Customs, Excise & Service Tax 

Appellate Tribunal West Zonal

Bench At Ahmedabad

 

REGIONAL BENCH- COURT NO. 1

Customs Appeal No. 11867 of 2017-DB

 

(Arising out of OIA-VAD-EXCUS-002-APP-158-2017-18 Dated-27/06/2017 passed by Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax- VADODARA-I)

 

Jvs Engineers

VERSUS

C.C.E. & S.T.-Vadodara-ii

 

APPEARANCE:

Shri. Saurabh Dixit, Advocate for the Appellant

Shri. Anand Kumar, Superintendent (AR) for the Respondent

 

CORAM: HON’BLE MR. RAJU, MEMBER (TECHNICAL)

HON’BLE MR. SOMESH ARORA MEMBER (JUDICIAL)

 

Final Order No. A/ 11042 /2023

 

 

 

 

Raju

DATE OF HEARING: 24.04.2023 DATE OF DECISION:24.04.2023

 

 

This appeal has been filed by M/s. Jvs Engineers against demand of Customs duty on “used valves” imported by them in their EOU.

2. Learned Counsel for the appellant pointed out that they were importing “used valves” as raw materials/ components for the final products manufactured by them. In the annexure-1 of the Letter of Permission issued by Development Commissioner they have been permitted import of “Valves” as raw material/ components and consumables. He further pointed out that the procurement certificates were issued to them by the concerned authorities namely Superintendent of the Central Excise wherein specific permission is granted to import “used valves”. The said valves were also re warehoused in their EOU has been seen from the warehousing certificate produced by the learned  The learned Counsel pointed out that the

 

Order-in-Original as well as the Order-in-Appeal seek deny the benefit of exemption notification on the ground that Foreign Trade Policy in para 2.17 restricts import on second hand goods except second hand capital goods. He pointed out that as an EOU they are permitted to import all kinds of goods as can be seen from para 6.2(b) of the chapter 6 of the Foreign Trade Policy pertaining to EOU. He pointed out that revenue has treated the goods as restricted goods in terms of the policy and have failed to notice that hand book of procedure in para 6.3.7 prescribes that LoP/LoI issued to EOU/EHTP/STP/BTP units by concerned authority would be construed as an authorization for all purposes. He further relied on para 6.2 (b) which provided they are not prohibited items of import in the ITC (HS). He argued that the restriction prescribed in para 2.17, will therefore not be applicable to EOU‟s. He relied on the decision of Tribunal in the case of Xron Gases P. Ltd-2017 (356) ELT 121 (Tri.-Mumbai) and on the decision in the case of Geetanjali woollens Pvt. Ltd-2002 (149) ELT 1192 (Tri.-Mumbai)

3. Learned Counsel further raised the issue regarding jurisdiction of excise authorities to issue the show cause notice. On the ground that the import assessment was done by the Customs Authorities. It was argued that Excise Authorities were trying to modify the said assessment done by Customs Authorities. He also raised the issue of limitation pointing out that they had declared the import goods as “used valves”.
4. Learned AR relies on the impugned 

 

5. We have considered the rival submission. We find that the Foreign Tade Policy in para 2.17 prescribed as under:

“All second hand goods, except second hand capital goods, shall be restricted for imports and may be imported only in accordance with provisions of FTP, ITC (HS). HBP v1, Public Notice or an Authorisation issued in this regard.

 

Import of second hand capital goods, including refurbished /re- conditioned spares shall be allowed freely. However, second hand personal computers / laptops, photocopier machines, air conditioners, diesel generating sets will only be allowed against a licence.

Import of re-manufactured goods shall be allowed only against a licence”.

 

 

 

6. We findthat para 2(b) of the FTP reads as under :

 

“ (b) An EOU / EHTP/STP/BTP unit may import and/or procure from DTA or bonded warehouses in DTA / international exhibition held in India without payment of duty all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS). Any permission required for import under any other law shall be applicable. Units shall also be permitted to import goods including capital goods required for approved activity, free of cost or on loan / lease from clients. Import of capital goods will be on a self certification basis. Goods imported by a unit shall be with actual user condition and shall be utilized for export production”.

