Sanstar Bio Polymers Ltd Vs C.C (CESTAT Ahmedabad)
CESTAT Ahmedabad held that as assessment of shipping bills has attained finality, classification of goods cannot be questioned subsequently by the Customs.
Facts-
The appellant is engaged in manufacturing of Starch, Modified Starch, Liquid Glucose, Malto Dextrine Mono Hydrate and High Maltose Corn Syrup and for manufacturing the said product their main raw materials were “Maize, Maize Starch, Tapioca Starch, Potato Starch, Modified Starches, HCI, Caustic Soda Lye, Soda Ash, Filtrate, Bentonite, Enzymes, Hypo Chloride and Sulphur etc.
During the period February 2015 to July 2015, the appellant exported one of its product declaring as “Liquid Glucose Concentrate (Food Grade)” – (ITC HS Code 17023010) under the Duty Free Import Authorization (DFIA) claim wherein import item declared was “Maize (Corn) Starch” – (ITC HS Code 11081200).
The export benefit was claimed under SION Entry E22 for the imports of input “Starch” under the DFIA Scheme and after verification of the appellant’s claim/application; 7 DFIA Licences were granted by the DGFT, Regional Authority, Ahmedabad to the appellant. The said Licences were transferrable and have been transferred by the appellant to various parties and the same are valid and subsisting as DGFT has not cancelled the said Licences.
It is the case of the department in the show cause notice dated 30-12-2016 that appellant have wrongly declared its input as ‘Maize (Corn) Starch’ for ‘Liquid Glucose Concentrate’ exported by them as it was found during investigation that actual raw material used was ‘Maize’; that process of manufacturing does not at any stage use ‘Maize Starch’; at best it uses ‘Starch Slurry’ which is manufactured from ‘Maize’. Therefore, correct SION Entry is E76 under which appellant was entitled to import ‘Maize’ and not “Starch” as claimed by the appellant.
Conclusion-
In the case of Axiom Cordages Ltd it is held that the allegation with regard to benefit under the scheme wrongly availed by the appellant does not have an independent nexus to the Customs Act, 1962 as such scheme for export benefits are dealt with under the Foreign Trade Policy (2015-2020) and Foreign Trade (Development & Regulation) Act, 1992. Thus, the administration of such schemes squarely falls within the jurisdiction of the office of the DGFT and not the customs authorities. The division of exercise of authority between the DGFT and Customs authorities is well recognized judicially and should be respected to prevent abuse of due process of law.
It is further held that when the assessment of shipping bills filed by the appellant has attained finality as department has not filed appeal against the same under section 128 of the Act; classification of goods cannot be questioned subsequently by the customs by way of issuance of show cause notice.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeals are directed against Order-In-Original No. MUN-CUSTOM-000-COM-13-17-18 dated 31.01.2018 passed by the Commissioner of Customs, Mundra confirming the recovery of customs duty foregone on the inputs allowed to be imported under 7 DFIA licences issued in terms of Notification No. 98/2009-Cus dated 11-9-2009 and 19/2015-Cus dated 2104-2015 under section 28AAA of the Customs Act, 1962 (“Act” in short).
2. Briefly, the facts are that the appellant, M/s. Sanstar Bio-Polymers Limited, Ahmedabad (“SBPL” in short) is engaged in manufacturing of Starch, Modified Starch, Liquid Glucose, Malto Dextrine Mono Hydrate and High Maltose Corn Syrup and for manufacturing the said product their main raw materials were “Maize, Maize Starch, Tapioca Starch, Potato Starch, Modified Starches, HCI, Caustic Soda Lye, Soda Ash, Filtrate, Bentonite, Enzymes, Hypo Chloride and Sulphur etc. During the period February 2015 to July 2015, SBPL exported one of its product declaring as “Liquid Glucose Concentrate (Food Grade)” – (ITC HS Code 17023010) under the Duty Free Import Authorization (DFIA) claim wherein import item declared was “Maize (Corn) Starch” – (ITC HS Code 11081200). The export benefit was claimed under SION Entry E22 for the imports of input “Starch” under the DFIA Scheme and after verification of the appellant’s claim/application; 7 DFIA Licences were granted by the DGFT, Regional Authority, Ahmedabad to the appellant. The said Licences were transferrable and have been transferred by the appellant to various parties and the same are valid and subsisting as DGFT has not cancelled the said Licences. It is the case of the department in the show cause notice dated 30-12-2016 that appellant have wrongly declared its input as ‘Maize (Corn) Starch’ for ‘Liquid Glucose Concentrate’ exported by them as it was found during investigation that actual raw material used was ‘Maize’; that process of manufacturing does not at any stage use ‘Maize Starch’; at best it uses ‘Starch Slurry’ which is manufactured from ‘Maize’. Therefore, correct SION Entry is E76 under which appellant was entitled to import ‘Maize’ and not “Starch” as claimed by the appellant.
3. Shri Rahul Gajera, learned Counsel appearing for the appellant submitted that appellant has rightly claimed DFIA benefits under SION Entry E22. It is not in dispute that liquid glucose concentrate is manufactured out of starch slurry (“starch” in slurry form); that except moisture or water content there is no difference at all between starch slurry and starch powder and this difference is also only that of a physical parameter but not of any chemical characteristics or constitutional properties of the product; that maize may be the original material used at the beginning of the manufacturing process but the immediate input for manufacturing of liquid glucose concentrate was that one which was used directly for manufacturing export product; that for export and also for exemption for goods manufactured in India a concept of immediate parentage is well recognized and accordingly the immediate parent material was relevant to decide which input was used for manufacture of the exported goods and that since the immediate parent material was starch slurry i.e. “starch” and ‘not maize’; E22 was the correctly applicable SION. For the proposition that immediate input is to be considered relevant, he relied upon Circular No. 5/89 dated 10.01.1989 and the following case laws:
