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Case Law Details

Case Name : Monier Roofing Pvt Ltd Vs Commissioner of Customs (CESTAT Bangalore)
Appeal Number : Customs appeal No. 20091 of 2014
Date of Judgement/Order : 22/04/2024
Related Assessment Year :

Monier Roofing Pvt Ltd Vs Commissioner of Customs (CESTAT Bangalore)

Monier Roofing Pvt Ltd engaged in a legal battle with the Commissioner of Customs, CESTAT Bangalore, over the classification of Round Ridge Cement Tiles for duty imposition.

The crux of the dispute lies in the interpretation of DGFT Notification No.77(RE-2008)/2004-2009 regarding the eligibility of Round Ridge Cement Tiles for duty-free import. Monier Roofing Pvt Ltd contended that these tiles, falling under CTH 68101990, should be exempt from duty as they are not processed tiles of agglomerated or artificial stones.

The appellant argued that the notification in question has been misinterpreted by the Customs Department. They emphasized that the Foreign Trade Policy, coupled with the DGFT clarification, permits the free import of cement tiles falling under the specified category, provided the CIF value exceeds US$ 50 per square meter.

Furthermore, Monier Roofing Pvt Ltd presented legal precedents supporting their interpretation, highlighting cases such as Salmag Enterprises Vs. Addl. Commissioner of Customs (Madras), EIH Associated Hotels Ltd. Vs. CC€, Nhava Sheva (Tri. Mumbai), and Casio India Co. Ltd. Vs. CC, Mumbai (Tri-Delhi).

Contrarily, the Revenue reiterated the findings of the learned Commissioner(Appeals), advocating for the imposition of duty as per their assessment.

Conclusion

After thorough deliberation, the CESTAT Bangalore ruled in favor of Monier Roofing Pvt Ltd. The tribunal considered the DGFT clarification, which stated that Round Ridge Cement Tiles are free for import under ITC(HS) Code No.68101990 and do not fall under the ambit of Notification No.77(RE-2008)/2004-2009.

The tribunal emphasized that the interpretation of policy provisions lies within the jurisdiction of DGFT, whose opinion is binding. Therefore, the restriction applied by the Customs Department was deemed unsustainable.

In conclusion, the ruling provides clarity on the duty-free import eligibility of Round Ridge Cement Tiles, setting a precedent for similar cases and ensuring compliance with trade policies and regulations.

FULL TEXT OF THE CESTAT BANGALORE ORDER

These five appeals are filed against respective Orders-in-Appeal passed by Commissioner of Customs (Appeals). Since common issues are involved, these appeals are taken up together for hearing and disposal. Narrating the facts in appeal No.C/20091/2014 would suffice the purpose. In the said case the appellant had filed the Bill of Entry No.9692851 dt. 27.03.2013 (RMS) declaring the goods as Round Ridge Cement Tiles falling under CTH 68101990. Alleging that the said ‘cement Tiles’ are processed tiles and allowed to be imported free provided the value of the goods is US$ 50 per square meter and above as per Notification No. No.77(RE-2008)/2004-2009 dated 09.01.2009 issued under Foreign Trade Policy(2009-14) , and in the present case the value per square meter being US$6.98 and consequently, it is proposed to confiscate the same under Section 111(d) of the Customs Act, 1962 and enhance the value to US$50. The Appellant resisted the said action of the department through their letter dated 29.03.2013; however, waived issuance of Show Cause Notice. Consequently, the Bill of Entry was assessed and it was ordered by the adjudicating authority that in terms of DGFT Notification No.77(RE-2008)/2004-2009 dated 09.01.2009, the value to be adopted is US$ 50 per square meter and directed confiscation of the goods Section 111(d) of the Customs Act, 1962 with an option to redeem the same on payment of fine and imposed penalty. Similar orders were passed for subsequent imports against Bill of Entry No.9968602 dated 26.04.2013 and Bill of Entry No.9886940 dt. 17.04.2013. On appeal, learned Commissioner(Appeals) rejected their appeals. Aggrieved by the said orders, the appellant filed appeals bearing No.C/20091 to 20093/2014.

2.1. Appeal No.C/20562/2015 relates to past clearances on 22.06.2012 against Bill of Entry No.7191475 and Bill of Entry No.9617024 dated 19.03.2013, for which a show-cause notice was issued on 21.06.2013 and corrigendum dated 27.08.2013 whereunder it is alleged that the Round Ridge Cement Tiles could be imported freely provided the CIF value of the same is US$ 50 whereas the value declared was only US$ 7.17 per square meter; hence it is proposed to enhance the value and differential duty of Rs.12,71,336/- proposed to be recovered under Section 28(1) of the Customs Act, 1962 and confiscation under Section 111(d) of the Customs Act, 1962. On adjudication, the demand of duty was confirmed and the goods were held to be liable for confiscation under Section 111(d) and equal penalty imposed under Section 114A and penalty of Rs.5 lakhs under Section 114AA of the Customs Act, 1962. Aggrieved by the said order, appellant preferred an appeal before the learned Commissioner(Appeals). Also Revenue has filed appeal against the said order of the adjudicating authority on the ground that while computing the penalty amount, the applicable interest amount was not included. The learned Commissioner(Appeals) rejected their appeal and allowed Revenue’s appeal. Consequently, the appellant filed appeal No.C/20562/2015 against rejection of their appeal and appeal No.C/20168/2016 for allowing Revenue’s appeal enhancing penalty by including interest components in the penalty amount.

3.1. At the outset, the learned Senior Advocate for the appellant has submitted that the DGFT Notification No.77(RE-2008)/2004-2009 dated 09.01.2009 does not apply to the product Round Ridge Cement Tiles imported by them since such tiles are not processed tiles of agglomerated or artificial stones.

