Dhawani Fashions Vs. Commissioner of Customs - Court Judgment

Excerpt:
2. shri laxminarayana, learned advocate appearing for the appellants stated that the appellants had imported one multi head embroidery machine under epcg scheme under licence no. 2134212, dated 3-5-1995 and the machine was cleared under customs notification no. 160/92-cus., dated 20-4-1992 on execution of a bond for fulfilment of export obligation to an extent of us $ 5,59/429/-. the appellants had executed a bank guarantee for a sum of rs. 10,69,404/- (50% of the duty saved amount). since the appellants did not submit any export documents for more than 4 years, the bank guarantee was enforced and for the balance amount of duty and interest, a demand notice was issued to the appellants on 30-11-1999. the asstt. commissioner, in his order-in-original, had confirmed the duty demand under notification no.110/95-cus., dated 5-6-1995 and charged interest at the rate of 24% per annum. on an appeal, id. commissioner (appeals) upheld the order of the asstt. commissioner.2. ld. advocate pleaded that the appellate authorities have wrongly held that the customs notification no. 160/92-cus., dated 20-4-1992 was wrongly mentioned and hence, it is not applicable. the policy circular no. 13 (re-98)/98-99, dated 11-6-1998, had clearly clarified that the handbook of procedures (1st april, 1997 to 31st march, 2000), which laid down the time schedule is applicable to epcg license issued on or after 5th june, 1995. in the appellant's case, the license has been issued on 3-5-1995. violation of condition (5) of the notification no.110/95-cus., dated 5-6-1995 was wrongly held to be applicable in the case of the appellants. this notification no. 110/95-cus. is applicable for issue of epcg licence issued on or after 5-6-1995 as per the dgft's circular stated above. the department is estopped from taking a stand that the notification no. 160/92-cus., dated 20-4-1992 has been wrongly mentioned in the bill of entry for the first time after a lapse of four years as the bill of entry has been assessed to duty on 6-11-1995. the indemnity bond executed by the appellants permitted to clear the goods under notification no. 160/92-cus., dated 20-4-1992. the demand of duty would have arisen only after the licensing authorities have initiated the proceedings. there is no condition of progressive export obligation mentioned in notification no. 160/92-cus. the only condition was that they should complete the export obligation within 5 years from the date of first import.3. shri p.m. saleem, id. sdr appearing for the revenue pleaded that the notification no. 160/92-cus., dated 20-4-1992 was amended by notification no. 108/95-cus., dated 5-6-1995 by amending condition no.(1) making the said notification applicable to the valid licence issued on or before 30th april, 1995 and notification no. 110/95-cus., dated 5-6-1995 is applicable to the licence which are issued on or after 1st may, 1995 under epcg scheme as per condition (1) of the said notification. notification no. 160/92-cus, dated 20-4-1992 is not applicable to the licence issued after 30 april, 1995. the licence of the appellants was issued on 3-5-1995. therefore, notification no.110/95-cus. only is applicable in their case. they have executed the bond for completion of export obligation which they have not completed, therefore, the demand notice has been rightly issued to them and interest has been rightly charged under notification no. 110/95-cus., which was the notification applicable in their case. simply mentioning the notification no. 160/92-cus. in the bill of entry at the time of clearance of the goods does not mean that the mistake cannot be corrected by demanding duty under the correct notification. on date of import, since the notification no. 110/95-cus., was applicable, therefore, mentioning of wrong notification in the bill of entry does not entitle, the appellants to take the benefit of notification which was not applicable to them. since the appellants have not fulfilled their export obligation, the duty has been correctly demanded along with the interest.4. we have carefully considered the submissions made by both the sides.we find that the only issue to be decided in this case is whether the notification no. 160/92-cus., dated 20-4-1992, as amended, was applicable or whether the notification no. 110/95-cus. was applicable in case of import of goods under epcg scheme by the appellants on the basis of licence issued to them on 3-5-1995.5. we find that the notification no. 160/92-cus. was amended by notification no. 108/95-cus., dated 5-6-1995 amending the first condition of notification no. 160/92-cus. to read it as under :- "(i) the goods imported are covered by the valid licence issued on or before 30th april, 1995 under the export promotion capital goods (epcg) scheme in terms of export and import policy (hereinafter referred to as the said policy) and the said licence is produced for debit at the time of clearance;" whereas the condition no. (1) of the notification no. 110/95-cus. which is as under - "(1) the goods imported are covered by the valid licence issued on or after 1st may, 1995 under the export promotion capital goods (epcg) scheme in terms of export and import policy (hereinafter referred to as the said policy) permitting import on payment of duty of customs at the rate of 15% and the said licence is produced for debit by the proper officer of the customs at the time of clearance;" since the license of the appellants was issued on 3-5-1995, therefore, the only notification applicable to them is the notification no.110/95-cus. and not the notification no. 160/92-cus. the circular of dgft on which the appellants are relying upon is only for the time schedule for fulfilment of export obligation under 10% epcg scheme and zero duty epcg scheme. it has nothing to do with the application of customs notification no. 160/92-cus. or notification no. 110/95-cus.since notification no. 110/95-cus. is applicable in the appellant's case and they have not exported the goods as required in terms of conditions of the notification, the duty has been correctly demanded along with the interest by applying correct notification in terms of the bond executed by them with the asstt. commissioner of customs. we, therefore, do not see any merit in the appeal and the same is rejected.

