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IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
Cus. Appeal No.70089/15
Arising out of O/O No.06/CUS/COMMR/NOIDA/2015 dated 28.07.2015 passed by Commr. of Customs, Noida.
For approval and signature:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)
HONBLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982? : No
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? : Yes
3. Whether His Lordship wishes to see the fair copy
of the Order? : Seen
4. Whether Order is to be circulated to the Departmental
Authorities? : Yes
M/s Al-Hamd Agro Food Products Pvt. Ltd.
APPELLANT(S)
VERSUS
Commissioner of Customs, Noida
RESPONDENT (S)
APPEARANCE S/Shri B. K. Singh & Garvit Chauhan, both Advocates for the Appellant (s) Shri D. S. Mann, Asstt. Commr. (D.R.) for the Department CORAM:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HONBLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) DATE OF HEARING : 18. 05. 2016 DATE OF PRONOUNCEMENT : 14. 06. 2016 FINAL ORDER NO._70307/2016 Per Mr. Anil Choudhary :
The issue in this appeal is that whether the appellant-exporter, have availed inadmissible export incentives by way of claiming draw-back on the quantities of 17625.465 MT of frozen meat to the extent of Rs.4,94,01,708/-.
2. The brief facts are that the appellant is a manufacturer of boneless buffalo meat and is registered with Central Excise Department. The appellant has integrated Abattoir-cum-Meat Processing Plant which is also registered with Agricultural and Processed Food Products Export Development Authority ( in short APEDA) as manufacturer for export of boneless buffalo frozen meat up to 170 MT per day and boneless buffalo chilled/fresh meat up to 155 Mt per day and further, APEDA has approved the unit as integrated Abattoir. The appellant exports 100% of the products and is entitled to the duty drawback in terms of Section 75 of the Customs Act read with the Customs, Central Excise Duties and Service Tax Drawback Rules 1995 and further vide Circular No.42/2011 Cus read with standard input output norms of export of products in respect of frozen meat packed and in packing of LDPE/HDPE/PB granules, Kraft paper and cardboard other than laminated board, all industries rate have been prescribed for drawback and the rate of 2% of F.O.B. value for the year 2011-12, which was subsequently amended with effect from 10/10/12 to 1.6% of F.O.B. value.
Pursuant to enquiry made by the Revenue, the show cause notice dated 11/7/2014 was issued alleging the following:
(a) The appellant/exporter have made excess export of 17625.465 MT of Buffalo Meat produced/procured in contravention of APEDA conditions and Chapter Note-6 of Chapter 2 of Schedule 2 of ITC (HS) Classification of Export and Import Items issued under Section 5 of Foreign Trade (D&R) Act, 1992 and such exports are prohibited under Section 11 of Foreign Trade (D&R) Act, 1992 ;
(b) The appellant/exporter have slaughtered more than 500 animals per day as against the approval from APEDA only for maximum 500 animals per day ;
(c) The appellant/exporter have exported total quantity of 34080 MT of Frozen Buffalo Boneless meat during the period from 15.06.2012 to 31.03.2013 out of which, they could legitimately manufacture and export 16455.368 MT and thus, quantity of totally 17625.465 MT of Frozen Boneless Buffalo Meat was exported in excess of the maximum production capacity which included 2532 MT produced from unauthorized slaughtering and 15093.465 MT exported in excess of maximum production capacity ;
(d) The appellant/exporter have filed wrong declaration with Customs at the time of export to the effect that the raw material was procured from APEDA approved sources, contravening the provisions of Section 50(2) of the Customs Act, 1962 with intent to avail inadmissible drawback.
(e) That the appellant/exporter availed inadmissible export incentives by way of claiming drawback on the said quantity of 17625.465 MT to the extent of Rs.4,94,01,708/- which is recoverable from them under the provisions of Rule 16 of Customs Excise Duties and Service Tax Drawbacks Rules, 1995 along with interest under Section 75A(2) of the Act.
