GTN Engineering (India) Limited Vs Pr. Commissioner of Customs (Adjudication) (ITAT Mumbai)
This appeal before the Income Tax Appellate Tribunal, Mumbai Bench concerned the validity of an IGST demand, along with interest, redemption fine, and penalty, arising from imports made under the Advance Authorisation scheme during the period 13.10.2017 to 09.01.2019. The appellant had imported raw materials for manufacturing industrial valves meant exclusively for export, availing duty exemption under Notification No. 18/2015-Customs based on 19 Advance Authorisations issued by the DGFT. These imports were assessed and cleared by customs, and export obligations were subsequently fulfilled.
The dispute arose after a DRI investigation alleged non-compliance with the “pre-import condition” introduced by Notification No. 79/2017-Customs dated 13.10.2017, on the ground that exports had, in some cases, preceded imports and that there was no one-to-one correlation between imported inputs and exported products. Based on this, a show cause notice dated 24.10.2019 proposed recovery of IGST of about ₹5.45 crore, confiscation of goods, and penalties. The Principal Commissioner confirmed the demand (after adjusting a small amount already paid), imposed redemption fine, and levied penalty.
The Tribunal examined the Foreign Trade Policy 2015–2020, the Handbook of Procedures, and the relevant customs notifications. It noted that the Advance Authorisation scheme permits duty-free imports subject to fulfilment of export obligation, which is evidenced through issuance of Export Obligation Discharge Certificates (EODCs) by DGFT. In this case, EODCs or redemption letters had been issued for all 19 Advance Authorisations, with customs authorities verifying the same and cancelling the bonds executed by the appellant. In two cases of minor shortfall, the appellant had paid the applicable duty.
