Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8371 of 2002

Commissioner of Customs, Calcutta   .....Appellant

- Versus -

Indian Rayon & Industries Ltd.   .....Respondent

J U D G M E N T

BHAN, J.

1. The  instant  appeal  has  been  filed  by  the

Revenue  under  Section  35L  of  the  Central  Excise

Act,  1944  against  the  final  judgment  and  order

No.1-1255/KOL/2001 dated 23rd November, 2001 passed

by the Customs, Excise and Gold (Control) Appellate

Tribunal, Eastern Bench, Kolkata (for short “the

Tribunal”), whereby the Tribunal has set aside the

order passed by the Commissioner.   

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2. The three Bills of Entry which are the bone of

contentions  in  the  present  case  are  detailed

below:-

(i) Bill of Entry Sl. No. 2256 dated 30th April,

1998, per Vessel X-Press Singapore Voy-257,

Rot. No. 258/98 dated 7th April, 1998, Line

No. 97, Country of origin – India, Goods 135

cartons 2/64 NM Merino Wool 100% Raw White

on  paper  cone,   Assessable  Value  –

Rs.36,63,829/-.

(ii)  Bill of Entry Sl. No. 2440 dated 29th May,

1998, per Vessel S.S. Acacia V. 818, Rot No.

370/98, Line No. 154, Country of Origin –

India,  Goods  –  20  pallets  Polyester  100%

Semi  Dull  Ring  Spun  Yarn  for  weaving  NE

24/2,  Assessable value – Rs.16,88,481.23

(iii) Bill of Entry Sl. No.930 dated 12th August,

1998  per  Vessel  Breeze,  Rot.  No.  549/98,

Line  No.  26,  country  of  origin  –  India,

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Goods  765  Ctns.  of  100%  polyester  yarn,

Assessable  value  liable  to  duty

Rs.27,37,954.76.

FACTS:

3. The  goods  were  initially  exported  by  the

respondent-assessee,  which  were  rejected  by  the

foreign buyer being defective and the assessee re-

imported them back to India.   

4. Assessee had initially claimed in the Bills of

Entry the benefit of Notification No. 158/95-Cus

and also executed bonds for re-export, as required

under the said notification.  The Bills of Entry

were assessed provisionally.  The assessee could

not  re-export  the  goods  due  to  recessionary

conditions  in  the  textile  industry.   It  claimed

before the adjudicating authority that since it was

not possible for it to re-export the goods, it may

be allowed the benefits of another Notification No.

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94/96-Cus., which was in force at the time of the

clearance from the factory originally.   

5. Three show cause notices were issued in respect

of the three Bills of Entry for realization of the

amounts  which  were  guaranteed  under  the  bonds

executed  by  the  assessee  at  the  time  of

importation.   The  demands  under  the  show  cause

notices were in terms of Notification No. 158/95-

Cus.  referred to above.    Confronted with the

liability to pay the duty as enjoined under the

notification, in view of non re-export of the goods

within six months of the date of re-importation as

stipulated, the assessee took the ground before the

adjudicating  authority  that  Notification  No.

158/95-Cus. was not in force at the time of the

importation.  Having realized this to be incorrect,

the assessee shifted its stand and submitted that

Notification  No.  94/96-Cus.  dated  16th December,

1996 was applicable to the goods in question and

the benefit thereunder should be given to it.   

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6. The main contention raised by the assessee was

that if the benefits were available under the two

Notifications to the assessee, then the assessee

could avail of the benefits under either of them.

Revenue’s reply to the said contention was that it

was  not  correct  to  say  that  if  the  two

Notifications are applicable, assessee after having

opted  to  take  benefit  under  one  of  the

Notifications, could change its option and avail

the benefit under the other scheme.  In any case,

this would depend upon the nature and contents of

the Notifications. It was revenue’s contention that

the assessee could not change its option because of

the nature and contents of the notifications.

7. The Authority-in-Original confirmed the demand

against (i) Bill of Entry No. 930 in the sum of

Rs.20,76,111/- and (ii) Bill of Entry No. 2440 in

the sum of Rs.13,86,355.24. The assessee was given

the  benefit  of  Notification  No.  94/96-Cus.  in

respect of Bill of Entry No. 2256 of 1998 as the

goods  were  re-exported  under  Incentive  Scheme,

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i.e.,  Duty  Exemption  Entitlement  Scheme (DEEC).

Thus, in relation to Bill of Entry No. 2256 dated

30th April, 1998, the duty was confirmed in the sum

of Rs. 4,99,188.79.  The benefit was not extended

to other two Bills of Entry as the goods in these

cases were covered under Duty Entitlement Passbook

Scheme (DEPB).  Contention raised on behalf of the

assessee that the benefits of the Notification No.

94/96-Cus.  having  been  given  to  the  assessee  in

regard  to Bill of Entry  No.  2256,  could not be

denied on Bills of Entry Nos. 930 and 2440, was

rejected.