 

 

 

• From the combine reading of above two provision it is seen that while the import of restricted items is not permitted without express authorization from the authorities in case of all importers, the said restriction would not apply to EOU in terms of para 6.2(b) of the FTP. In terms of 6.2(b) an importer is permitted to import all items that are not prohibited for
• In this case we notice that that appellant has imported „used valves‟ which according to revenue are restricted items. In terms of para 6.2 (b)this restriction of import of restricted items is not applicable to EOU‟s. Further, it is seen that the letter of permission in the appellant‟s case clearly covers valves as raw materials/ components. Annexture-1 to the letter of LOP is reads as under:-

 

 

 

 

 

 

 

7. We also find that the similar view has been taken in the case of Xron Gases P. Ltd (supra) and in the case of Geetanjali woollens Pvt. Ltd (supra). In the case of Xron Gases P. Ltd in para 5 following has been observed:-

 

5. I find that adjudicating authority as well as Commissioner(Appeals) held the goods for absolute confiscation on the ground that appellant have not obtained the Special Import License for import of R-22 Gas. As per FTP, 2009-2014, the goods R-22 Gas is restricted items and the import of the same can be made only after obtaining import license. In the present case, appellant being 100% EOU is under the jurisdiction of Development Commissioner, who is also regional licensing authority, accordingly for all the purposes related to FTP, the Development Commissioner is the authority incharge of the appellant’s unit. The said licensing (Development Commissioner) Gandhidham, Gujarat issued an LOP dated 3-1-2011 which is scanned below :

 

 

 

 

 

 

From the LOP, it can be seen that except prohibited goods, all items of import and local purchases are permitted. It is undisputed that goods R- 22 Gas is not prohibited goods therefore the said goods is permitted to be imported as per LOP dated 3-1-2011. It also observed that on 3-5- 2011, request of the appellant for broad banding of LOP in respect of refrigeration gas R-22 gas was allowed by the Development Commissioner, which is scanned below :

 

 

 

 

 

Thereafter vide letter dated 29-5-2012, Development Commissioner has granted specific permission for import of R-22 gas which is scanned below :

 

 

 

 

 

 

 

 

 

 

From the LOP dated 3-1-2011, letter dated 3-5-2011 for broad banding of LOP in respect of R-22 Gas and letter dated 29-5-2012 by which specific permission was granted for import of R-22 Gas. It is clear that appellant had indeed valid license in possession for import of R-22 gas. As regard the contention of the lower authority that LOP is not sufficient for allowing import of restricted items, appellant should have obtained specific import license. In this regard, I refer to para 6.2.7 of Handbook of Procedure which reads as under :-

 

“6.2.7. LOP/LOI issued to EOU/EHTP/STP/BTP units by concerned authority would be construed as an authorization for all purposes”

 

From the above para of the policy, it is clear that once the LOP is obtained by EOU, no further license is required as LOP is authorization of all purposes. This issue also has come up in the case of Geentanjali Woollens Pvt. Ltd. (supra) wherein coordinate bench of this Tribunal observed as under :

 

”5. We have considered the submissions. We take the letter dated 20-12-2000 to be clarificatory in nature emphasising that the appellants were capable of importing raw materials which were required for their manufacture. At this stage we also notice, Paragraph 9.8 of the Handbook of Procedures which permits raw materials to be imported by an EOU provided they are not prohibited items in the ITC(HS) classifications. The note thereto permits such goods to be in second-hand condition also. There is no doubt that both rags and serviceable garments were raw materials. The paragraphs did not make any specification. Even if the importers had in their letter of indent to the Free Trade Zone authorities specified rags, the list was not required to be attested. Thus, in terms of the clear wordings of the Policy and also by the correspondence with the people who were entrusted with

 

enforcing the Policy, it appears that there was no significant distinction held by the Licensing Authority between the rags and unmutilated rags/uncut worn clothing. At this stage, we have also seen the certificate dated 15-11-2000 given by the Central Excise Authorities to the appellants on which reliance was placed by Shri Jain. This is a certificate meant for presentation to the Customs House and certifies that the importers would be an EOU and it does not in any way restrict or prohibit the importability of raw materials by an EOU”.

 

In view of the above observations of the Tribunal, it is settled that once the 100% EOU has been permitted to import certain goods, for import of such goods, restriction prohibition of goods provided under policy shall not apply. Similarly, in the present case, when Development Commissioner has specifically allowed the import of R-22 Gas, there is no need of special import license”.

 

Similar view are in the decision in the case of Geetanjali woollens Pvt. Ltd (supra). The ratio of above decision is squarely applicable to the instant case.

• In view of the above facts, we are of the view that “used valves” are permitted for import to the appellant in their EOU for use as raw materials/Components.

8. In view of the above, we do not find any merit in the impugned order, the same is set aside and appeal is allowed.

 

 

(Dictated and pronounced in the open court )

(RAJU) MEMBER (TECHNICAL)

(SOMESH ARORA) MEMBER (JUDICIAL)