Whether “Cocoa Powder” is covered under term “flour” for the purpose of duty free import against authorisation ?

PJ/CASE LAW/2016-17/3046

Case:COMMISSIONER OF CUSTOMS, MANGALORE VsKUSHALCHAND & CO.

Citation:2015 (325) E.L.T. 813 (S.C.)

Brief Facts:The respondent/assessee herein had purchased certain duty free import Authorisations issued against export of biscuits. The Authorisations were originally issued in favour of Rani International and Pinacle Export. It is not in dispute that the Authorisations were transferable and the respondents were the bona fide transferees of these Authorisations. Under these Authorisations the assessee was allowed to import “Flour”. The assessee imported “Cocoa Powder” and sought clearance thereof under the Authorisations as input items, issued under Customs Notification No. 40/2006, dated 1-5-2006. This was not accepted by the appellant/Department as according to the Customs Authorities the import of “Cocoa Powder” was not permissible against the input “Flour” as “Cocoa Powder” is different from “Flour”. A show cause notice was issued and the position taken therein was confirmed by the Commissioner vide his order dated 6-11-2009 thereby rejecting the contentions of the assessee and confirming the demand contained in the show cause notice holding that the benefit of the aforesaid customs Notification was not available to the assessee. The order of the Commissioner was challenged by the assessee before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’). The Tribunal disposed of the said appeal vide its order dated 29-12-2009. A perusal of the order would show that it specifically dealt with the issue as to whether the “Cocoa Powder” would be covered by the expression “Flour” and after going through the dictionary meanings of the two expressions it turned a finding that “Cocoa Powder” was so covered under the description of the input item “Flour” has bearing under the said Authorisations. However, at the same time it noticed that the impugned order was passed by the Commissioner without seeing all the amendment sheets which were produced before the Tribunal and for this reason the matter was remitted back to the Commissioner of Customs for examining the amendment sheets and further relevant clarification/circular to adjudicate the matter afresh following the principles of natural justice.
On remand, the Commissioner again took the same view viz. “Cocoa Powder” was not covered under the term ‘Flour’ and, therefore, the assessee was not entitled to the benefit of the Notification in question. The assessee again challenged this order before the Tribunal. One of the contentions raised by the assessee was that since the Tribunal had already decided the issue on merits vide its earlier order dated 29-12-2009 and the remand was only limited, it was not permissible for the Commissioner to go into the main issue all over again and take a view which is contrary to the view taken by the Tribunal. This contention was upheld by the Tribunal and on that basis the order of the Commissioner is set aside.

Reasoning of Judgement:After hearing the learned counsel for the parties, The Supreme Court are of the view that the approach of the Tribunal, in the aforesaid circumstances, is however unblemished and does not call for any interference.
It is pertinent to mention that in spite of particular conclusion which was arrived at by the Tribunal that “Cocoa Powder” was ‘Flour’ and covered under the description of the license, the Department did not choose to challenge this finding by filing any further appeal, therefore, at least inter se between the parties, the said issue attained finality and this finding was binding on the Commissioner and, therefore, it was not open to the Commissioner to re-visit the issue all over again and come to a contrary finding.
Thus, insofar as the facts of this case are concerned, since the earlier order of the Tribunal was not challenged by the Department, the impugned order warrants no interference. Thus the revenue appeal is dismissed.

Decision:Appeal Dismissed.

Comment: In this case, the Tribunal had already decided the matter in favour of assessee and the matter was remanded to Commissioner (Appeal) for limited purpose of examining the amendment sheet. The Supreme Court held that as the earlier order of the Tribunal was not challenged by the department therefore the matter attained finality. Hence appeal of department is dismissed.

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PJ/CASE LAW/2016-17/3046

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