It is his contention that the said notification has been mis­interpreted by the authorities below. These tiles are freely importable; hence goods are to be assessed on the transaction value and the same are not liable for confiscation. It is his contention that the Foreign Trade Policy read with the said Notification No.77(RE-2008)/2004-2009 dated 09.01.2009 clearly provides for free import of ‘Cement tiles’ falling under CTH 68101990. It is restricted only with respect to importation of rough blocks / slabs of agglomerated / artificial stones which is clear from the wordings of the restriction stated in the Policy as “However, import of rough blocks and slabs of agglomerated / artificial stones shall be restricted”. It is his contention that when the Policy makes the said restriction, it also clarifies that rough blocks and slabs are restricted; however if the same are processed and produced as tiles / slabs, then the same is allowed to be imported free provided CIF value is US$ 50 and above per square meter. Further he has submitted that the interpretation adopted by the Customs Department is untenable in view of the clarification of the DGFT through letter dated 27.12.2013. He has submitted that interpretation provided by DGFT relating to the Policy is binding on the Customs Department. In support, he has referred to the following judgments:

i. Salmag Enterprises Vs. Addl. Commissioner of Customs (Adj.), Tuticorin [2021(378) ELT 127 (Mad.)]

ii. EIH Associated Hotels Ltd. Vs. CC€, Nhava Sheva [2020(374) ELT 807 (Tri. Mumbai)]

iii. Casio India Co. Ltd. Vs. CC, Mumbai [2000(121) ELT 379 (Tri-Delhi)].

3.2. Further the learned Senior Advocate has submitted that the confirmation of demand in relation to appeal No.C/20562/2015 is irregular inasmuch as the adjudicating authority without finalization of the assessment issued the show-cause notice and later on adjudication confirmed the demand.

Thus, it is in contravention to the principles laid in the following judgments:-

i. A. S. Syndicate (Warehousing) P. Ltd. Vs. CC(Port) [2011(267) ELT 469 (Cal.)]

ii. CC(Import), Mumbai Vs. Mahesh India [2009(243) ELT 339 (Bom.)]

iii. Finolex Industries Ltd. Vs. CC [2003(159) ELT 949]

iv. ITC Limited Vs. UOI [2010(250) ELT 189 (Del.)]

4. Learned AR for the Revenue reiterated the findings of the learned Commissioner(Appeals).

5. Heard both sides and perused the records.

6. The limited issue involved for determination is, whether the goods viz. Round Ridge Cement Tiles imported by the appellant declaring its value as US$ 6.98/ be allowed free or is to be considered as ‘processed tiles / slabs of agglomerated / artificial stones’ and subjected to the restrictions prescribed under DFGT Notification No.77(RE-2008)/2004-2009 dated 09.01.2009 and its importation can be allowed only if the value is US$ 50 and above per square meter.

7. We find after the objection of the Customs Department in assessing the Bills of Entry filed during the period March 2013 about applicability of the said notification to the imported goods, the appellant wrote to DGFT seeking for clarification on the stand of the Customs Department on the applicability of Notification No.77(RE-2008)/2004-2009 dated 09.01.2009 to imported Round Ridge Cement Tiles. The DGFT communicated its opinion through letter dated 27.12.2013 observing that the import of cement tiles under ITC(HS) Code No.68101990 is free for import and such cement tiles would not come within the ambit of Notification No.77(RE-2008)/2004-2009 dated 09.01.2009.

8. We find that in the impugned orders relating to appeal Nos. C/20091 to 20093/2014, the learned Commissioner(Appeals) did not have the opportunity to examine the said clarification issued by the DGFT after the order was passed, whereas in the subsequent order dated 22.01.2015 before the learned Commissioner(Appeals) the said opinion of the DGFT was placed by the Appellant. However, it was discarded by the learned Commissioner(Appeals) observing that in absence of issuance of any amendment or clarification to the said Notification, the opinion is not binding on the Department.

9. We do not find merit in the said observation of the learned Commissioner(Appeals). To interpret the scope and application of the provision of Policy, the authority is vested with DGFT and their opinion is binding on all concerned including the Customs Department as has been held in series of judgments by this Tribunal and also in the judgment of the Hon’ble Madras Hight Court in the case of Salmag Enterprises (supra). In the said judgment, their Lordships have observed as follows:

10. The question that arises for my consideration is how this verification exercise ought to have been carried out in the case on hand. The petitioner’s contention is that the goods are freely importable. The stand of the customs authority is that they are restricted items. The issue turns on an interpretation of the policy notification issued by the Director General of Foreign Trade. The customs authority on its own ought not to have interpreted as to whether the goods in question can be called as restricted items. The respondent ought to have sought a clarification directly from the concerned authority in DGFT. In the alternative, the respondent could have mandated the petitioner to move the competent authority under Foreign Trade (Development and Regulation) Act, 1992 and obtain a clarification. Instead of doing so, the respondent applied his own understanding of the policy notification. What the respondent has done is not in accordance with Section 17 of the Customs Act.

10. Consequently, adopting the said opinion of DGFT on the applicability of the said Notification No. 77(RE-2008)/2004-2009 dated 09.01.2009 and applying to the facts of the present case, it can safely be held that the appellants are entitled to import the Round Ridge Cement Tiles free and the restriction applicable to processed tiles as held in the impugned orders cannot be sustained. In the result, the impugned orders are set aside and appeals are allowed with consequential relief, if any, as per law.

(Operative part of this order was pronounced in Open Court on conclusion of the hearing )

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