3.1 The appellant contested the show cause notice stating that the Indian Meat Exports are regulated as per the Raw Meat (Chilled/Frozen) (Quality Control and Inspection), Rules, 1992 made under Section 17 of The Export (Quality Control and Inspection) Act, 1963 which are further amended vide Notification No.-S.O.3024(E) Dated 28.12.2012 issued by Department of Commerce, Ministry of Commerce and Industry, Government of India. The Rules include standards for abattoir, processing plants and for various meat products. Registration of abattoirs and meat processing plants is carried out by the Agricultural and Processed Food Products Export Development authority (APEDA). Inspection of the meat processing plants is carried out by a Committee of experts as per the standards laid down in the Meat and Meat Products order (1973) & Food Safety and Standards Authority of India (FSSAI), Government of India. During inspection, focus is on hygiene and sanitary conditions maintained by the plant, ante-mortem and post-mortem inspections of each animal, infrastructure, staff hygiene, laboratory facilities, record maintenance etc. The registration of the meat processing plants is renewed every year after a detailed plant inspection by the Committee. According to the current Export and Import Policy of the Government of India, each export consignment is subjected to compulsory microbiological and other tests and a comprehensive pre-shipment inspection certificate is issued by the State Government Veterinarian. Each export consignment is accompanied by the Animal Health Certificate. This certificate also states that meat has been obtained from healthy, disease free livestock, which are free from contagious and infectious disease, including foot and mouth disease and other diseases. The Health Certificate also confirms that the livestock have been subjected to ante-mortem inspection followed by post-mortem examination and that the meat is fit for human consumption, besides having the services of highly qualified and experienced veterinarians, microbiologists etc., employed by the exporting units.
3.2 Part-2 of The ITC (HS) Classifications of Export & Import Items contains Schedule-2 of the Export Policy deals with classification of Export products. The goods are classifiable in Chapter 2 of Schedule 2 of ITC (HS). The Chapter Notes to Chapter 2 had been substituted vide Notification No 82 (RE-2010)/2009-2014, New Delhi, dated 31st October, 2011 issued by Government of India, Ministry of Commerce & Industry, Department of Commerce. The effect of the amendment vide Notification No 82(RE-2010)/2009-2014, New Delhi, dated 31st October, 2011 are:
(i) All the amendments/changes made in Chapter 2 between August, 2009 and September, 2011 have been incorporated in this notification to make it comprehensive.
(ii) Exporters would now be required to certify both
(a) That the items have been obtained/sourced from an APEDA registered integrated abattoir or from APEDA registered meat processing plant and
(b) That the raw material have been sourced exclusively from APEDA registered integrated abattoir/abattoir.
(iii) Designated Veterinary Authority of the State are now authorized to issue the certificate on the basis of the inspections carried out by Veterinarians duly registered under the Indian Veterinary Council Act 1984 employed by the exporting unit in relevant laboratories.
3.3 The above amendment dated 31.10.2011 was made with immediate effect which means that the same came into effect from 31.10.2011 itself. However, on the representation of the Meat exporters trade a further Notification No 82 (RE-2010)/2009-2014 dated 15th December, 2011 was issued to bring into effect the above provision of Note-6 of Notification No. 82 after six Months from today i.e. from 15th June, 2012. Rest of the Notification No 82 (RE-2010)/2009-2014 dated 31.10.2011 continues to be effective from the date of issue i.e. 31.10.2011.
3.4 For the export purposes, frozen Boneless meat of Buffalo (both male and female) are classifiable at Sl. No. 19 (b) under Tariff item Code No.-020230 00 of Chapter 2 to Schedule 2 to ITC (HS) Classification of Export items and export of these products are Free subject to following restrictions/conditions mentioned in column 6 of chapter 2 to Schedule 2 of ITC(HS):-
(I). Production of a certificate from the Designated Veterinary Authority of the State, from which the meat or offals emanate, to the effect that the meat or offals are from buffaloes not used for breeding and milch purposes.
(II) Production of a certificate about quality control and inspection under Note 3 as well as fulfilment of conditions stipulated at Note 8.
(III) Furnishing a declaration by the exporter for fulfilment of condition stipulated at Note 6 that meat and/or raw material are sourced/obtained from an APEDA registered integrated abattoir or from APEDA registered meat processing plant.
3.5 The inferences drawn by the DRI are as under:
(i) That the appellant had procured the excess buffalo Meat from other Sources (not APEDA approved) ;
(ii) That the appellant has slaughtered more than 500 buffaloes in their abattoir per day ;
(iii) That the appellant have exported 34080 MT. Of Frozen Buffalo Boneless meat during the period from 15.06.2012 to 31.03.2013, which is more than their capacity and thus quantity of 17625.465 MT. Of Frozen Boneless Buffalo Meat was exported in excess of the maximum production capacity which included 2532 MT produced from unauthorized slaughtering and 15093.465 MT. Exported in excess of maximum production capacity:
(iv) The appellant thus availed inadmissible export incentive in the form of Drawback which was recoverable under Rule 16 of the Drawback rules.
