Customs Authorities Can't Deny Benefit Of Customs Duty Exemption Under Notifications Governing Advance Licensing Scheme: CESTAT

The Bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) was addressing the issue of whether the goods imported by the assessee under AAs are permitted for duty free import under Advance Authorization Scheme.

In this case, the assessee/appellant was engaged in the manufacture and export of Alu Foils used for the packaging pharmaceutical products.

The assessee obtained 8 Advance Authorisations ("AAs") from the DGFT, to import duty free certain inputs / raw materials, on the condition that the assessee fulfilled the export obligation of exporting.

Using the said AAs, the assessee imported the impugned goods vide 45 Bills of Entry under the Notification No. 18/2015.The assessee imported the goods by classifying them under CTH 7607 19 91 of Customs Tariff.

However, the department alleged that the assessee had wrongly classified the impugned goods under CTH7607 19 91 in order to match with the CTH provided in the Advance Authorizations.

The assessee submitted that the customs tariff classification of the imported material is not at all relevant for the purpose of allowing exemption from customs duty where such imported materials were covered for import in the advance authorizations issued to the assessee.

The revenue submitted that the imported goods are not classifiable under CTH 7607119 as they were “not worked upon” and the said goods had merely under gone annealing and shifting. Consequently, the impugned order has held that impugned goods were classifiable under CTH 76071190.

The Tribunal stated 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 assesee from any further export obligation.

“The customs authorities, if had been of the opinion that the assessee had violated any of the terms and conditions of the licences, the matter should have been referred to the licensing authority for appropriate action rather than demanding duty in the inputs/raw materials,” stated the bench.

In view of the above, the Tribunal allowed the appeal.

Case Title: Svam Toyal Packaging Industries Pvt. Ltd. v. Principal Commissioner of Customs

Case Number: Customs Appeal No.50780 Of 2021

Counsel for Appellant/ Assessee: Priyanka Goel, S. C. Jain and Abhishek

Counsel for Respondent/ Department: S. K. Rahman

Click Here To Read/Download The Order