8. The assessee being aggrieved filed an appeal

against the order of the Commissioner, which has

been  accepted  by  the  Tribunal  by  its  impugned

order.  The Revenue being aggrieved has filed the

present appeal.

9. Counsel for the parties have been heard.

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10. Section  20  of  the  Customs  Act,  1962,  which

deals with re-importation of the goods, provides:-

“20. Re-importation of goods. – If goods were imported into India after exportation therefrom, such goods shall be liable to duty  and  be  subjected  to  all  the conditions  and  restrictions,  if  any,  to which goods of the like kind and value are liable  or  subject,  on  the  importation thereof.”

11. By  Notification  No.  158/95-Cus.  dated  14th

November, 1995, goods manufactured in India and re-

imported  in  India  for  repairs  or  for  re-

conditioning are exempted from whole of the duty of

customs leviable on them as well as additional duty

subject  to  the  condition,  inter  alia,  that  the

goods are re-exported within six months of the date

of re-importation or any extended period as may be

allowed  and  a  bond  is  executed  at  the  time  of

importation to export within the said period and,

in the event of failure to do so, pay an amount

equal to the difference between the duty levied at

the time of re-import and the duty leviable on such

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goods at the time of importation.  The assessee

executed  a  bond  with  the  President  of  India,

complying  with  the  aforesaid  condition  of

notification and undertook to pay, on demand in the

event  of its failure to comply  with  any of the

conditions of notification, an amount equal to the

difference between the duty levied and leviable on

such goods.  In respect of each of the Bills of

Entry, separate bonds were executed indicating Bill

of  Entry  No.,  description  of  goods,  country  of

origin,  CIF  Value,  the  assessable  value  and  the

bond value.   

12. The Revenue contends that the assessee could

not avail the benefit under Notification No.94/96-

Cus  and  that  it  could  not  change  its  option.

According  to  the  assessee,  the  assessee  could

change  its option even at a  later  stage and it

could  avail  of  the  benefit  under  Notification

No.94/96-Cus which was in force at that time.

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13. We do not find any substance in this submission

advanced  on  behalf  of  the  assessee.  The  only

notification which was available to the assessee at

the time of import which granted the assessee the

right to import duty free goods was Notification

No. 158/95-Cus. Having availed of the benefit of

notification,  the  assessee  has  necessarily  to

comply with the conditions of the notification.  It

goes  without  saying  that  the  assessee  cannot

approbate  and  reprobate.  In  Tractors  and  Farm

Equipment  Ltd. v.  Collector  of  Customs,  Madras,

[1998  (9) SCC 665], it  was  pointed  out by this

Court that once the assessee’s case was that what

it  had  imported  do  not  constitute  internal

combustion  piston  engines  but  only  certain

components, the importer cannot turn around and say

that what was imported constitutes piston engines.

Of course, there is no estoppel against the law but

having  sought  for  and  taken  the  benefit  of  the

notification  to  import  goods  without  payment  of

duty, it is not open to the assessee to contend

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that the conditions in the said notification need

not  be fulfilled,  be it on  the ground that the

benefit under another notification is available to

him or otherwise.   

14. In any event, Notification No. 94/96-Cus. is,

on its own terms, not applicable to the facts of

the present case.  The assessee has claimed the

benefit  under  clause  1(e)  of  Notification  No.

94/96-Cus.  The description of the goods claimed in

Serial No. 1(e) under Notification No. 94/96-Cus.,

which reads as under:

Sl. No.

Description of goods Amount of duty

(1) (2) (3)

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1. Goods exported- (a). XXX (b). XXX (c). XXX (d). XXX (e). under duty exemption  scheme (DEEC) or export Promotion Capital Goods Scheme (EPCG)

XXXXX XXXXX XXXXX XXXXX XXXXX Amount of excise duty leviable at the time and place of importation of goods and subject to the following conditions Applicable for such Goods

(I) DEEC book has not been finally closed and export in question is delogged from DEEC book.

(II)In case of EPCG scheme the period of full export performance has not expired and necessary endorsements regarding reimport have been made.

(III)The importer had intimated the details of the consignment re-imported to the Assistant Commissioner of Central Excise in charge of the factory where the goods were

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(2) XXX XXX (3) XXX XXX

refers to the goods exported under DEEC or Export

Promotion Capital Goods (EPCG) Scheme and not under

DEPB Scheme.  In the present case, out of the three

Bills of Entry covering goods which had to be re-

exported, only one of them was for goods earlier

exported under DEEC scheme while the other two were

under DEPB scheme.  The adjudicating authority had,

in respect of goods initially imported under DEEC

Scheme, given the benefit of the Notification No.

94/96-Cus, while rejecting the claim in respect of

the goods exported under a DEPB Scheme.  This is in

accordance with the language of Notification No.

