Cus - Once LOP is obtained by EOU, no further license is required as LOP is authorization for all purposes: CESTAT
By TIOL News Service
MUMBAI, AUG 10, 2017: THE importers (100% EOU) were issued Letter of Permission (LOP) dated 03.01.2011 by the Development Commissioner SEZ, Kandla, Gandhidham for manufacture and export of Refrigeration Gas R-134 A (HCFC-134A) falling under ITC (HS) Chapter Heading 2903 4710.
However, the appellant imported "Refrigerant gas R-22" which is categorized in Schedule-I of the list of Ozone depleting substances (Regulation and Control) Rules, 2000.
The Development Commissioner, SEZ, Kandla also noted that the said restricted goods were sold by the appellant in Domestic Tariff Area (DTA); the activity of the appellant was not allowed as per para 6.1 of the Foreign Trade Policy 2009-14 and was in violation of the Ministry of Environment and Ozone Cell letter dated 17.01.2013 and,therefore, revoked the LOP dated 03.01.2011 vide order dated 25.06.2013 ; that based on the action taken by the Development Commissioner, the department held that the impugned goods are restricted under FTP and import is allowed under actual user condition from the country which is a signatory of Montreal protocol and against specific import license. Accordingly, the department seized the goods imported totally valued at Rs.1,79,70,261/- and confiscated the same u/s 111(d) of the Customs Act, 1962 for destruction and cost of which is to be borne by the appellant. A penalty of Rs.5,00,000/- has also been imposed on the appellant u/s 112(a) ibid.
As the Commissioner (Appeals)upheld the O-in-O dated 13.10.2015, the appellant is before the CESTAT.
After considering the submissions made by both sides and examining the permissions granted by the Development Commissioner to the appellant, the Bench observed -
+ In the present case, appellant being 100% EOU is under the jurisdiction of Development Commissioner, who is also regional licensing authority, accordingly for all the purposes related to FTP, the Development Commissioner is the authority in-charge of the appellant's unit. The said licensing authority viz. Development Commissioner,Gandhidham, Gujarat issued an LOP dated 03.01.2011.
+ From the LOP, it can be seen that except prohibited goods, all items of import and local purchases are permitted. It is undisputed that goods R-22 Gas is not prohibited goods, therefore, the said goods is permitted to be imported as per LOP dated 03.01.2011. It is also observed that on 03.05.2011 request of the appellant for broad banding of LOP in respect of refrigeration gas R-22 gas was allowed by the Development Commissioner.
+ Thereafter vide letter dated 29-5-2012, Development Commissioner has granted specific permission for import of R-22 gas.
+ From the LOP dated 3-1-2011, letter dated 3-5-2011 for broad banding of LOP in respect of R22 Gas and letter dated 29-5-2012 by which specific permission was granted for import of R-22 Gas, it is clear that appellant had indeed valid license in possession for import of R-22 gas.
+ Para 6.2.7 of Handbook of Procedures reads - "6.2.7. LOP/LOI issued to EOU/EHTP/STP/BTP units by concerned authority would be construed as an authorization for all purposes." From the above para of the policy, it is clear that once the LOP is obtained by EOU, no further license is required as LOP is authorization of all purposes.
+ It is settled that once the 100% EOU has been permitted to import certain goods, for import of such goods, restriction / prohibition of goods provided under policy shall not apply. Similarly, in the present case, when Development Commissioner has specifically allowed the import of R-22 Gas, there is no need of special import license.
+ At the time of import, the goods R 22 gas was permitted to be imported and cleared under LOP/permission granted by the Development Commissioner, therefore subsequent cancellation of LOP cannot have retrospective effect.
+ It has been consistently held that imports shall be governed by the valid license existing at the time of import of goods and subsequent cancellation of the said license will not affect import and clearance of the goods prior to the date of cancellation of license. Therefore, even though LOP was cancelled on 24.06.2013, the same will not adversely affect the import of the goods taken place prior to 24.06.2013. Accordingly, the goods were not liable for confiscation.
+ As regards the other condition for import of R-22 Gas though it is not under dispute, but it is fact that the appellant is engaged in the activity of conversion of imported gas from bulk pack to retail pack, this activity clearly amounts to manufacture as per chapter note 10 of Chapter 29 of CETA, accordingly actual user condition stands complied with. The goods are imported from China who is undisputedly a member of Montreal Protocol, 1987.
The impugned order was set aside and the appeal was allowed with consequential relief.
(See 2017-TIOL-2870-CESTAT-MUM)
