2005 (98) ECC 353 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri P.G. Chacko, Member (J) and Shri Jeet Ram Kait, Member (T)

Commissioner of Customs, Chennai

Versus

Vishal Exports Overseas Ltd.

Appeal No. C/30/2004/MAS

[Arising out of Order-in-Appeal No. C.CUS.463/2000 dated 29.6.2000 passed by the Commissioner of Customs (Appeals), Chennai]

Final Order No. 1017/04, dt. 25.11.2004, Certified on 3.12.2004

Export

Shrimps -- Under 159 Shipping Bills -- Under DEPB Scheme -- The department allowed DEPB credit to the exporter in respect of input "Vitamin Mix" in terms of Notification No. 104/95-Cus. dated 30.5.95 (as amended) to the extent of US $ 8.2 per kg. -- The original authority, by Order-in-Original dated 31.12.98, affirmed the unit value credit of US $ 8.2 per kg. already fixed for Vitamin Mix, after rejecting VISHAL'S claim for fixing it at US $ 36 per kg. -- The authority apparently chose not to examine the assessee's claim for credit at the rate of US $ 12.5 to 14.75 per kg. Claim of the assessee for credit in the range of US $ 12.5-14.75 per kg. should be examined on its merits by the original authority, which did not examine this claim in its order dated 18.10.2002. Therefore, the orders of both the lower authorities are set aside and the case remanded to the Original authority.

Appeal allowed by way of remand

PRESENT :

Shri C. Mani, JDR for the appellant.

Shri M.G. Grover, Adv. for the respondent.

Cases Cited :

1. Adani Exports Ltd. v. UOI, 2003 (151) ELT 520 (Mad)....................................... [Para 4]

2. Karnataka Chemical Industries & Ors., Civil Appeal No. 4123/1983

3. Nat Steel Equipment Private Ltd. v. CCE, 1988 (15) ECC 457 (SC).................... [Para 4]

Per : P.G. Chacko

The respondents had exported Shrimps under 159 Shipping Bills under the Duty Exemption Pass Book (DEPB) Scheme during the period August 1996 to March, 1997. In assessing the Shipping Bills, the department allowed DEPB credit to the exporter in respect of input "Vitamin Mix" in terms of Notification No. 104/95-Cus. dated 30.5.95 (as amended) to the extent of US $ 8.2 per kg. only against their claim of credit in the range of US $ 12.5 to 14.75 per kg. The respondents M/s. Vishal Exports Overseas Ltd. (VISHAL, for short) disputed the unit price of US $ 8.2 per kg. fixed as DEPB credit by the department and they requested for fixing the credit at US $ 36 per kg. as allowed to M/s. Adani Exports Ltd., M/s. Inter Continental India and others. The department took the view that VISHAL'S case was not analogous to that of M/s. Adani Exports Ltd. (ADANI, for short) and others. In keeping with this view, the original authority, by Order-in-Original dated 31.12.98, affirmed the unit value credit of US $ 8.2 per kg. already fixed for Vitamin Mix, after rejecting VISHAL'S claim for fixing it at US $ 36 per kg. Aggrieved by the decision of the Assistant Commissioner of Customs, VISHAL preferred an appeal to the Commissioner (Appeals) and also filed a Writ Petition in the High Court of Madras. The Hon'ble High Court, by its judgment dated 24.3.99, allowed DEPB credit of US $ 36 per kg. (as allowed by the department to others) provisionally subject to certain conditions. The operative part of the judgment reads as under:

5. There is no dispute that the other exporters are being given the credit facility at the rate of US $ 36 per kg. pursuant to the orders of the appellate authority mentioned in the prayer in the writ petition itself. Hence, I am of the view that the petitioner cannot be deprived of such benefit during the pendency of the appeal. However, to safeguard the interests of the respondents, the petitioner may be directed to furnish the bank guarantee. Since the appeal is pending, the petitioner is directed to furnish the bank guarantee for the entire difference of the rate of credit facility to the satisfaction of the first respondent herein and avail the credit facility and utilisation pending disposal of the appeal. It is made clear that this is subject to the result of the appeal preferred by the petitioner before the appellate authority."

2. In terms of the High Court's judgment, the department recommended credit of US $ 36 per kg. to the Joint Director-General of Foreign Trade (JDGFT) for granting it in VISHAL'S Pass Book. Such recommendation was made by reckoning the quantity of input (Vitamin Mix) at 227 per kg. for one M.T. of the export product (Shrimps). Later on, the Commissioner (Appeals) disposed of VISHAL's appeal as per order dated 29.6.2000 remanding the case to the original authority for de novo adjudication, after holding thus "The case of M/s. Adani Exports Ltd., where right from the beginning, the exporter had declared the input price as US $ 36 per kg. therefore stands distinguished from the case of the appellant who had claimed credit for Vitamin Mix only at US $ 12 to 15 per kg." This remission of the case to the original authority was on the following basis:

"Firstly, that the lower authority had passed the orders violating the principles of natural justice as they were neither given a Show-cause notice nor allowed to be personally heard before the final decision was taken. On scrutiny of the records, it is seen that it is a fact that while denying the claim for the higher credit of US $ 36 per kg., the lower authority has, in fact, not issued any Show-cause notice giving the appellants an opportunity to substantiate their claim nor granted a personal hearing, as required by the principles of natural justice.

Secondly, the appellant, in the course of his appeal, has also submitted that a letter had been given by them dated 27.5.97 giving inter-alia a list of international prices of Vitamin mixes (including at US $ 40 per kg) but the lower authority had not referred to this letter while deciding the case and denying the higher credit. I have gone through the original case records and find that a letter dated 26.5.97 has, in fact, been received on record. Curiously, however, this letter, which is handwritten in ink, appears to be in two different handwritings and the reference to the average price of US $ 40 per kg. for vitamins seems to be an addition to the original letter. The photocopy of different sources including Chemical Weekly for international prices said to have been enclosed to the letter, is also not on record. In the fitness of things, this reference deserves to be discussed and ought to have been discussed and suitably disposed of by the lower authority before finalising the credit eligibility."

Pursuant to the above remand order, the Assistant Commissioner re-examined the case and passed order dated 18.10.2002 fixing the rate of DEPB credit for VISHAL at US $ 8.2 per kg. of Vitamin Mix and directed them to discharge consequential duty liability. VISHAL again approached the Commissioner (Appeals) in an appeal against the Assistant Commissioner's decision and this appeal was allowed by allowing credit at the rate of US $ 36 per kg. to VISHAL as in ADANI'S case. Hence, the present appeal of the Revenue.

3. Heard both sides. Ld. DR reiterated the grounds of the appeal and emphatically submitted that the Tribunal's decision in ADANI'S case was based on definite evidence adduced by that party and the same was not applicable to the instant case wherein VISHAL could not substantiate their claim for DEPB credit at the rate of US $ 36 per kg. In this connection, Ld. DR relied on the Hon'ble Supreme Court's judgment in Civil Appeal No. 4123/1983 of M/s Karnataka Chemical Industries & Ors. wherein the case of a particular assessee which involved challenge to levy of additional duty of customs on "brass scrap" was delinked from the rest of the cases which involved challenge to levy of such duty on "copper scrap." Ld. DR argued that VISHAL'S case was different from ADANI'S case just as a case involving "brass scrap" was different from one involving "copper scrap." Ld. DR also laid stress on the ground raised by the appellant with reference to the amendment made to Notification No. 104/95-Cus by Notification No. 24/97-Cus dated 6.3.97. It was argued that, as the party had not adduced any evidence in terms of sub-clause (b) (I to IV) of clause (iii) of the second proviso to condition No. 2 of Notification No. 104/95-Cus as amended by Notification No. 24/97-Cus, it was incumbent on the department to determine unit price for DEPB credit in terms of sub-clause (b) (V) of the said clause (iii), whereunder the Assistant Commissioner of Customs could arrive at such price by following such reasonable method as he might deem fit. It was this residual provision which was appropriately invoked by the original authority for passing Order-in-Original dated 18.10.2002, DR argued.

