability of the Licences and then demand duty. Lastly, it is the contention that a demand cannot be made under Section 28 unless the assessment orders are reopened. He relied on the Supreme Court judgement in the case of Priya Blue Industries Ltd. Vs. Commissioner of Customs (Preventive) 2004 (172) ELT 145 (S.C.) which was followed by CESTAT in the case of Wipro Ltd. Vs. Commissioner of Customs, Chennai 2005 (189) E.L.T. 289 (Tri.Bang.).

5. The CHA M/s. Jani through their counsel represented that although show cause notice was issued for imposing penalty under Sections 112(a) (para 12 of SCN) & 114 AA, the Order-in-Original has been passed imposing penalties under Section 112(b) (para 19 of O-in-O). According to them, the goods were not liable for confiscation under Section 111(d)/Section (o) so as to attract penalty under Section 112 as the goods in question are not prohibited goods nor was any post clearance condition in the DFIA violated. They only presented papers given to them by the importer for customs clearance and the question of failure to advise the importer regarding non-validity of DFIAs does not arise.

6. The Ld. AR appearing for Revenue reiterated the findings of the Commissioner. On a query from the Bench as to how endorsement of transferability was made on the license by the DGFT authorities, the Ld. AR informed that the matter had been taken up with the licensing authority by the Commissioner of Customs. The licensing authority vide their letter dt. 16.10.2014 replied to the Commissioner that the benefit of transferability must be denied, due recovery may be made and penal action may be taken. However, this clarification is only with respect to DFIA No. 0310597237 dt. 15.10.2010 issued to M/s Laxmi International. In his written submissions submitted on 6th April, Ld AR enclosed a copy of the SCNdt 30-03-15 issued to M/s Laxmi by DGFT proposing to cancel the DFIA.

6.1. In his written submissions the Ld. AR drew our attention to the additional condition sheet attached to DFIA No. 0910049059 dt.27.9.2011 which states that the DFIA holder shall abide by other licensing conditions appearing in the Handbook of Procedures. Therefore, the importer cannot plead ignorance about the conditions attached to the DFIA.

6.2. Ld. AR relied on the case of Polyplex Corporation Ltd. Vs. Joint Secretary, Finance 2014 (306) E.L.T. 24 (All.) in which it was held that an executive order laying down something otherwise than what is prescribed in the notification is not permissible in law and mere executive decision cannot authorize the authorities concerned to do something which is not otherwise permitted under statutory rules. He also relied on the Apex Court judgment in the case of Union of India Vs. Jain Shudh Vanaspati Ltd. 1996 (86) ELT 460 (S.C.) which held that show cause notice can be issued under Section 28 of the Customs Act without revising under Section 130, the order of clearance passed under Section 47 of the Customs Act. He relied on the case of East West Freight Carriers Pvt. Ltd. Vs. Commissioner of Customs (Export) 2014 (303) ELT 454 (Tri. Mum.) to state that Transfer of license in violation of Exim Policy is void abinito.

7. We have carefully gone through the facts of the case and the submissions made by both sides. The issue to be decided is whether the import of Saffron under the subject DFIAs was eligible for exemption. To decide this a view has to be taken whether the DFIAs on the basis of which exemption was availed were subject to the condition that :

(i) In respect of import against export of assorted confectionery, the quantity of Saffron actually used in the export product is mentioned in the shipping bills.

(ii) The import of Saffron against the export of Biscuits is subject to the actual user condition with accountability of actual use on the on the export side.

7.1 We find that the DFIAs have been issued and made transferable without putting any of the above conditions on the face of the DFIAs. There is some merit in the contention that the duty free import is permissible on the basis of the DFIAs presented to the Customs when there is no allegation that the DFIAs were obtained on account of fraud committed by the importer. The importer is not responsible for the transfer conditions imposed by the DGFT on the licenses when they are transferred to the importers by the original license holder. If at all, the actual user condition on the body of the DFIA was mandatory for the licensing authority. In the present case, no evidence whatsoever, of fraud committed by the importer has been brought on record. The assessing authorities also verified the license at the time of Customs clearance and found nothing wrong with the licenses. We have seen the Tribunal judgment cited by the Ld. AR in the case of East West Freight Carriers Pvt. Ltd. Vs. Commissioner of Customs (Export) 2014 (303) ELT 454 (Tri. Mum.). The circumstances in that case were quite different as it related to a definite and conscious fraud committed.

