By TIOL News Service

NEW DELHI, NOV 22, 2017: THE appellant is engaged in the export of fresh chilled meat, the export of which is free under the ITC export policy. However, there is a condition attached to such export that Government appointed Doctor would issue a certificate ante mortem and post mortem of animals at the time of slaughter.

Investigation conducted by Revenue revealed that certain blank certificates duly signed by the Doctors were found in the appellant's factory at the time of the search.

Alleging that the appellants were not fulfilling the conditions of ITC Policy, duty demand was raised and penalties were imposed.

The appellants are before the CESTAT.

It is submitted that Section 28AAA of the Customs Act, 1962 came into effect w.e.f. 28.05.2012 so the same is not applicable in the instant case; that equally Section 28 is not applicable in the assessee's case [The Thar  Dry Port & Ors. vs. CC, Jodhpur =  2017-TIOL-3472-CESTAT-DEL  relied upon as well as CC (E.P.) vs. Jupiter Exports = 2007-TIOL-329-HC-MUM-CUS , Swati Industries vs. CC, Amritsar = 2009-TIOL-1422-CESTAT-DEL  ]

The AR supported the impugned order and sought to distinguish the case laws relied upon by the appellant by adverting to the decisions in Sravani Impex Pvt. Limited vs. Additional Director General, DRI = 2009-TIOL-715–HC–AP-CUS and Tejwant Singh vs. Commissioner of Customs, New Delhi = 2010-TIOL-941-CESTAT-DEL.

The appellant countered the arguments made by the AR by pointing out that the DGFT is the competent authority for granting or cancelling the license which was never done till today inspite of the recommendation made by the department.

The Bench observed –

Jurisdiction:

+ In the present case, the appellant has exported chilled meat and procured DEPB/VKGUY scrips issued by DGFT. The allegations made in the SCN by customs Department are that such scrips where procured by undertaking export of chilled meat in contravention of the relevant provisions of the Foreign Trade Policy (FTP).

Negating the argument of the appellant that Section 28AAA came into effect w.e.f. 28.05.2012 and there was no legal sanction prior to the date of introduction of this section to recover customs duty from the person to whom the instrument was issued, the CESTAT further observed -

+ The relevant period involved in the present case is 01.04.2006 to 31.10.2010 and the show cause notice has been issued on 30.05.2011 to the person to whom such scrips were issued.

+ The Hon'ble Andhra Pradesh High Court [2009-TIOL-715–HC–AP-CUS] has held that the Customs Authorities had the power to issue show cause notice under section 28 for repayment of credit which was availed by resort to fraud. The Hon'ble High Court has taken the view that though DEPB scripts are issued by DGFT, the relevant notifications are for customs duty exemption notification. The Hon'ble High Court has further held that the power to exempt would include within its ambit the power to demand in the event such exemption is misused.

+ The case of Sravani Impex Pvt. Ltd. (supra), is far more recent than the other cases relied upon by the appellant except that of the case of The Thar Dry Port & Ors. (Supra), which we have already distinguished... By respectfully following the judgment of the Hon'ble Andhra Pradesh High Court, we conclude that the show cause notice issued under Section 28 in the present case cannot be held to be without jurisdiction for the period prior to the introduction of section 28AAA.

Merits:

+ After investigation into the affairs of the appellant, the Department has opined that the Foreign Trade Policy specifies that the government appointed doctor would issue a certificate ante mortem and post-mortem of animals at the time of slaughter. The investigation has revealed that certain blank certificates duly signed by the doctors were found in the appellant's factory at the time of their search along with the relevant seals. The allegation is that the veterinary doctors never supervised such slaughter and hence, all such certificates were not valid but only an empty formality.

+ We note that the main evidence obtained by customs Department in the investigation are the blank certificates found with the signature of the veterinary doctor. From record we find that the appellant has sought cross-examination of the veterinary doctors whose certificates were recovered during such proceedings. Revenue has also taken the view that these doctors were not authorized to issue such certificates during the relevant period. Specifically they have sought the cross-examination of Dr. Jeevan Singh, Animal Husbandry Dept, UP and Dr. Abdul Majid, Veterinary Officer, Talipur, Aligarh.

+ We find that cross-examination has not been allowed by the adjudicating authority before passing the impugned order. We note that it is a well settled legal principle that the cross examination of witnesses whose statements are admitted as evidence has to be considered in terms of Section 138B of the Customs Act. The said provisions are identical to the provisions of Section 9D of the Central Excise Act, 1944. [ Nirmal Seeds Ltd.  -  2017-TIOL-627-HC-MUM-CX   and G. Tech Industries = 2016-TIOL-2749-HC-P&H-CX refers.]

Noting that cross-examination of the witnesses will be particularly necessary since the case of revenue is based on the certificates said to have been issued by these doctors, the matter was remanded to the adjudicating authority to pass fresh orders after allowing the cross-examination of the witnesses.

Conclusion:

++ Legal validity of the show cause notice issued under Section 28 upheld.

++ Impugned order set aside and matter remanded to the adjudicating authority to pass orders on merit after cross-examination and extending effective hearing to all the appellants.

(See 2017-TIOL-4097-CESTAT-DEL)