(V) The appellant wrongly declared in the Shipping Bill filed under Section 50(2) of the Customs Act.
4. The SCN was adjudicated ordering confiscation of 17625.465 MT buffalo meat valued at Rs.290,59,15,220/- under Section 113 (d) of Customs Act, 1962 with option to redeem by paying fine of Rs.50,00,000/-. Further amount of drawback Rs.4,94,01,708/- was demanded under Rule 16 of Customs and Central Excise duties and Service Tax Drawback Rules, 1995 along with interest under Section 75A (2) of the Customs Act and the amount already deposited during investigation of Rs.2.00 Crores was appropriated towards the demand. Further, penalty of Rs.50,00,000/- was imposed on the appellant under Section 114 of Customs Act,1962.
5.0 Being aggrieved the appellant have preferred appeal before this Tribunal on the following grounds :
5.1 First of all, it is urged that Drawback is not an incentive. As per Rule 2(a) of the Drawback Rules In these rules, unless the context otherwise requires,-
(a) drawback in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods;
Thus the Drawback is rebate in lieu of duty or tax charged on materials used for the manufacture of the goods exported. This works on the principle that you can export the goods but cannot export the taxes and for making the Indian made goods more competitive in the international market.
5.2 The basic requirement for entitlement for Drawback under section 75 of the Act is that the goods manufactured in India should be exported. Other conditions to be fulfilled for grant of Drawback under Section 75 of the Act are as under
(i) goods should have been entered for export;
(ii) in respect of such goods, an order permitting the clearance and loading thereof for exportation has been made under section 51 by the proper officer;
(iii) The government should notify the eligibility of such goods for drawback on some products:
(iv) The government should not have specifically disallowed drawback on some products;
(v) export value of such goods or class of goods should not be less than the imported materials used in the [manufacture or processing of such goods or carrying out any operation on such goods] or class of goods; and
(vi) sale proceed of the exported goods should be received by or on behalf of the exporter in India within the time allowed under the [Foreign Exchange Management Act, 1999 (42 of 1999)].
5.3 None of the allegations made in the SCN specify that any of the aforesaid conditions have been violated. Thus the appellant has fulfilled all the conditions for grant of Drawback under Section 75 of the Act. Violation of any of the condition of Section 75 of the Act is sine qua non for applying Rule 16 of the Drawback Rule for recovery of drawback already paid to the appellant. As may be seen, Rule 16/16A of the Drawback Rule provides certain reasons for recovery of drawback. These are
(i) Where an amount of drawback and interest, if any, has been paid erroneously;
(ii) where the amount so paid is in excess of what the claimant is entitled to,
(iii) Where an amount of drawback has been paid to an exporter or a person authorised by him but the sale proceeds in respect of such export goods have not been realised by or on behalf of the exporter in India within the period allowed under [the Foreign Exchange Management Act, 1999 (42 of 1999)], including any extension of such period.
5.4 In the instant case, although the allegation is that the drawback was paid erroneously, however, the SCN does not give any reason as to what the error was and who was responsible for that error. The only reason given in the SCN is that the appellant had permission to slaughter only 500 animals per day and they have slaughtered more. Yet another presumption made in the SCN is that since the appellant did not have capacity to slaughter more than 500 buffaloes, they would have procured the Meat from a source not approved by the APEDA.
5.5 (i) At the cost of repetition, it is submitted that the DRI has itself agreed that the appellant had slaughtered more than 500 buffaloes in their abattoir. The appellant had agreed to this in all their statements including the statements of their employees. However, the DRI conveniently forgot to take note of the fact that in the same certificate where the number of buffaloes to be slaughtered was mentioned, the capacity to produce a quantity of 170 MT per day of boneless buffalo frozen meat was also mentioned. Thus, it is undisputed fact that the appellant had capacity to produce 170 MT of boneless Buffalo Meat per day in their premises. The capacity of any factory to produce or manufacture a commodity is measured by the capacity to produce the final product and not the capacity to consume the raw material. For the appellant, the number of buffalo is raw material. It is Buffalo Meat which is the final product and violation of the provision relating to the capacity is to be assessed by that of final product and not of raw material which was number of buffaloes.
5.5 (ii) The allegation of the DRI is that as the appellant had capacity to slaughter only 500 buffaloes per day, it is presumed that they had procured the buffalo Meat from other sources which were not approved by APEDA. The DRI has not shown or produced any evidence of the buffalo meat being procured from any source other than the Noticeees own abattoir which was duly approved by all law enforcing agencies including APEDA. The SCN issuing authority has not produced any evidence of buffalo meat being transported to the notices factory from any other place. There is no statement of any person regarding transportation for or sale of buffalo meat to the Notice from any other place nor corroborated with evidence of payments, if any, made to the suppliers of such alleged Meat. Thus the allegation of the DRI in the SCN is without any tangible evidence.
5.5 (iii) on the contrary, the evidences on record are all in favor of the appellant. The appellant had all certificates at the time of export in terms of conditions mentioned in Para 5 (supra) of this submission which showed that the buffaloes were slaughtered and processed in the premises of the appellant. This is proved by the certificate of the Veterinary Doctors, both employed by the appellant as well as the doctor Designated by the State Government, UP which certifies that all the animals were inspected before and after being slaughtered and all the meat was inspected and tested after production. The said certificate was produced at the time of export as per the requirement of the Export Policy, as mentioned herein before. No objection was raised at the time of export by any agency who had allowed export of the goods.
5.5 (iv) So far the number of buffaloes to be slaughtered mentioned in the Certificate is concerned, it is submitted that appellant had applied to Uttar Pradesh Pollution Control Board (here-in-after refer to as UPPCB), Lucknow for amendment in the number of buffaloes to be slaughtered per day from 500 to 1000 per day vide their application No. AHAF/2011/94 dated 26.09.2011/03.10.2011. The Regional Officer, Regional Office & Laboratory, UPPCB, Aligarh conducted inspection of the plant and submitted the inspection report with some observation to UPPCB, Lucknow vide Letter No. 1990/NOC-1078/11 dated 02.11.2011. The appellant have complied with their observations and suggestions and informed the UPPCB on 09.01.2012. The formal approval was still pending at the end of UPPCB, Lucknow. However, as per the deeming clause under sub-Section (7) of Section 25 of The water (Prevention and control of Pollution) Act, 1974 and similar provision under Sub-Section (4) of Section 21 of the Air (Prevention and Control of Pollution) Act, 1981, the NOC/Consent, unless refused, be deemed to have been given unconditionally on the expiry of a period of 4 months from the date of filing/forwarding of the application. Since, the notice never received any adverse report or refusal from UPPCB, Lucknow with respect to their application, they considered the same to have been granted as per the deeming provisions. Accordingly they started slaughtering more than 500 Buffaloes per day and processing thereof in their Integrated Abattoir-cum-Meat Processing Plant. However, it is clarified that the export quantity of Frozen Boneless Buffalo Meat always remained within the authorized limit of 170MT per day, granted to them by APEDA.
5.6 Another allegation in the SCN is that the appellant had filed wrong declaration before the Customs Authority at the time of filling the Shipping Bills. The SCN nowhere specifies as to in which Shipping Bills the declaration was wrong. It is submitted that all Shipping Bills were accompanied by proper certificates of the APEDA as well as of the Veterinary Doctors of State Government and the declaration was filed as per the certificates. The Revenue has not challenged or doubted the contents of the Certificates. They have also not recorded the statements of any of the authorities who had issued the certificates regarding number of animals being slaughtered and processed in the abattoir of the appellant. For proving mis-declaration, it was essential for the Revenue to obtain some tangible evidence in the form of statements of any competent person who could affirm that the buffaloes were not slaughtered in their abattoir or the meat was not processed therein. In absence of any evidence to the contrary, the allegation of mis-declaration is only based on presumption and assumption. Incidentally, mis-declaration is not a ground in the SCN for holding the goods liable to confiscation. This itself shows the inadequacy evidence with the Revenue for mis-declaration. Hence, the charge of mis-declaration is frivolous and not sustainable.
5.7 It is alleged in the SCN that the appellant has violated Section 11 of the FTDR Act, 1992 and therefore the exported goods are prohibited and liable to confiscation under Section 113 (d) of the Act (Section 11 of the FTDR Act, 1992 has been quoted earlier). According to sub-section (1) of Section 11 of FTDR Act, 1992 No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made thereunder and the export and import policy for the time being in force. For reaching at this allegation, the reasoning of the department are:-
5.8 It is submitted that registration of abattoirs and meat processing plants is carried out by the Agricultural and Processed Food Products Export Development Authority (APEDA). Inspection of the meat processing plants is carried out by a Committee of experts as per the standards laid down in the Meat and Meat Products Order (1973) & Food Safety and Standards Authority of India (FSSAI), Government of India. During inspection, focus is on hygiene and sanitary conditions maintained by the plant, ante-mortem and post-mortem inspections of each animal, infrastructure, staff hygiene, laboratory facilities, record maintenance etc. The registration of the meat processing plants is renewed every year after a detailed plant inspection by the Committee. According to the current Export and Import Policy of the Government of India, each export consignment is subjected to compulsory microbiological and other tests and a comprehensive pre-shipment inspection certificate is issued by the State Government Veterinarian. Each export consignment is accompanied by the Animal Health Certificate. This certificate also states that meat has been obtained from healthy, disease free livestock, which are free from contagious and infectious diseases, including foot and mouth disease and other diseases. The Health Certificate also confirms that the livestock have been subjected to ante-mortem inspection followed by post-mortem examination and that the meat is fit for human consumption, besides having the services of highly qualified and experienced veterinarians, microbiologists etc., employed by the exporting units.
5.9 The very nature of the certificate warrants that the animals are examined before slaughtering and after slaughtering at the premises of the exporter. The certificate is based on the reports of the Veterinary Doctors of the abattoir as well as designated by the State Authority.
5.10 The Revenue has completely ignored the certificated issued by the competent authorities. The certificate is the only requirement of the Export Policy. Once, no doubt has been expressed regarding the authenticity of the Certificate, it is only a presumption that the Meat was o0btained from other sources. Apart from this presumption, the Revenue has not produced any evidence such as the person from whom Meat was sourced, the place from where it was sourced, payment made to the supplier, transport used, etc., regarding so called other source of procurement. It is not disputed that such Health Certificates had been issued for each consignment after inspection and testing of each animal/buffalo before and after slaughtering AND after testing of processed meat in the in-house laboratory of the appellant within integrated Abattoir-Cum-Meat Processing Plant duly approved and registered by/ with APEDA. The basic principle of adversary judicial System that the person who alleges has to prove the charges with evidence, has been ignored by the Revenue. The allegations based on presumption, cannot be sustained.
5.11 Note 6 of The Export Import Policy warranted that exporter is to fulfil the condition by attaching copy of valid APEDA registration certificate with each Shipping Bill and also to submit declaration with each Shipping Bill/Consignment stating that:-
(a) the items exported have been obtained/sourced from an APEDA registered integrated abattoir or from APEDA registered meat processing plant; and
(b) the raw material, means Carcasses, have been sourced exclusively from APEDA registered integrated abattoir/abattoir.
A careful look at the wordings used in the said conditions indicate that the conditions mentioned at (a) above, part of Note 6 to Chapter 2 of Schedule 2 to ITC(HS) is for merchant exporter. It is not disputed that appellant has their own integrated Abattoir-Cum-Meat Processing Plant duly approved and registered with APEDA and thus they did not obtain/source either finished items or raw/processed meat in their own integrated Abattoir- Cum Meat Process Plant. The conclusive evidence of this is the certificate issued by Animal Husbandry directorate, UP for each consignment.
The condition (b) above is again part of condition mentioned in Note 6 of Chapter 2 of Schedule 2 of ITC(HS) and is relevant and related to those manufacturers who have only meat Processing Plant but do not have their own slaughter house which is not the case with the appellant as they have their own integrated Abattoir-Cum-Meat Processing Plant. They had not obtained/sourced any raw material from any other plant either approved and registered with APEDA or not approved or registered with APEDA. This allegation was denied and was not accepted by the exporter, in their statements under Section 108 of the Customs Act, 1962.
5.12 It is further submitted that at the port of destination also, the importing countries conduct quality check. None of the consignments exported by the appellant had been rejected on this account. This also proves that the quality of meat exported by the appellant met the international standards.