And the license issued by fraud was placed under suspension by the DGFT and later amended, which is not so in the present case. Similarly in the case of Nippon Bearings 2014(304) ELT 688 (Bom) the Honble High Court held that there was no valid license at the time of importation. In the present case no deliberate or even unintentional omission or commission by the importer is noticed by us. The DFIAs are purchased by the transferee in the open market and they cannot be held responsible for omissions, if any, made by the Licensing authorities while endorsing transferability. Even in the case of license issued to M/s Laxmi, the transferee cannot be held responsible. It was held by the Honble Supreme Court in the case of Collector Vs. Sneha Sales Corporation - 2000(121) ELT 577 (S.C. ) that In the aforementioned decision of this Court it has been clearly laid down that in a case where the license is obtained by misrepresentation or fraud it is not rendered nonest as a result of its cancellation. In the present case the licenses were cancelled by order dt. December 18, 1986 after the goods had been cleared.

The Tribunal was, therefore, right in holding that the import of the goods was not in contravention of the provisions of import and export order. Further the Honble Bombay High Court held in the case of Global Exim Vs. Commissioner 2010 (259) ELT A139 (Bom.) that ..even during the course of hearing the Ld. Counsel appearing for the Revenue was unable to point out from any of the documents available on record that the import was not in accordance with the license conditions or the specifications provided therein. The view taken by the Tribunal is in accordance with the law laid down by this Court in the case of AV Industries Vs. Union of India .

7.2 It is inexplicable as to why the licensing authorities have not taken any action to amend or cancel the licenses despite the Commissioner of Customs having taken up the matter with the licensing authority. The Licensing authorities are well aware that the benefit of transferability must be first denied by them by canceling licenses. Instead of taking action to cancel the licenses if it was of the view that the same have been obtained through misrepresentation, they simply asked Customs to recover the duty in one case (Laxmi). The decision of Bombay High court in the case of AV Industries (supra) supports the view that . when the import is in accordance with the import license issued to the petitioner, the respondents cannot take shelter under the import policy and purport to take action against the petitioner. Therefore, if the deletion of the condition was a bonafide error or misconstruction of the import policy by the officers of the department the petitioners cannot be made to suffer. In the present case, far from conniving, the importer is in no way responsible for the omission on the part of DGFT.The judgement of Mumbai High Court squarely applies in the circumstances. In the case of M/s.Laxmi International to whom the DGFT has issued a show cause notice belatedly on 30.3.2015 proposing to cancel the license we do not appreciate its impact on the importer whose action is bona fide in terms of the High Court judgment in the case of A.V. Industries (supra).

7.3. We have seen the additional condition sheet which requires the DFIA holder to abide by the other licensing conditions appearing in the Handbook of Procedures. However, the same sheet also states that the Customs shall thoroughly verify the imports allowed as per SION SLNO. E.1 of HBP (Vol.II) as amended from time to time & clearance shall be permitted strictly as per the description mentioned in the SION. Any mis-match between this Authorization and the SION, corrections without proper attestations or for any other doubts, the Customs shall revert back to the Licensing Authority for proper rectification/authentication before allowing clearance of imports and exports under this Duty Free Import Authorization.

From the above it is clear that the licensing authority is required to rectify the license before allowing clearance of imports. In the present case, neither the Customs reverted to the licensing authority nor the licensing authority rectified the license before allowing clearance.

7.4 The appellant have submitted copies of several DFIAs which are similarly placed and issued against SION E-1 and SION E-5. These DFIAs also do not bear the note under SION E-1 or the condition of Public Notice No. 84/2009-14 under SION E-5. A widespread issue of such authorizations indicates a practice. Therefore the duty free import cannot be attributed to any mistake on the part of the importer. The case of Air Travel Bureau Ltd- Delhi High Court- referred by the adjudicating authority does not apply in the present circumstances as no fraud or misrepresentation by the importer is proved. Rather in the case of Sampat Raj Dugar 1992 (58) ELT 163 (SC) it was held by the Honble Supreme Court that an import license cannot be cancelled retrospectively. Therefore, the benefit exists till the DFIAs are cancelled retrospectively.

