The Tribunal allowed the appeal of M/s Yash Oro India Pvt. Ltd., set aside the demand of customs duty, interest, redemption fine and penalty, and held that the importer could validly claim LDC exemption on gold dore imports under Notification 96/2008-Cus despite the DGFT licence mentioning Notification 12/2012/50/2017, as long as the licence itself remained valid and un-cancelled.519006.pdf
Background
- The case arose from imports of gold dore bars from Tanzania (an LDC) by Yash Oro under a DGFT import licence dated 22.12.2020, which described the import as “subject to” Customs Notification 12/2012-Cus (later superseded by 50/2017-Cus).519006.pdf
- The importer instead claimed full exemption (NIL BCD and AIDC) under Notification 96/2008-Cus, a duty free tariff preference scheme for products originating from Least Developed Countries.519006.pdf
- The Principal Commissioner treated this as violation of licence conditions, denied the 2008 exemption, demanded around Rs. 50.92 lakh duty with interest under section 28AA, imposed penalty under section 112(a)(ii) and ordered confiscation with redemption fine.519006.pdf
Department’s and Assessee’s Stands
- Department’s case:
- Gold dore is a “restricted” item under FTP and can be imported only in strict compliance with DGFT licence terms.519006.pdf
- Since the licence specifically made imports subject to Notification 12/2012 (and its successor 50/2017), the importer was “mandatorily” required to pay concessional duty under that notification and could not simultaneously or alternatively take NIL duty under the 2008 LDC notification.519006.pdf
- Wrong claim of 2008 exemption caused short-levy recoverable under section 28(1); the violation of licence conditions also rendered goods liable to confiscation and justified penalty under section 112 and interest under section 28AA.519006.pdf
- Assessee’s case:
- The DGFT licence is valid and subsisting; DGFT has not alleged any violation or cancelled the licence, so Customs cannot treat the licence as breached and raise demand on that basis, relying inter alia on Titan Medical Systems and Designco line of judgments.519006.pdf
- The licence condition merely says “import is subject to Notification 12/2012”; it does not say duty must necessarily be paid under that notification nor does it prohibit availing any other exemption legally available, including the LDC notification 96/2008.519006.pdf
- There is no statutory bar on simultaneous availment of two exemption notifications in the absence of an express prohibition; JSW Energy and other precedents recognise that, where conditions are met and the notification does not bar it.519006.pdf
Tribunal’s Key Findings
- Meaning of licence condition:
- The wording “import is subject to Notification 12/2012-Cus” only makes the import conform to that notification but does not state that the importer is barred from claiming benefits under any other exemption notification lawfully available.519006.pdf
- The Principal Commissioner’s finding that licence conditions are complied with “if and only if” duty is paid under Notification 12/2012/50/2017 is not borne out from the actual licence text and amounts to adding a condition that is not present.519006.pdf
- Simultaneous benefit of notifications:
- The licence condition does not prohibit simultaneous availment of benefits under two notifications.519006.pdf
- Following JSW Energy (Bom HC) and CESTAT precedents like Hindustan Lever etc., in the absence of a bar in the notification, an assessee can take benefit of more than one notification if conditions are satisfied.519006.pdf
- Therefore, if the importer is otherwise eligible under the 2008 LDC notification, benefit cannot be denied merely because the licence mentions the 2012/2017 notification.519006.pdf
- Distinguishing Tasha Gold (Del HC):
- In Tasha Gold, the imported gold dore did not meet the specification (gold content not exceeding 95%) in Notification 12/2012, so the Delhi High Court held that 2008 LDC exemption was not available for such non-conforming goods.519006.pdf
- In the present case, there is no finding that the goods are outside the description in the exemption notifications; the only ground taken is the licence’s reference to Notification 12/2012, so Tasha Gold does not govern the present facts.519006.pdf
- Jurisdiction of Customs vs DGFT (Designco/Titan Medical line):
- DGFT, under the FTDR Act and FTP, is the primary authority to issue, interpret, suspend or cancel licences/instruments; Customs cannot question the validity of an instrument issued under FTDR or go behind it unless DGFT has first found it to be illegally obtained or cancelled it.519006.pdf
- Relying on Designco (Del HC) and Titan Medical (SC), the Tribunal held that only if DGFT cancels or modifies the licence on grounds of misrepresentation/violation could Customs then proceed to recover duty on that basis.519006.pdf
- Since the licence in this case remains valid and DGFT has not alleged violation, Customs cannot unilaterally treat the licence condition as breached and invoke section 28(1) on that ground.519006.pdf
Final Decision
- The Tribunal held that:
- The importer was not barred by the licence condition from availing the 2008 LDC Exemption Notification, provided its conditions were met.519006.pdf
- Customs could not treat the DGFT licence as violated or indirectly cancelled when DGFT itself has taken no such action.519006.pdf
- Consequently, the duty demand under section 28(1), interest under section 28AA, penalty under section 112(a)(ii) and redemption fine in lieu of confiscation, all premised on an alleged violation of licence conditions and denial of LDC exemption, were unsustainable.519006.pdf
- The impugned Order-in-Original dated 23.12.2024 was set aside in entirety and the appeal of M/s Yash Oro India Pvt. Ltd. was allowed.519006.pdf