5.13 Further, the Revenue have only presumed that since the Noticee had permission to slaughter only 500 Buffaloes, they could not have produced the quantity of Meat exported. They conveniently ignored that the appellant had approved capacity to manufacture the quantity of 170MT of boneless frozen Meat. The said capacity in terms of weight was much more than the quantity exported by the appellant.
5.14 There is no provision to declare under Section 50 or 75 of the Act or under chapter Note 3, 6 & 8 to Chapter 2 of Schedule 2 of ITC(HS) Classification of Export and Import Items or under Rule 16 of the Drawback Rules, 1995 by the exporter about the number of Buffalo slaughtered per day in their Plant. In his statement dated 20.05.2013 Shri Baqar Abid, General Manager of appellant company agreed that during the months of November 2012 to February 2013, they had slaughtered more number of animals than 500 per day as mentioned in the Certificate by APEDA. Similarly Shri Haji Zaheer, Managing Director of the company vide his statement dated 21.05.2013 stated that they applied for enhancement of the number of buffaloes allowed to be slaughtered, and that is the reason they continued slaughtering more than 500 animals per day. In his statement dated 04.05.2014 Shri Baqar Abid categorically stated that they do not purchase any meat from outside and whatever they pack for export is slaughtered in their own slaughter house. It is alleged in Para 14 of the SCN that the appellant had exported a quantity of 17625.465 MT of Frozen Boneless Buffalo Meat in excess of the maximum production capacity which also includes the quantity of 2532 MT produced from unauthorized slaughtering. This allegation is vague without any supporting evidence and based on assumption and presumptions. The department has not produced any evidence as to from where, when and how the quantity of 2532 MT had reached the appellant Abattoir-Cum-Meat Processing Plant. An allegation cannot be leveled without supporting documents and other corroborative evidence and only on the basis of assumptions and presumptions. They have averred in no uncertain terms that all slaughtering of animals/buffaloes, even if more than 500 animals per day, has taken place in their Abattoir-cum-Meat Processing Plant which stand confirmed from the certificates issued by designated authority of State Government for each buffalo slaughtered in their Plant by testing and inspection of buffaloes in their plant only. Therefore, the allegation that they had purchased and sourced meat/carcasses from non APEDA approved sources is not correct and not sustainable.
5.15 In view of admitted facts, all conditions of APEDA and chapter note 3, 6 and 8 of Chapter 2 of Schedule 2 of ITC (HS) Classification of Export and Import Items issued under Section 5 of Foreign Trade (D&R) Act, 1992 had been duly complied with and to the satisfaction of the department. More so the impugned goods were freely exportable subject to certain condition and the department has not proved that any of the conditions was not satisfied. Thus the goods were not liable to confiscation either under Section 50 or 113 (d) of the Act or under Section 11 of the Foreign Trade (D&R) Act, 1992 as alleged in the show cause notice. It is re-iterated that impugned goods were neither Prohibited nor restricted nor STE and were Free to be exported and accordingly, the appellant did not contravene any provisions of APEDA, or Chapter 2 of Schedule 2 or Section 50 or 113 (d) of the Act or Section 11 of Foreign Trade (D&R) Act, 1992 and thus, the allegations made under Para 16, 18 and 19 of the Show Cause Notice are not sustainable or maintainable.
5.16 (a) Section 113(d) of Customs Act clearly states that goods Prohibited under the Customs Act or under any law for the time being inforce are liable for confiscation under this section. The prohibited goods are defined under Section 2 (33) of CA, 1962 which means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being inforce but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. In view of the above submission, the export of goods by appellant was FREE subject to fulfilment of conditions stipulated in Column 6 of Chapter 2 of Schedule 2 to ITC(HS). These conditions have been admittedly fulfilled as explained and verified by Customs Department in each and every consignment before Let Export order was given. Moreover, all consignments have been examined, stuffed in refrigerated containers and then sealed by the Jurisdictional Central Excise officers who also verified the Health Certificates issued by Designated Veterinary Authority of UP State in each case and thus confirmed that goods have been produced in the factory of appellant. Thus goods are neither Prohibited under Customs Act nor under the Foreign Trade (Development and Regulation) Act, 1992, nor under any other law for the being enforce. The ld.Commissioner has not mentioned the relevant provisions of any Act, Rule, Regulation or Notification issued under any Act which make the goods as prohibited goods.