7.5. We note that even in the case of the DFIA issued to M/s. Laxmi International, the allegation that the DFIA applicant had manipulated the Sr. Nos. of import list by indicating items at Sr. No. 5 a, b, c, and d of the relevant SION as sr. No. 5,6,7& 8 in the application to escape the restrictions given by the footnote of SION E-5 is unsustainable as far as the appellant is concerned. Note 2 at the bottom of the License allows transferability for items at 6 to 9 and the product food flavour which includes saffron is listed at item 8. The licensing authorities do amend licenses wherever required, for example some amendments carried out in some of the subject licences are as under.

(a) In the case of DFIA No. 2410031082 dated 08.03.2011 issued to Lily Impex, the list of import items at Sr. No. 5(iii) mentions Flavours without mentioning any restrictions. The amendment sheet No.1 retains the same description. Amendment sheet No.2 dated 03.10.2012 changes the status of the DFIA from AU to Transferable. In the amendment Sheet No.3 there is no change for Flavours. The AU restrictions are mentioned only against items other than Sr. No. 5(iii) which remains as Flavours without restricting the quantity or seeking the end use or the data of shipping bills.

(b) In the case of DFIA No.0910049059 dated 27.09.2011 issued to Shoubhagya Confectionary, Amendment Sheet-1 refers to entry Flavours at Sr. No. 06 of list of import items and mentions the quantity of 238.20 KGS, under the title with transferability. (In terms of PN 84 dated 23.7.2010.) In the next column against the item nos.1. Sugar and item no.2 Fruit Concentrate respective quantities are mentioned with a remark Without Transferability in terms of PN 84 dated 23.07.2010 i.e. with actual user. This means that the mandate of PN viz. Actual User is not applicable to entry Flavours.

(c) In the case of the DFIA No. 0310617228 dated 22.02.2011 issued to M/s. General Export Mumbai, the entry Food Flavours appears at Sr. No. 06 of list of import items and in the amendments Sheet No.1 dated 14.10.2011 there is no restriction in respect of this entry whereas the restrictions are specifically mentioned against item No. 1 & 2 viz. Sugar and Liquid Glucose etc.

The above shows that the restrictions appearing in the PN/SION norms relating to the individual items are invariably mentioned by the LA in the License at the time of issue or on transfer. If a particular DFIA does not contain an entry for restricting saffron, it shows that the LA considered it prudent not to make an endorsement. That they have not amended the DFIAs in question as far as saffron is concerned indicates a conscious action or inaction on the part of the DGFT for which the blame cannot be put on the importer. As a matter of record we find that the duty demand in the case of DFIA issued to M/s. Laxmi International works out to only Rs. 19,98,891/- as against the total duty demand of Rs. 1,59,89,118/-.

The reliance placed by the Ld. AR on the case of Polyplex Corporation is not appropriate in the circumstances of the present case. In that case it was held by the Honble High Court that rebate cannot be denied on the basis of a Board Circular when it is permissible under the Rules. The present situation is different because Customs have to allow the import on the basis of the DFIA presented to them. It is for the DGFT authorities to amend the license which they have chosen not to do even after lapse of a long period of time. The Supreme Court decision in the case of Jain Shudh Vanaspati (supra) was not a decision on merits but only disagreed with the decision of the High Court exercising power of writ under Article 226 to stultify investigations at the show cause stage.

7.6 The allegation against the appellant is that they are not eligible for the benefit of exemption Notification No. 98/2009. The duty free import is allowed subject to the following conditions laid down in the Notification.

