The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the Advance Licensing Scheme.
The bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the licensing authority viz. DGFT has accepted the fulfilment of export obligation and issued 7 Export Obligation Discharge Certificates to the appellant. The 8th was pending at the time of hearing. These EODCs discharge the appellants from any further export obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the Advance Licensing Scheme.
The appellant/assessee was engaged in the manufacture and export of Alu Foils used for the packaging of pharmaceutical products. The appellant obtained 8 Advance Authorisations (AAs) from the DGFT, to import duty free certain inputs / raw materials including Aluminium Foil 50 MIC +- 10%, on the condition that the appellant fulfilled the export obligation of exporting “Alu/ Alu Foil (PVC 60 MIC/ OPA 25 MIC/ALU 50 MIC) +-10%” (export product).
Using the AAs, the appellant imported the goods vide 45 Bills of Entry under the Notification No. 18/2015.The appellant imported the goods by classifying them under CTH 7607 19 91 of Customs Tariff.
However, the department alleged that the appellant had wrongly classified the impugned goods under CTH7607 19 91 in order to match with the CTH provided in the Advance Authorizations.
The department alleged that the imported goods were classifiable under CTH 7607 11 90 and not under CTH 7607 19 91 as the imported goods were classifiable under CTH 7607 11 90 they were not eligible for the benefit under the Advance Authorisations.
Consequently, the benefit of Notification No. 18/2015-Cus had been correctly availed by the appellant. Accordingly, the differential duty was demanded from the appellant. The order confirmed the differential customs duty of Rs. 21,43,27,904 along with interest and penalty of Rs. 50,00,000 was imposed u/s 112(a)(ii) of the Customs Act, 1962.
The appellant contended that all the Advance Authorizations issued to the appellant, allowed duty free import of Aluminium Foil – 50 MIC +- 10%. There is no dispute regarding the fact that the goods imported by the appellant were Aluminium Foil 50 MIC+ 10% only. The only dispute relating to the Customs classification of the goods.
The department contended that the imported goods are not classifiable under CTH 7607119 as they were ‘not worked upon’ and the said goods had merely undergone annealing and shifting. Consequently, the order held that goods were classifiable under CTH 76071190.
The tribunal held that the customs authorities, if they had been of the opinion that the appellant had violated any of the terms and conditions of the licences, should have been referred to the licensing authority for appropriate action rather than demanding duty in the inputs/raw materials.
Case Details
Case Title: Svam Toyal Packaging Industries Pvt. Ltd. Versus Principal Commissioner of Customs
Case No.: Customs Appeal No.50780 Of 2021
Date: 21.02.2025
Counsel For Appellant: Priyanka Goel
Counsel For Respondent: S. K. Rahman