5.17 Further, in absence of goods being available, the order of confiscation is bad ad fit to be set aside as held by Honble Calcutta High Court in the following case:-
Anita International v/s Commissioner of Customs, Calcutta; 1993 (65) ELT 201(Cal).
5.18 Further, the appellants have filed monthly returns with APEDA (the regulatory body) giving details of quantity produced and exported. No objection have ever been raised by APEDA.
6.1 The ld. A.R., Mr D.S.Mann, for the revenue relied on the impugned order passed by the Commissioner. Reiterating the findings, he states that the appellant have apparently exported frozen meat by slaughtering more animals per day than approved in the Certificate granted by APEDA and as such, the appellant have illegitimately exported more quantity of frozen meat. Thus, there is a clear indication that a quantity of 2532 MT of frozen meat was produced from un-authorized slaughtering or the excess quantity was procured from non-APEDA sources and exported by the appellant. The ld. Commissioner observed that the appellant might have submitted the APEDA Certificate but the same was invalid for slaughtering of more than 500 animals per day whereas the appellant exported more quantity. Thus, the APEDA Registration Certificate was not valid for such excess quantity exported. This fact was not brought to the notice of the Customs Officer at the time of export. Further under the Certificate granted by APEDA for integrated abattoir cum meat processing plant required the appellant to produce the raw meat by slaughtering the animals in their abattoir and processing of the meat. Thus, the provision of Note 6 applies not only to a meat processing plant who obtain raw meat from APEDA approved outside abattoir but also to integrated abattoir cum meat processing as in the case of the appellant. So far the contention of appellant is concerned, they had applied to the UPPCB for the consent/NOC for increasing the slaughtering capacity to 1000 animals per day, as it was a pre-condition for registration with APEDA. The authority of UPPCB had inspected the unit of the appellant and forwarded the report on 02/02/2011 and in pursuance thereto, the compliance as suggested had been made by the appellant and intimation for the same had been given to the UPPCB. Further, the contention of the appellant that under the provisions of the deemed consent under the Pollution Control Law, they started to slaughter more than 500 animals/buffaloes. The said contention of the appellant was not believed by the Commissioner, appreciating that for export of 170 MT of boneless frozen meat per day, more than 500 buffaloes will be required, but it does not mean that all the animals slaughtered on any day can only be exported on that day. The slaughtering of 2 or 3 days may be clubbed for export, thereby increasing the quantity of export on the following day. There is no stipulation that the maximum quantity sanctioned for a particular day, should be disposed of or cleared on that day only. The different capacities like freezing capacity, chilling capacity, was sanctioned on the basis of chilling facility available, therefore the appellant cannot seek immunity on the ground that they had more sanctioned export capacity and hence, that could have slaughtered more animals per day.
6.2 The plea of the appellant is completely untenable that they started to slaughter more animals under the provisions of the deemed consent/NOC under the Pollution Control Law and the same appears to be an afterthought to cope up the excess slaughtering as well as much more quantity of export of boneless buffalo meat, than the sanctioned capacity. Taking the average carcass weight as 208 Kgs and recovery as 66.69%, multipled with the total number of buffaloes 136884 slaughtered during the period 15.6.12 to 31.03.13 the total quantity of boneless meat produced would be 18987 MT, which includes the quantity of 2532 MT produced from 18257 animals slaughtered in excess of the permitted capacity during the period November, 2012 to February, 2013. Therefore, the legitimate quantity available for export during this period would be 16455 MT (18987-2532 MT). As per shipping bill-wise details for the period 15.06.2012 to 31.03.2013, appellant had exported 34080.883 MT of boneless buffalo meat whereas legitimate quantity available for export is calculated at 16455.368 MT. Therefore, the excess quantity of meat exported was 17625.465 MT. As out of the aforesaid quantity, 2532 MT of excess quantity of meat was due to excess slaughtering during the period November, 2012 to February, 2013. Therefore the rest of the quantity that is, 15093 MT was in excess to the slaughtering done in the plant of the appellant. The contention of the appellant that carcass weight was in the range of 301 kgs to 458 Kgs, with average weight of 386.42 Kgs. was not believed as in several weightmant slips maximum weight appeared to be 318 kgs. Thus, definitely the balance quantity of 15093 MT was produced in a non-APEDA sanctioned abattoir whether it was outside or inside their plant. But in any case, they were not authorized to produce more than 16455 MT of meat during the aforesaid period. Therefore, it is evident that the quantity of 17625.465 MT of frozen meat was exported in excess of the quantity sanctioned by APEDA from the plant of appellant. Thus, the declaration filed by the appellant with the Customs at the time of export to the effect that the raw material was procured from APEDA approved sources is apparently wrong. Thus, the appellant have contravened the provisions of Section 50, sub-section (2) of the Customs Act with intent to export prohibited goods and to claim inadmissible draw-back claim. It was further urged that as prohibited goods were exported or smuggled out of the country by the appellant, therefore, any amount which was due in the form of duty drawback, as claimed by the appellant was recoverable. Accordingly, he prays for dismissing the appeal and confirming the impugned order.