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(i) that the description, value and quantity of materials imported are covered by the said authorization and the said authorization is produced before the proper officer of customs at the time of clearance for debit:

Provided that in respect of resultant product specified in paragraph 4.32.3 of the Hand Book of Procedures (Vol.I) of the Foreign Trade Policy, the materials permitted in the said authorisation or a duty free import authorisation for intermediate supply, as the case may be, shall be of the same quality, technical characteristics and specifications as the materials used in the said resultant product:

Provided further that in respect of the said resultant product the exporter shall give declaration with regard to the quality, technical characteristic and specifications of materials used in the shipping bill;

(ii) that where import takes place after fulfillment of export obligation, the shipping bill number(s) and date(s) and quantity and Free on Board value of the resultant product are endorsed on the said authorization:

Provided that where import takes place before fulfillment of export obligation, the quantity and Free on Board value of the resultant product to be exported are endorsed on the said authorization;

(iii) that in respect of imports made before the discharge of export obligation in full, the importer at the time of clearance of the imported materials executes a bond with such surety or security and in such form and for such sum as may be specified by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, binding himself to pay on demand an amount equal to the duty leviable, but for the exemption contained herein, on the imported materials in respect of which the conditions specified in this notification are not complied with, together with interest at the rate of fifteen per cent. per annum from the date of clearance of the said materials;

(iv) that in respect of imports made after the discharge of export obligation in full, if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or CENVAT Credit under CENVAT Credit Rules, 2004 has been availed, then the importer shall, at the time of clearance of the imported materials furnish a bond to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, binding himself, to use the imported materials in his factory or in the factory of his supporting manufacturer for the manufacture of dutiable goods and to submit a certificate, from the jurisdictional Central Excise officer within six months from the date of clearance of the said materials, that the imported materials have been so used:

Provided that, in case,

(a) materials are imported against an authorisation transferred by the Regional Authority, or

(b) the imported materials are transferred with the permission of Regional Authority, then the importer shall pay an amount equal to the additional duty of customs leviable on the materials so imported or transferred, but for the exemption contained herein, together with interest at the rate of fifteen per cent. per annum from the date of clearance of the said materials:

Provided further that no such amount shall be payable in respect of Authorizations issued from 1.5.2006 to 31.3.2007:

Provided also that if the importer pays additional duty of customs leviable on the imported materials but for the exemption contained herein, then the imported materials may be cleared without furnishing a bond specified in this condition and the additional duty of customs so paid shall be eligible for availing CENVAT Credit under the CENVAT Credit Rules, 2004;

(v) that in respect of imports made after the discharge of export obligation in full, and if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule 2 of rule 19 of the Central Excise Rules, 2002 or CENVAT credit under CENVAT Credit Rules, 2004 has not been availed and the importer furnishes proof to this effect to the satisfaction of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs as the case may be, then the imported materials may be cleared without furnishing a bond specified in condition (iv);

(vi) 

(vii) that the export obligation as specified in the said authorization (both in value and quantity terms) is discharged within the period specified in the said authorization or within such extended period as may be granted by the Regional Authority by exporting resultant products, manufactured in India which are specified in the said authorization:

Provided that an Advance Intermediate authorization holder shall discharge export obligation by supplying the resultant products to the exporter in terms of paragraph 4.1.3 (ii) of the Foreign Trade Policy;

(viii) that the importer produces evidence of discharge of export obligation to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within a period of sixty days of the expiry of period allowed for fulfillment of export obligation, or within such extended period as the said Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may allow;

(ix) that exempt materials shall not be disposed of or utilized in any manner, except for utilization in discharge of export obligation, before the export obligation under the said authorization has been discharged in full:

Provided further that where the Bond filed under condition (iii) against the said authorization has not been redeemed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, the unutilized material may be transferred to any other manufacturer except to the unit availing the benefit of notifications, Nos. 49/03-CE and 50/03-CE both dated 10thJune,2003, 32/99-CE and 33/99-CE both dated 8thJuly, 1999 , 8/04-CE dated 21stJanuary,.2004, 20/07-CE dated 25thApril,.2007, 56/02-CE and 57/02-CE both dated 14thNovember, 2002, , 71/03-CE dated 9thSeptember,.2003, 56/03-CE dated 25thJune,.2003 and 39/01-CE dated 31stJuly,.2001, for processing under actual user condition after complying the central excise procedure relating to Job work;

(x) that in relation to the said authorization issued to a merchant exporter,-

(a) the name and address of the supporting manufacturer is specified in the said authorization and the bond required to be executed by the importer in terms of condition numbers (iii) or (iv) as the case may be shall be executed jointly by the merchant exporter and the supporting manufacturer binding themselves jointly and severally to comply with the conditions specified in this notification; and

(b) exempt materials are utilized in the factory of such supporting manufacturer for discharge of export obligation and the same shall not be transferred or sold or used for any other purpose by the said merchant exporter until the export obligation specified in condition (vii) has been discharged in full.

