Dhaval Agri Exports LLP Vs C.C.-Mundra (CESTAT Ahmedabad)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad considered three connected customs appeals arising from proceedings concerning M/s. Dhaval Agri Exports and Shri Jay Sureshbhai Chandarana. The first matter, Customs Appeal No.10985 of 2017, arose from the earlier departmental proceedings, while Customs Appeal Nos.12919 of 2018 and 10674 of 2022 were connected matters arising from the same Order-in-Original dated 10.08.2018. The dispute concerned duty-free import of raw sesame seeds under the Advance Authorization Scheme, the actual-user condition, alleged diversion into the domestic market, process loss under the Standard Input Output Norms (SION), exports made under the drawback scheme, and subsequent Export Obligation Discharge Certificates (EODCs) issued by DGFT.
The first appeal was by Dhaval Agri Exports against the Commissioner’s order dated 23.01.2017 concerning conversion of shipping bills; the departmental appeals challenged the order dropping the proceedings against Dhaval Agri Exports and its CEO. The Department alleged that 9527.592 MT of raw sesame seeds imported duty-free had not been used for the specified purpose and had been diverted to the local market. The show cause notice proposed confiscation of the goods valued at Rs. 1,27,57,35,460/-, Customs duty of Rs. 46,09,99,766/-, interest and penalties under Sections 112(a), 112(b) and 114A of the Customs Act, 1962. The adjudicating authority, however, found that the evidence did not establish diversion, accepted the respondent’s explanation regarding process loss, took note of the revised SION norms and the DGFT Policy Interpretation Committee ruling dated 12.01.2018, and dropped the proceedings. Before the Tribunal, the Department relied on contract notes, statements of the broker and CEO, the shortage noticed during the 05.09.2014 search, the then-applicable 1% SION norm, and the proposition that the later Public Notice revising the norm to 33% could not operate retrospectively. It also relied on the Supreme Court decision in Sheshank Sea Foods and the strict-interpretation principle in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company.
