CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE
1st Floor, WTC Building, FKCCI Complex, K. G. Road, BANGLORE-560009
Regional Bench COURT-1
Legal Robe 1161 of 2012
[Arising out of the Order-in-Appeal No. 05/2012-CUSTOMS dated 07.02.2012 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Cochin.]
M/s. Baby Marine International,
VERSUS
Commissioner of Central Excise & Customs
Appearance:
Mr. N. Anand, Advocate for the Appellant
Mr. K.A. Jathin, Jt. Commissioner(AR) for the Respondent
CORAM: HON’BLE DR. D.M. MISRA, MEMBER(JUDICIAL) HON’ BLE MRS R BHAGYA DEVI,
MEMBER (TECHNICAL)
Final Order No._20224 of 2025
Date Of Hearing: 06.09.2024 Date Of Decision: 28.02.2025
Per: R BHAGYA DEVI
The issue in the present appeal is regarding demand of Customs duty for the alleged contravention of Condition (iii) of Notification No. 32/1997-Cus dated 01.04.1997.
2.The brief facts of the case are that the Appellant had imported ‘Shell on Shrimps’ and filed Bill of Entry No. 194755 dated 21.02.2007, claiming the Benefits of Notification No.32/1997-Cus dated 01.04.2007, which provides for exemption on imports for execution of export order. The Appellant sought permission for jobbing operation by following the procedure as per condition(v) of Notification No. 32/ 1997-Cus read with Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 and as part of the procedure, sample were drawn by Export Inspection Agency (EIA) for mandatory testing. Thereafter as per the certificate dated 27.06.2007, it was found that the imported goods were contaminated with ‘Nitrofuran Metabolite AHD’ and the said goods could not be exported or used for Human/live stock consumption. On receipt of the above certificate, Appellant approached the Respondent and updated the facts regarding the test report and informed that due to the said reason, Appellant was not in a position to export the goods. Appellant requested for permission to destroy the goods under the supervision of Central Excise Officers and also requested for returning the bond executed at the time of import. Though the Assistant Commissioner granted permission for destruction of contaminated goods vide letter dated 20.08.2007, alleging that the Appellant failed to comply with the condition of the Notification, demand notice was issued for recovering an amount of Rs. 8,20,600/. There was also a proposal for confiscation of the goods and to impose penalty under Section 112 of the Customs Act, 1962. Thereafter, adjudicating authority vide Order-in-Original No.22/2008 dated 30.06.2008 confirmed the demand with interest. However, the Adjudicating authority refrained from confiscating of goods and also not imposed penalty as proposed in the show cause notice. Aggrieved by the said order, the Appellant filed an appeal before Commissioner (Appeals), who rejected the appeal. Aggrieved by said order, present appeal is filed before the Tribunal.
3.When the appeal came up for hearing, learned counsel submits that there is no wilful omission on the part of Appellant to comply with the conditions of notification. Learned Counsel for the Appellant also drew our attention to the letter dated 22.05.2007 issued by Export Inspection Agency, Cochin confirming that on test it is found to be contaminated with ‘Nitrofuran Metabolite AHD-8.O ug/kg’. The Learned counsel also drew our attention to the letter dated 30.11.2017, where an attempt was made by the Appellant to conduct retest of the imported goods and to export the same seeking extension of time for complying with the export obligation. Learned counsel also drew our attention to the impugned order, where the Adjudicating authority, while dropping the penal proceedings held that imposing penalty is unwarranted because there is no failure on the part of the Appellant to export goods as per the conditions. Learned counsel also challenged the power of the Joint Commissioner to issue Show Cause Notice under Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. Learned counsel for the Appellant relied on cetana of decisions, inter alia M/s Alsa Marine & Harvests Ltd Vs. CC Cochin, 2007(216) ELT 405(Tri- Che.), M/s APP Enterprises Vs. CC Chennai, 2009(233) ELT
515 (Tri-Che.) and M/s BPL Display Devices Ltd., Vs. CCE, 2004(174) ELT 5 (SC).
4.Learned Authorised Representative (AR) for the Revenue reiterated the findings and further submits that; as per the notification, the importer had executed a bond to the effect that the imported goods shall be used for the intended purpose; and it shall not be sold/loaned/transferred or otherwise used/disposed; the importer shall bind himself to pay duty due on the goods imported if the conditions specified in the notification that have not been complied with. He has submitted that since the Appellant has not fulfilled the said condition, they are liable to pay duty.
5.Heard both sides and perused the records.
6.We have gone through decisions relied by the Counsel for the appellant. This Tribunal in the matter of M/s Alsa Marine & Harvests Ltd. V. CC Cochin (supra) held that:-
“3. After giving careful consideration to the submissions, we have found substance in some of the submissions of ld. Counsel. The original authority found that the imported goods (whole squid) were perishable in nature and were not fit for export after elapse of more than 3 years since the import. The appellate authority found that the party could not re-export the balance quantity of squids (215.07 MTs imported less 56.42 MTs re-exported) on account of the stringent conditions imposed on Indian seafood exporters by the European Union countries. From these findings of the lower authorities, it would appear that the plea of the party that they were unable to discharge export obligation due to reasons beyond their control has been accepted. It is on the ground of violation of condition
(iii) of Notification No. 32/97-Cus. ibid by the appellants that the lower authorities have demanded duty from them. This condition reads thus:
“that the goods are utilized only for the discharge of export obligation and no part thereof shall be sold, loaned, transferred or otherwise used or disposed off.”
It is not in dispute that any part of the squids imported by the appellants was sold, loaned, transferred or otherwise used or disposed off by them. As a matter of a fact, the party offered to surrender the goods to the Customs for destruction. As held by the lower authorities, the appellants were incapable of discharge of export obligation due to reasons beyond their control. The European Union countries had imposed stringent job work conditions on Indian seafood exporters. In order to comply with such conditions and export the goods after jobbing, the appellants requested the Customs authorities for extension of the period of export, but this request was not favourably considered. Meanwhile, the squids perished and became unfit for export. It was in these circumstances that the appellants could not discharge their export obligation. Therefore, in our considered view, the Customs authorities were not justified in enforcing condition No. (iii) against them. The authorities ought to have borne in mind the legal maxim lex non cogit ad impossibilia, which means the law does not compel a person to do the impossible. The Hon’ble Supreme Court has invoked this principle in numerous cases, for instance, vide Vinod Krishna Kaul v. UOI [1996] 1 SCC 41, Manohar Joshi v. Nitin Bhaurao Patil [1996] 1 SCC 169, Mohammed Gazi v. State of M.P. [2000] 4 SCC 342 and Industrial Finance Corporation of India Ltd. v. Cannanore Spinning and Weaving Mills Ltd. [2002] 5 SCC 54.”
7.In the present case, the Appellant sought permission for destruction of the goods and had not proceeded for disposal of the goods to demand customs duty. The Hon’ble Supreme Court in the matter of M/s BPL Display Devices Ltd., held as follows:-
“We are of the view that no material distinction can be drawn between the loss on account of leakage and loss on account of damage. The words ‘for use’ used in similar exemption Notification have also been construed by this Court earlier in the State of Haryana v. Dalmai Dadri Cement Ltd., 1987 (Suppl) SCC 679 to mean ‘intended for use’. According to this decision object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage”.
8.Similarly, as evidenced from the facts of the case, after import, the goods were used for job work and thereby the appellant made best efforts to comply with the Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. Facts being so, there is no reason or justification to demand duty from the Appellant for the goods, since the goods were subjected to job work and appellant was ready to export. However, since the sample of imported goods were held to be contaminated with the presence of ‘Nitro furan Metabolite AHD’, export obligation could not be fulfilled.
9.In the facts and circumstances of the case and following the ratio of the decision in the matter of M/s Alsa Marine & Harvests Ltd Vs. CC Cochin (supra), the appeal is allowed with consequential relief, if any, in accordance with law.
(Order pronounced in open court on 28.02.2025)
(D.M. MISRA) MEMBER (JUDICIAL)
(R BHAGYA DEVI) MEMBER (TECHNICAL)
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