7. Having considered the rival contentions, we find that it is not disputed as to the quantum of frozen meat exported by the appellant. It is also not disputed that the frozen meat was processed and exported from the APEDA approved unit of the appellant. In all the consignments of export, the same were factory stuffed under supervision and sealed by the Excise or the Customs Officials, in the premises of the appellant and all export have taken place from ICD Dadri. It is also not disputed that there was no lacuna in the documents of export having proper health certificates granted by the Authority of the State Government of Uttar Predesh, Animal Husbandry Department. It also not disputed that the appellant received all the remittances for the export. The appellant have filed monthly online returns with APEDA declaring the quantity and value and the country to which exports were made. It is also an admitted fact that as per the registration certificate of APEDA, the slaughter permission approved was 500 animals or buffaloes per day whereas as per the processing capacity (170 MT per day of boneless buffalo frozen meat), the appellant could have utilized the meat of more than 500 buffaloes in view of its installed capacity. The appellants have also led evidences, being Annexure 22 to the appeal memo, wherein they applied to the Uttar Pradesh Pollution Control Board on 26/9/11 for the enhancement of the slaughtering number of buffaloes along with report on modification in the Environmental Management Plan for the proposed augmentation of the existing meat factory, which was prepared by approved consultant of the Pollution Control Board. In response thereto, the unit of the appellant was inspected by the Pollution Control Authority and vide communication dated 02/11/11 the appellant was directed to comply with certain conditions by the Pollution Control Board and the same was duly complied with under proper intimation dated 9/1/2012, categorically mentioning that the appellant will commence trial runs and if there are any further instructions, the same may be intimated in the meantime.. The ld. Counsel for the appellant, has further demonstrated that under The Water (Prevention and Control of Pollution) Act, 1974, section 7 provides that the consent referred to in sub-section (1) of Section 25 shall unless given or refused earlier, be deemed to have been given unconditionally on the expiry of a period of four months of the making of an application in this behalf, complete in all respects to the State Board. Similarly, Section 21(4) of The AIR (Prevention and Control of Pollution) Act, 1981, provides that within a period of four months after the receipt of the application for consent referred to in sub-section (1), the State Board, shall, by order in writing, and for reasons to be recorded in the order, grant the consent applied for subject to such conditions and for such period as may be specified in the order, or refuse consent. It is an admitted fact that the Pollution Control Board had not refused consent nor made any further suggestions for compliance to be made. Thus, there was deeming consent in favour of the appellant to slaughter and process more than 500 animals/buffaloes on the expiry of four months from the date of application being 26/9/11. In this view of the matter, we find that the whole case of the revenue is misconceived as the same is based on presumption that the appellant could not have processed more than 500 buffaloes per day in view of the Certificate of APEDA. There is no dispute that the slaughtering capacity has to be, prima-facie, approved by the State Pollution Control Board. Further, we find that in the facts of this case, the appellant is entitled to drawback only on the packing materials. Further, there is no dispute of export of packing material along with the frozen meat. In this view of the matter, there is no irregularities in the drawback granted to the appellant pursuant to export of frozen meat for which, the remittance is admittedly been received in convertible foreign exchange. Accordingly, we allow the appeal and set aside the impugned order. The appellant will be entitled to consequential benefits.
8. The concerned authority is directed to immediately refund within a period of 45 days the amount of duty drawback deposited by the appellant in the course of investigation and/or recovered from the appellant with interest as per Rules.
(Pronounced in the open Court on 14.06.2016)
Sd/ Sd/
(ANIL G. SHAKKARWAR) (A.CHOUDHARY)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
mm
28
Cus. Appeal No.70089/15