94/96-Cus.  The difference between DEEC and DEPB

Schemes can be seen from the following :-

“  DEEC Scheme    

Under this scheme the importer is issued an  Advance  Licence  to  procure  the  raw material for a manufacturer of the export product.   The  goods  which  are  cleared

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under Advance Licence are meant for use in the  manufacture  of  export  product  or replenishment of the raw materials already used.  The clearance is allowed duty free. The  details  of  items  allowed  for  import against  a  specific  export  product  are published by the Ministry of Commerce in their Input Output Norms which are part of the Exim Policy.   

DEPB Scheme

Under this scheme the exporters are issued DEPB scrips which allows them the specific amount  to  be  utilized  for  payment  of Customs duty.  The amount for which DEPB scrip is issued depends upon the rate for a particular export product.  The Ministry of Commerce notifies DEPB credit rates for export  of  an  item.   The  DEPB  scrip  is freely  transferable  and  can  be  used  to debit the payment of duty at the time of clearance  of  goods  except  capital  goods and goods mentioned in negative list.”

15. An attempt was made on behalf of the assessee

to refer to Sl. No.1(d) of the said notification

which refers to goods exported under bond without

payment of excise duty.  It is only Sl. No. 1(e)

which deals with benefit under the EXIM Policy but,

at the same time, confines to DEEC and EPCG Scheme

and not to the DEPB Scheme.  Sl. Nos. 1(a), (b),

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(c) and (d), all deal with export of goods in the

normal course, where duty becomes payable under the

provisions  of  Central  Excise  Act,  1944  or  the

Customs Act, 1962, as the case may be, and to the

Customs  or  Excise  duties  leviable  on  goods  so

exported.  They do not deal with imports or exports

under the EXIM Policy which fall in Sl. No. 1(e).  

16. Rule  13  of  the  Central  Excise  Rules,  1944,

which was in force at the time of initial export of

goods  in  question  (February  1998),  provides  as

under:

“RULE 13- Export in bond of goods on which duty has not been paid-

(1)The  Central  Government  may,  from  time  to time,  by  notification  in  the  Official Gazette-

(a)permit export of specified excisable goods in bond without payment of duty, in the like manner, as the goods regarding, which the rebate is granted under sub-rule (1) of rule 12  from  a  factory  of  manufacture  or warehouse or any other premises as may be approved  by  the  Commissioner  of  Central Excise;

(b) specify materials, removal of which without payment  of  duty  from  the  place  of manufacture  or  storage  for  use  in  the manufacture in bond of export goods, may be

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permitted  by  the  Commissioner  of  Central Excise;

(c)allow removal of excisable material without payment  of  duty  for  the  manufacture  of export  goods,  as  may  be  specified,  to  be exported in execution of one or more export orders; or for replenishment of duty paid materials used in the manufacture of such export  goods  already  exported  for  the execution of such orders, or both;

subject to such safeguards, conditions and limitations as regards the class or  description  of  goods,  class  or description  of  materials  used  for manufacture thereof, destination, mode of transport and other allied matters as  may  be  specified  in  the notification  which  the  exporter undertakes to abide by entering into a bond  in  the  proper  form  with  such surety  or  sufficient  security,  and under  such  conditions  as  the Commissioner approves.

(2)The  Central  Government  may,  from  time  to time,  by  notification  in  the  Official Gazette,  permit  export  of  specified excisable goods in bond, without payment of duty  from  a  factory  of  manufacture  or warehouse, to Nepal or Bhutan, subject to such  conditions  or  limitations  as  regards the  class  of  goods,  destination,  mode  of transport  and  other  matters  as  may  be specified therein.

  Explanation I.- In this rule, the expression  “manufacture”  includes  the process of blending of any goods or making alterations  or  any  other  operation thereon.

Explanation  II.-  In  this  rule,  the term  ‘materials’  shall  include  raw materials,  consumables,  components,  semi- finished  goods,  assemblies,  sub- assemblies,  intermediate  goods,

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accessories, parts and packaging materials used  in  the  manufacture  of  export  goods but does not include capital goods used in the  factory  in  or  in  relation  to manufacture of export goods.”

17. Rule  14  provides  for  entering  into  General

Bond,  for  permission  to  export  goods  from  India

under  the  prescribed  conditions  and  Rule  14A

provides for penalty for failure to furnish proof

of export within the prescribed period.  Sl. No. 1

(d)  of  Notification  No.  94/96-Cus.  covers  these

instances where goods are manufactured in India and

exported without payment of duty in accordance with

the  procedure  set  out  in  Rule  13,  as  indicated

above.  Sl. No. 1(d) has, therefore, no relevance

to exports made under Export Import Policy Schemes.

18. Since the two consignments vide Bills of Entry

Nos. 930 dated 12th August, 1998 and 2440 dated 29th

May, 1998 under DEPB Scheme do not get the benefit

of  Notification  No.94/96-Cus.,  the  order  of  the

Tribunal deserves to be set aside and the order of

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the  Commissioner  of  Customs  restored.  Ordered

accordingly.  Appeal is allowed with costs.

...................J. (ASHOK BHAN)

...................J. New Delhi; (DALVEER BHANDARI) July 16, 2008

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