4. Ld. Senior Advocate for the respondents sought to defend the impugned order by submitting that their case was substantially similar to ADANI'S case. Copies of the orders passed by the original authority and the first appellate authority in ADANI'S case were produced and referred to by Ld. Counsel, who pointed out that the Orders-in-Original in the two cases were, by and large, pari materia. Comparing the findings of facts recorded in Order-in-Original dated 5.2.98 passed by the Assistant Commissioner of Customs in ADANI'S case and Order-in-Original dated 31.12.98 passed by the original authority in VISHAL'S case, Ld. Sr. Counsel argued that the decision taken by the Tribunal in ADANI'S case [1999 (111) ELT 143 (Tribunal) as affirmed by the Supreme Court in 2004 (167) ELT 131 (SC) was fit to be followed in VISHAL'S case also. It was argued by the Sr. Counsel that, though initially the respondents had claimed credit at the rate of US $ 12.5 to 14.75 per kg., they revised their claim at the adjudication stage itself and such revised claim was liable to be considered. It was also contended that the input of the respondents was similar to ADANI'S. The words "similar" used here was sought to be explained with the aid of the Supreme Court's judgment in Nat Steel Equipment Private Ltd. v. CCE, 1988 (15) ECC 457 (SC) : 1988 (34) ELT 8 (SC). It was argued that the expression "similar" did not mean identical but only meant "corresponding to or resembling to in many respects; somewhat like; having a general likeness." In view of this meaning of the expression "similar", the input of the respondents could easily be said to be similar to that of ADANI and, therefore, the judgment in ADANI'S case was to be followed in the instant case. In the course of his arguments, Ld. Sr. Counsel also referred to the Madras High Court's judgment in Adani Exports Ltd. v. UOI, 2003 (151) ELT 520 (Mad) wherein the scope of DEPB Scheme was explained. He argued that the entries in SION (standard Input-Output Norms) were not to be pressed into service for deciding whether the input imported by one party was "similar" to the input imported by another party.

5. In his rejoinder, Ld. DR accepted the High Court's interpretation of the DEPB Scheme. However, he submitted that comparability of goods also depended on quantity. In ADANI'S case, only 70 kilograms of Vitamin Mix were imported, whereas in the respondents' case, a larger quantity of Vitamin Mix was imported and, therefore, the goods were not to be compared for DEPB credit. It was also pointed out by Ld. DR that the particulars of the imported goods were not available in VISHAL'S case, unlike in ADANI'S case.

6. We have carefully considered the submissions. The lower appellate authority has followed the Tribunal's decision in ADANI'S case, upheld by the Supreme Court, to allow provisional credit of US $ 36 per kg. to the respondents. It set aside the order of the original authority finalising DEPB credit at US $ 8.2 per kg. and demanding differential duty. Ld. Commissioner (Appeals) has preferred to treat the credit as `provisional' in view of the pendency, in the Supreme Court, of the Revenue's appeal against the Tribunal's decision in ADANI'S case. This appeal of the Revenue has since been dismissed by the Apex Court, affirming the Tribunal's decision. Apparently, the view taken by the Commissioner (Appeals) in the impugned order has purportedly, attained finality with the Supreme Court's order dismissing the Revenue's appeal.

7. The question before us whether the Tribunal's decision in ADANI'S case was liable to be followed in VISHAL'S. Ld. Commissioner (Appeals) has held that the said decision of the Tribunal is applicable to VISHAL'S case on account of the fact that the export item, the entry in SION, the scheme of policy and the period of export are the same in both the cases. Accordingly, Ld. Commissioner (Appeals) has allowed credit at the rate of US $ 36 per kg. to the respondents as allowed to ADANI. We are unable to persuade ourselves to accept this decision as, in our view, ADANI'S case was no longer a precedent for VISHAL'S after the remand order dated 29.6.2000 of the Commissioner (Appeals) became final as against Vishal whether one case is factually distinguishable from another is, by itself, a question of fact. In the said remand order, Ld. Commissioner (Appeals) had categorically held that ADANI'S case stood distinguished from VISHAL'S on certain facts. The limited purpose of the remand to the original authority was to re-examine VISHAL'S claim of credit at the rate of US $ 40 per kg. The remand order was not challenged by VISHAL. It should, therefore, be held that the assessee accepted the finding of the Commissioner (Appeals) that ADANI'S case was distinguishable on facts from theirs. This finding cannot be challenged by them in the pretext of defending the impugned order now. On the other hand, the Revenue has a valid challenge against the view taken by the Commissioner (Appeals) in the impugned order (that ADANI'S and VISHAL'S cases factually rest on the same footing), inasmuch as it was not open to her to take such view contrary to what had been conclusively held by her predecessor-in-office in the remand order. The predecessor's finding on the above issue had become final and conclusive for want of challenge. In the circumstances, on the principle of res judicata, we reject the contra view taken in the impugned order.

