Customs Cannot Deny Benefit on 'Decalcified Fish Scale' Imported Under Advance Authorisation Scheme: Kerala HC
It was necessary to consider the imports made by the assessee as covered by the notification that allowed for a duty-free import as long as the products were imported in accordance with the advance authorization scheme
The Kerala High Court ruled that imports of "decalcified fish scale" are covered by the advance permission program and that customs cannot refuse benefits. The import of raw materials and inputs needed to create export goods is permitted duty-free under the advance permission scheme.
The assessee/appellant, Nitta Gelatin India Ltd, uses the protein from cow bones to make collagen peptide. The assessee subsequently suggested using fish protein to produce collagen peptides. As a result, fish protein that was produced by decalcifying fish scales was imported from nations such as China and Japan.
The product known as "decalcified fish scale for collagen" is a rich supply of the specific protein needed to make collagen peptides, which the assessee exports once they are manufactured. Although the assessee's initial imports were classified as "fish protein" for the purposes of the advance authorization scheme, it appears that during an inspection of the imported goods conducted in accordance with Bill of Entry No. 5034927 dated April 25, 2016, it was discovered that the imported products were tagged in polypropylene bags bearing the markings "decalcified fish scale for collagen (fish protein)".
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Since the products were discovered to be processed/de-mineralized fish scale, which is classified under Customs Tariff Heading 0511 9190, the Revenue determined that the declaration of the items as "fish protein" was inaccurate.
The Appellate Tribunal determined that the imported items were appropriately classified under Custom Tariff Heading 3504 0099 as "decalcified fish scale." The Tribunal reversed the redemption fine, penalty, and differential tariff demand for the assessee's previous imports. But with regard to the live transactions, the Tribunal upheld the petition for a differentiated duty.
The Revenue's position that the assessee would lose the benefit of the notification in question cannot be accepted, according to the bench, which held that the classification of the imported items had no bearing on the legality of imports for the purposes of the advance authorization scheme and that the authorities tasked with administering the said scheme have not viewed the various descriptions used by the assessee at the time of import of the product under the advance authorization scheme as being in violation of the terms and conditions of the advance authorization.
A division bench of Justices A.K. Jayasankaran Nambiar and P.M. Manoj held that during the period subsequent to the period covered by the show cause notice, the assessee has obtained advance authorization for importing the same product this time under the nomenclature 'decalcified fish scale' and no objection has been taken by the Revenue to such import.
It was necessary to consider the imports made by the assessee as covered by the notification that allowed for a duty-free import as long as the products were imported in accordance with the advance authorization scheme. The court allowed the appeal filed by the assessee.
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