Judgment:
2. Shri Laxminarayana, learned Advocate appearing for the appellants stated that the appellants had imported one Multi Head Embroidery Machine under EPCG Scheme under licence No. 2134212, dated 3-5-1995 and the machine was cleared under Customs Notification No. 160/92-Cus., dated 20-4-1992 on execution of a bond for fulfilment of export obligation to an extent of US $ 5,59/429/-. The appellants had executed a Bank Guarantee for a sum of Rs. 10,69,404/- (50% of the duty saved amount). Since the appellants did not submit any export documents for more than 4 years, the Bank Guarantee was enforced and for the balance amount of duty and interest, a demand notice was issued to the appellants on 30-11-1999. The Asstt. Commissioner, in his Order-in-Original, had confirmed the duty demand under Notification No.110/95-Cus., dated 5-6-1995 and charged interest at the rate of 24% per annum. On an appeal, Id. Commissioner (Appeals) upheld the order of the Asstt. Commissioner.

2. Ld. Advocate pleaded that the appellate authorities have wrongly held that the Customs Notification No. 160/92-Cus., dated 20-4-1992 was wrongly mentioned and hence, it is not applicable. The Policy Circular No. 13 (RE-98)/98-99, dated 11-6-1998, had clearly clarified that the Handbook of Procedures (1st April, 1997 to 31st March, 2000), which laid down the time schedule is applicable to EPCG License issued on or after 5th June, 1995. In the appellant's case, the license has been issued on 3-5-1995. Violation of condition (5) of the Notification No.110/95-Cus., dated 5-6-1995 was wrongly held to be applicable in the case of the appellants. This Notification No. 110/95-Cus. is applicable for issue of EPCG licence issued on or after 5-6-1995 as per the DGFT's Circular stated above. The department is estopped from taking a stand that the Notification No. 160/92-Cus., dated 20-4-1992 has been wrongly mentioned in the Bill of Entry for the first time after a lapse of four years as the Bill of Entry has been assessed to duty on 6-11-1995. The Indemnity Bond executed by the appellants permitted to clear the goods under Notification No. 160/92-Cus., dated 20-4-1992. The demand of duty would have arisen only after the licensing authorities have initiated the proceedings. There is no condition of progressive export obligation mentioned in Notification No. 160/92-Cus. The only condition was that they should complete the export obligation within 5 years from the date of first import.

3. Shri P.M. Saleem, Id. SDR appearing for the Revenue pleaded that the Notification No. 160/92-Cus., dated 20-4-1992 was amended by Notification No. 108/95-Cus., dated 5-6-1995 by amending condition No.(1) making the said Notification applicable to the valid licence issued on or before 30th April, 1995 and Notification No. 110/95-Cus., dated 5-6-1995 is applicable to the licence which are issued on or after 1st May, 1995 under EPCG Scheme as per condition (1) of the said Notification. Notification No. 160/92-Cus, dated 20-4-1992 is not applicable to the licence issued after 30 April, 1995. The licence of the appellants was issued on 3-5-1995. Therefore, Notification No.110/95-Cus. only is applicable in their case. They have executed the bond for completion of export obligation which they have not completed, therefore, the demand notice has been rightly issued to them and interest has been rightly charged under Notification No. 110/95-Cus., which was the Notification applicable in their case. Simply mentioning the Notification No. 160/92-Cus. in the Bill of Entry at the time of clearance of the goods does not mean that the mistake cannot be corrected by demanding duty under the correct Notification. On date of import, since the Notification No. 110/95-Cus., was applicable, therefore, mentioning of wrong Notification in the Bill of Entry does not entitle, the appellants to take the benefit of Notification which was not applicable to them. Since the appellants have not fulfilled their export obligation, the duty has been correctly demanded along with the interest.

4. We have carefully considered the submissions made by both the sides.

We find that the only issue to be decided in this case is whether the Notification No. 160/92-Cus., dated 20-4-1992, as amended, was applicable or whether the Notification No. 110/95-Cus. was applicable in case of import of goods under EPCG Scheme by the appellants on the basis of licence issued to them on 3-5-1995.

5. We find that the Notification No. 160/92-Cus. was amended by Notification No. 108/95-Cus., dated 5-6-1995 amending the first condition of Notification No. 160/92-Cus. to read it as under :- "(i) The goods imported are covered by the valid licence issued on or before 30th April, 1995 under the Export Promotion Capital Goods (EPCG) Scheme in terms of Export and Import Policy (hereinafter referred to as the said policy) and the said licence is produced for debit at the time of clearance;" whereas the condition No. (1) of the Notification No. 110/95-Cus. which is as under - "(1) The goods imported are covered by the valid licence issued on or after 1st May, 1995 under the Export Promotion Capital Goods (EPCG) Scheme in terms of Export and Import Policy (hereinafter referred to as the said policy) permitting import on payment of duty of customs at the rate of 15% and the said licence is produced for debit by the proper officer of the customs at the time of clearance;" Since the license of the appellants was issued on 3-5-1995, therefore, the only Notification applicable to them is the Notification No.110/95-Cus. and not the Notification No. 160/92-Cus. The Circular of DGFT on which the appellants are relying upon is only for the time schedule for fulfilment of Export Obligation under 10% EPCG Scheme and zero duty EPCG Scheme. It has nothing to do with the application of Customs Notification No. 160/92-Cus. or Notification No. 110/95-Cus.

Since Notification No. 110/95-Cus. is applicable in the appellant's case and they have not exported the goods as required in terms of conditions of the Notification, the duty has been correctly demanded along with the interest by applying correct Notification in terms of the bond executed by them with the Asstt. Commissioner of Customs. We, therefore, do not see any merit in the appeal and the same is rejected.