2015 (12) TMI 1090 - AT - Customs

Tribunal upholds duty demand of Rs. 74,11,970 with interest, modifies confiscation and penalties

M/s. Krishna Knitwear Technologies Limited Versus Commissioner of Central Excise & S.T., Vapi

The Tribunal upheld the demand of duty of Rs. 74,11,970/- along with interest but set aside the confiscation of goods, redemption fine, and penalties. The ... 100% EOU - appellants failed to install Secondhand Textile Machinery (capital goods) within the stipulated time of one year, or within the extended period - Confiscation of goods - exemption under Notification No. 53/1997-Cus dated 03.6.1997 as amended by Notification No. 52/2003-Cus dated 31.3.2003 - Imposition of redemption fine and penalty - Held that:- The goods were allowed to be imported and the duty on the same was exempted for a specific purpose, as per the conditions of the exemption notification (supra) and the appellant was bound by the conditions. On failure to comply with those conditions, the goods are not eligible for the exemption provided by the said notification and they are liable to pay applicable customs duty. In Macmillan India Limited (2007 (10) TMI 186 - CESTAT, BANGALOR), the goods related to Information Technology and export obligations were already met. In Paras Fab International (2010 (6) TMI 184 - CESTAT, NEW DELHI), the issue was whether the entire premises of 100% EOU should be treated as warehouse, and whether for captive consumption within the bonded premises, ex-bond bill of entry has to be filed and duty paid. The issue in Gemini Metal Works (1984 (12) TMI 314 - MADRAS HIGH COURT) related to cancelation of license and is not relevant in the instant case. On the other hand, we find our views are fortified by the decisions of this very Bench of the Tribunal in the case of M/s. Siddeshar Spinning Pvt. Limited vs. CCE, Bhavnagar [2013 (9) TMI 585 - CESTAT AHMEDABAD], which had also followed the earlier decisions of the Tribunal in the case of Nava Bharat Enterprises Limited - [2009 (12) TMI 396 - CESTAT, BANGALORE], Philips India Limited vs. Commissioner of Customs, Mumbai - [2000 (12) TMI 195 - CEGAT, MUMBAI] and Taurus Novelties Limited vs. Commissioner of Customs, Bangalore - [2004 (7) TMI 162 - CESTAT, BANGALORE]. The demand of duty with interest would suffice the cause of justice in the instant case and confiscation of the goods and penalty on the appellant are not warranted. - Decided partly in favour of assessee. Issues Involved:1. Failure to install imported capital goods within the stipulated period.2. Denial of extension requests and subsequent actions by the department.3. Liability to pay customs duty and imposition of penalties.4. Applicability of cited case laws.Detailed Analysis:1. Failure to Install Imported Capital Goods Within the Stipulated Period:The appellants, a 100% EOU unit, imported 144 secondhand textile machines availing exemptions under Notification No. 53/1997-Cus and Notification No. 52/2003-Cus. They installed 113 machines within one year but failed to install the remaining 31 machines within the stipulated time or the extended period granted by the Assistant Commissioner. The appellants argued that the delay was due to difficulty in procuring spare parts for obsolete machinery. The adjudicating authority confiscated the 31 machines, imposed a fine, confirmed the duty with interest, and imposed a penalty.2. Denial of Extension Requests and Subsequent Actions by the Department:The appellants requested permission to scrap and destroy the uninstalled machines and sought further extension for installation, both of which were denied by the department. The department directed the appellants to pay duty with interest. The appellants did not appeal these decisions, leading to their finality. The department's stance was that the appellants failed to comply with the conditions of the exemption notifications, justifying the duty demand and penalties.3. Liability to Pay Customs Duty and Imposition of Penalties:The Tribunal observed that the appellants were bound by the conditions of the exemption notifications, which required installation of the capital goods within one year or an extended period not exceeding five years. Failure to comply resulted in the ineligibility for exemption and liability to pay customs duty. The Tribunal upheld the demand of duty of Rs. 74,11,970/- along with interest, citing that exemption notifications must be strictly construed and non-compliance results in denial of benefits.4. Applicability of Cited Case Laws:The Tribunal found that the case laws cited by the appellants were not applicable due to differing facts. The Tribunal referred to its decision in Siddeshar Spinning Pvt. Limited, which held that non-fulfillment of export obligations necessitated payment of customs duty with interest but did not justify confiscation and penalties. The Tribunal concluded that while the duty and interest demand was justified, the confiscation of goods and imposition of penalties were not warranted due to the absence of malafide intention and suppression of facts by the appellants.Conclusion:The Tribunal upheld the demand of duty of Rs. 74,11,970/- along with interest, but set aside the confiscation of goods, redemption fine, and penalties. The appeal was disposed of with modifications to the extent of setting aside the confiscation and penalties, while confirming the duty and interest demand.