Local Sale of Duty-Exempt Imports Violates Export Obligations under Advance Authorization: Delhi HC [Read Order]
Rectification of errors on a Settlement Commission Order are exclusively limited to clerical or arithmetical errors that may have crept in during the process
Customs Duty ExemptionS – Export Obligations – Delhi High Court – taxscan
Customs Duty ExemptionS – Export Obligations – Delhi High Court – taxscan
In a notable ruling, the Delhi High Court affirmed that the localized sale of goods imported under Advance Authorization, with duty exemptions, shall result in a breach of the concerned seller’s export obligations.
The verdict was delivered in a Writ Petition filed by KBS Industries Ltd. & Anr., a manufacturer of high quality semi finished copper and copper alloy products (rods, bus bars, strips, plates, wires, sheet and circles) for a wide range of engineering industries.
The Petitioner utilizes the provisions of two Advance Authorisations (DGFT Licences) granted to KBS to import Continuous Cast Copper Rod 8mm valued at ₹10,85,60,299/- against Advance Authorisation dated 31.07.2015 and Copper Scrap valued at ₹5,43,06,644.30/- against Advance Authorisation dated 17.08.2016, all free of duty.
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Following apprehension, searches were conducted at the premises of the Petitioner whose authorized representative confessed to having sold the goods imported under the Advance Licenses within the local markets due to financial crises; the Petitioner also acceded their willingness to pay the averted customs duty along with interest and penalty.
The Customs officials ascertained the customs duty at ₹2,35,24,597/-, out of which KBS had discharged liability of ₹2.04 Crores and ₹84,35,359 against both the Advance Authorization Licenses respectively.
Seeking directives, the Petitioner filed an application before the Settlement Commission who computed an interest liability of ₹1,19,05,337/- on the Petitioner.
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Advocates Tuhina and Deep Shah, appearing for the Petitioner contested the interest levied by the Settlement Commission, averring the same to be done without authority of law, while Senior Standing Counsel Harpreet Singh appeared for the Respondents along with Suhani Mathur.
The Delhi High Court Bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that an Applicant before the Settlement Commission does not have the liberty to dissect or seek merit review of such order passed under Section 127C of the Customs Act, 1962 which has to be accepted in its entirety.
Observing that the Petitioners had availed a scheme to import material against advance authorization without payment of customs duty, special additional duty, safeguard duty and anti-dumping duty, which mandated the levy of 15% interest from the date of clearance if the goods had not been repurposed and exported within the time frame.
The Scheme mandated the Petitioners to fulfill their concomitant export obligations under Notification No. 18/2015-Cus dated 01.04.2015 whose Constitutional validity had also been challenged by the Petitioners.
In closing, the Delhi High Court upheld the interest levy of interest of ₹1,15,13,067/- calculated by the Settlement Commission while dismissing the contest of the constitutional validity of the Customs Notification since the Petitioners failed to substantively challenge the same.
To Read the full text of the Order CLICK HERE
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