2B. After discharge of export obligation as specified in condition (vii) of paragraph 1, the Regional Authority shall permit transfer of the said authorisation and/or the goods imported under it subject to such conditions as may be specified

Para 2B lays down the condition under which the regional licensing authority shall permit transfer of the said authorization and/or the goods imported under it subject to such conditions as specified. From the notification it is clear that only some of the conditions (i) to (x) in para 1 of the notification apply to the importer. We do not find any violation of these conditions. Para 2Bcasts a responsibility on the regional licensing authority to permit transfer under conditions as may be specified. The regional authorities did not put any conditions on the DFIA.

Reliance is placed on the case of Goodluck Industries Vs. Commissioner 1999 (108) ELT 818 (Tri.) which held that Bond/Le-gal undertaking or the declaration has to be executed by the person (importer) who is to discharge the export obligation i.e. it has to be a person in whose name the licence stands i.e. before the licence is made transferable to another person. In other words, condition No. (ii) of the Notification does not concern a transferee i.e. the appellant herein. Condition Nos. (iii) & (iv) are purely procedural and not in controversy as well. Condition No. (v) is to be fulfilled by original licence holder in whose name the licence stands because he has to fulfil the export obligation and he alone is in a position to know whether Modvat credit/proforma credit or facility of Rule 191B has been taken on inputs in respect of export goods fulfilling export obligation. Transferee of a VBAL, as the appellant is, in no position to know that. Therefore, it is not correct to hold that the appellant has not been able to discharge the burden of proof cast on him to claim the benefit of the notification. Here in this exemption notification the expression `importer applies to two persons - One is a licencee in whose name the VBAL has been originally issued and the other is a transferee of the licence. Various conditions of the notification may be required to be fulfilled by one, or other person or both. Condition No. (vii) alone governs the import made by a transferee licencee which is not disputed by Revenue to have been satisfied.

Therefore, the appellant cannot be made to suffer in the present case. Therefore, we hold the view that duty is not demandable from the appellant and the benefit of notification No. 98/2009 is admissible. Consequently the confiscation as well as penalties are not sustainable.

8. Revenue is in appeal against the impugned order of Commissioner of Customs on the ground that the penalty under Section 114A imposed on the appellant is not adequate and the same needs to be enhanced to the extent of penalty equivalent to duty and interest. As we have already held that duty is not demandable and penalty is not required to be imposed, the question of enhancement in penalty does not arise.

9. Coming to the role of the clearing agent, we find that the job of the clearing agent is to prepare documents such as bill of entry properly and file the same along with supporting documents such as licenses wherever required. In this case the document namely the DFIA presented to the Customs is not a document prepared by the CHA. This document is a license issued by the DGFT. We cannot appreciate how the CHA can be faulted for submitting documents issued by DGFT. The Customs also assessed the goods as per the DFIA issued by the DGFT. Therefore the CHA cannot be held responsible for mistakes, if any, in the document i.e. DFIA issued by the DGFT. The action of the CHA does not reflect violation of Regulations 13(d) and 13 (o) as held by the adjudicating authority. We have already decided that the goods are not liable to confiscation. Even otherwise we do not find merit in holding the CHA liable to penalty under Section 112(b) of the Customs Act, 1962 because the CHA cannot be said to have dealt with the goods which he knows are liable to confiscation. Even the penalty under Section 114AA is not imposable on the CHA because the CHA has not made any false statement or produced any false document before the Customs. The CHA has merely presented the license which is issued by DGFT.

10. In view of the above, the impugned order is set aside. Appeals of first appellant M/s. USMS Saffron Co. Ltd and second appellant M/s. Jani & Co. are allowed. Revenues appeal is dismissed.

(Pronounced in Court on .)

(Anil Choudhary) Member (Judicial) (P.S. Pruthi) Member (Technical)

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