ANDAGRO SERVICES PVT. LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition under Article 226 of the Constitution of India challenges the order dated 09.01.2007 passed by Assistant Commissioner (Gr-VII) Customs House, Kandla whereby a demand of duty of Rs.1,00,38,321/- (One Crore Thirty Thousand Three Hundred and Twenty One Only) made under the show-cause notice dated 30.08.2006 is confirmed. The petitioner has been denied the benefit of Duty Free Credit Entitlement ('DFCE' for short) in respect of the two Bills of Entry, under notification No. 53/2003 dated 01.04.2003. Also under challenge is the Circular No. 10/2004-Cus dated 30th January 2004, by virtue of which the Department of Revenue issued a clarification regarding restrictions on import of agriculture and dairy products, occurring in Clause (ii)(c) of Notification of 01.04.2003. The clarification issued suggested that the term "agriculture and dairy products" shall mean that import of all types of products derived from agriculture/dairy origin including crude edible oil shall not be permitted. According to the petitioner the scope of the term "agriculture and dairy products" cannot be widened or enlarged by a circular, so as to add something in the Notification providing for exemption.

(2.) The challenge to the order and the clarificatory circular arises in the background of the following facts:

(3.) After granting a personal hearing on 08.12.2006, the department disagreed with the submissions of the petitioner and held that the import of Crude Degummed Soyabean Oil was in the nature of an agricultural product or a product of agricultural origin and therefore not eligible for benefits under the DFCE Scheme. Moreover, according to the department, the goods exported by the importer did not appear to have any broad nexus with the product group exported. As per the SION norms, soyabean meal extract which is exported, figures at E-38 for which imported items allowed is Hexane, Coal, Diesel or Kerosene. Crude Soyabean Oil which figures at E-121 has against it an export of Refined Soyabean Oil (edible grade) and therefore soyabean meal extract does not have such a nexus. There is no manufacturing undertaken or process undergone as the process of treatment of Crude Soyabean Oil and since even as per entry 1507 of chapter 15 of Central Excise Tariff, there was no refining or chemical modification and therefore it continues to remain as an agricultural product without any manufacturing process undergone. The department was also of the opinion that since special additional duty of 4% were imposed under Sub-section (1) of Section 3 of the Customs Tariff Act, 1975, the petitioner shall have to pay the special CVD in cash. Accordingly, by the impugned order dated 09.01.2007, a demand of duty of Rs.1,00,38,321/- with interest was leviable and ordered to be paid by the petitioner.