Page 197 - ELT_15th August 2020_Vol 373_Part 4

2020 ] IFFCO LTD. v. PRINCIPAL COMMISSIONER OF CUSTOMS, JAMNAGAR 531

Gupta Chemicals Ltd. v. Commissioner — 2002 (148) E.L.T. 535 (Tribunal) — Referred ............. [Para 10]
Hyderabad Industries Ltd. v. Union of India —2000 (115) E.L.T. 593 (S.C.)
— Inapplicable .............................................................................................. [Paras 10, 11, 17, 27, 28, 29]
Morgan Industries Ltd. v. Commissioner — 2003 (161) E.L.T. 634 (Tribunal) — Referred ........... [Para 10]
Wipro Ltd. v. Assistant Collector — 2015 (319) E.L.T. 177 (S.C.) — Relied on ........................ [Paras 37, 42]
DEPARTMENTAL CLARIFICATION CITED
C.B.E. & C. Circular No. 32/2004-Cus., dated 11-5-2004 ............................................... [Paras 33, 35, 36, 44]
REPRESENTED BY : S/Shri Deepak Kumar, Consultant with Atul S.
Chhabra, Taxation Head, for the Appellant.
Shri T.G. Rathod, Authorised Representative, for the
Respondent.
[Order per : Justice Dilip Gupta, President]. - The Appellant has sought
the quashing of the order dated 30 March 2016 passed by the Principal Commis-
sioner of Customs (Preventive) Jamnagar [the Principal Commissioner] by which
the demand of differential Customs duty has been confirmed after rejecting the
declared value and re-determining it. Penalty and interest has also been directed
to be paid. An order for confiscation of urea imported by M/s. Indian Farmers
Fertilizers Co-operative Limited [IFFCO] has also been passed under the provi-
sions of Section 111(m) of the Customs Act, 1996 [the Customs Act].
2. IFFCO is a multi unit Co-operative Society and is primarily engaged
in the production and distribution of fertilizers. The Appellant claims that it im-
ports and distributes in India urea that is imported on Government Account by
the Department of Fertilizers through canalising agencies like the State Trading
Corporation [STC] and Minerals and Metals Trading Corporation [MMTC].
3. The scheme of import involves the Government of India estimating
the requirement of urea to be imported every year. Urea being a canalised item,
the import requirement is made known to the canalising agencies called State
Trading Entities [STE]. The STEs place the order on exporters located outside
India. The exporter issues the commercial invoice to STE, and the Bill of Lading
to the Ministry of Chemical and Fertilizer as a consignee. Thereafter, the Gov-
ernment of India transfers the goods to the Fertilizer Marketing Entity. To select
this Entity, the Department of Fertilizer in the Government of India invites quo-
tation from prequalified Fertilizer Marketing Entities for marketing of the im-
ported urea in the country after receipt, bagging, handling and standardisation at
Indian Ports. Based on the rates quoted by IFFCO, the Department of Fertilizer
agreed to appoint IFFCO as the Fertilizer Marketing Entity for Pipavav and New
Mangalore ports. Thereafter, an agreement dated 1 May, 2012 was entered into
between the Government of India and IFFCO.
4. It is stated that STE pays the full import price to the exporter and the
Government of India pays this import price to STE. IFFCO, on the other hand
pays “pool issue price” to the Government of India. Thus, for example, if STE
purchases urea at 300 US $ per MT from the exporter, the Government of India
pays 300 US $ per MT to STE. However, IFFCO would pay “pool issue price” of
Rs. 5110 per MT (approximately 83 US $ per MT) to the Government of India as
per the agreement and this is the price at which IFFCO sells urea to the farmers.
The differential amount is borne by the Government of India as a subsidy to the
farmers. IFFCO, however, pays Customs duty on the price paid by STE to the
exporter, that is 300 US $ per MT. It is stated that subsequently, in view of a
communication dated 2 February, 2015 sent by the Assistant Commissioner
EXCISE LAW TIMES  15th August 2020  197