Page 218 - ELT_15th August 2020_Vol 373_Part 4

552 EXCISE LAW TIMES [ Vol. 373

8.1 Heard both sides. The only issue to be decided is, “whether the ap-
pellant has made out a case for refund under Section 142(3) ibid, of the Customs
Duty paid in view of non-fulfilment of its export obligations?”
8.2 None of the decisions relied on by the assessee are dealing with the
refund arising on account of failure to comply with export obligation vis-à-vis
Advance Authorization and therefore, as pointed out by the Ld. Authorized Rep-
resentative for the Revenue, the same are not applicable to the facts of this case.
9.1 Advance Authorization is issued in terms of paragraph 4.03 of the
Foreign Trade Policy [F.T.P. (2015-20)] and the relevant Notification is Notifica-
tion No. 18/2015-Cus., dated 1st April, 2015. The said Notification exempts ma-
terials imported into India against a valid Advance Authorization issued by the
Regional Authority in terms of paragraph 4.03 of the FTP subject to the condi-
tions laid down thereunder. One of the conditions, as per clause (iv), is that it
requires execution of a bond in case of non-compliance with the conditions speci-
fied in that Notification. Further, paragraph 2.35 of the FTP also requires execu-
tion of Legal Undertaking (LUT)/Bank Guarantee (BG) : (a) Wherever any duty
free import is allowed or where otherwise specifically stated, importer shall exe-
cute, Legal Undertaking (LUT)/Bank Guarantee (BG)/Bond with the Customs
Authority, as prescribed, before clearance of goods.
9.2 Further, there is no dispute that the above is guided by the Hand-
book of Procedures (‘HBP’ for short) and paragraph 4.50 of the HBP prescribes
the payment of Customs Duty and interest in case of bona fide default in Export
Obligation (EO), as under :
“(a) Customs duty with interest as notified by DoR to be recovered from
Authorisation holder on account of regularisation or enforcement of
BG/LUT, shall be deposited by Authorisation holder in relevant Head
of Account of Customs Revenue i.e., “Major Head 0037 - Customs and
minor head 001-Import Duties” in prescribed T.R. Challan within 30
days of demand raised by Regional/Customs Authority and docu-
mentary evidence shall be produced to this effect to Regional Authori-
ty/Customs Authority immediately. Exporter can also make suo motu
payment of Customs duty and interest based on self/own calculation
as per procedure laid down by DoR.”
10. Thus, the availability of CENVAT paid on inputs despite failure to
meet with the export obligation may not hold good here since, firstly, it was a
conditional import and secondly, such import was to be exclusively used as per
FTP. Moreover, such imported inputs cannot be used anywhere else but for ex-
port and hence, claiming input credit upon failure would defeat the very pur-
pose/mandate of the Advance Licence. Hence, claim as to the benefit of
CENVAT just as a normal import which is suffering duty is also unavailable for
the very same reasons, also since the rules/procedures/conditions governing
normal import compared to the one under Advance Authorization may vary be-
cause of the nature of import.
11. The import which would have normally suffered duty having es-
caped due to the Advance Licence, but such import being a conditional one
which ultimately stood unsatisfied, naturally loses the privileges and the only
way is to tax the import. The governing Notification No. 18/2015 (supra), para-
graph 2.35 of the FTP which requires execution of bond, etc., in case of non-
fulfilment of export obligation and paragraph 4.50 of the HBP read together

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