8. The view taken in the remand order dated 29.6.2000 of Ld. Commissioner (Appeals) that ADANI'S and VISHAL'S cases are distinguishable on facts still prevails. Therefore, the pendency, in Supreme Court of the Department's appeal against the Tribunal's decision in ADANI'S case has no bearing on the instant case the lower appellate authority's decision to treat its own conclusion as "provisional's in view of such pendency cannot be sustained.

9. Ld. Commissioner (Appeals) has rejected the department's argument that, as the respondents had initially claimed credit only at the rate of US $ 12.5 to 14.75 per kg. their subsequent claim for credit at the rate of US $ 36 per kg. on the basis of ADANI'S case was liable to be rejected. She has held that, under Notification No. 104/95-Cus., it was not mandatory for the respondents to declare unit price. This view has been contested by the Revenue in the present appeal, saying that, with the amendment of the above Notification by Notification No. 24/97-Cus., the party was liable to declare the unit price and adduce evidence in support thereof. We find that, under the DEBP Scheme as explained by the Hon'ble High Court, the credit would accrue to the exporter as soon as he exported. In the instant case, the exports had taken place during the period August, 1996 to March 1997. The amending Notification No. 24/97-Cus, which had no retrospective effect, is not relevant to this period. The appellant has no case that, under the unamended provisions of Notification 104/95-Cus., it was mandatory for the party to declare the unit price. In the circumstances, we have to sustain the finding of the lower appellate authority that it was not mandatory for the party to declare the unit price under Notification No. 104/95-Cus. However, this does not mean that the exporter can claim DEBP credit intially at a certain rate and revise it at his sweet will without any basis at a later stage. In the instant case, the respondents had claimed credit initially at the rate of US $ 12.5 to 14.75 per kg. Later on, they staked a claim for credit at the rate of US $ 40 per kg. on the basis of international price said to have been reported in Journals. This claim was subsequently superseded to claim credit at the rate of US $ 36 per kg. on the strength of the Tribunal's decision in ADANI'S case. The original authority, pursuant to the remand order, passed Order-in-Original dated 18.10.2002 wherein credit was finalised at the rate of US $ 8.2 per kg. However, that authority apparently chose not to examine the assessee's claim for credit at the rate of US $ 12.5 to 14.75 per kg. As regards the assesse's claim for credit at the rate of US $ 40 per kg., the original authority did not accept it as it felt that the claim was not capable of being verified. The Commissioner (Appeals) also did not allow this claim, in the impugned order. The assessee has not chosen to challenge this rejection of the claim for credit at the rate of US $ 40 per kg. Hence, the claim for DEPB credit at the rate of US $ 40 per kg. does not survive. We have already rejected the lower appellate authority's decision to treat the assessee's case on par with ADANI'S and grant credit at the rate of US $ 36 per kg. to VISHAL. In the circumstances, we are of the view that the claim of the assessee for credit in the range of US $ 12.5 -- 14.75 per kg. should be examined on its merits by the original athority, which did not examine this claim in its order dated 18.10.2002. Therefore, we have to set aside the orders of both the lower authorities and remand the case to the original authority.

10. In the result, this appeal is allowed by way of remand directing the original authority to consider the assessee's claim for DEPB credit at the rate of US $ 12.5 -- 14.75 per kg. on its merits after giving them a reasonable opportunity of being heard.

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