TaxTMI 
TaxTMI 
2001 (5) TMI 919
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....t polyethylene and polypropylene foam profiles, like sheets, hoses, rods, net, pad etc. worth US $ 3708000/- within a period of 5 years from the date of issue of licence. The licence also mandated that before clearance of the first consignment but not later than six months from the date of issue of the licence, the applicant would execute a legal undertaking and bank guarantee in the manner indicated in para 102 of the Handbook of Procedure or amended from time to time, with the concerned export obligation cell of the DGFT. 3. The applicant imported the capital goods viz. complete custom built plant for manufacturing of polyethylene and polypropylene and availed exemption under Notification No. 160/92-Cus., dt. 20-4-1992 as amended, which extended concessional customs duty at 15% to such capital goods imported under EPCG Scheme subject to conditions specified therein. The capital goods were imported vide B/E No. 125, dt. 15-9-94. The goods were assessed and CIF value as taken at Rs. 2,89,54,286/- on which the applicant paid the duty at concessional rate of 15% amounting to Rs. 43,86,574/- and duty saved was Rs. 65,79,872/-. 4. As per one of the terms of the EPCG Lic....
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....72/- as well as interest accrued thereon from 4-10-94 to 31-7-99 @ 20% amounting to Rs. 63,52,731/- and further interest @ 20% from 1-8-99 till the payment of differential duty should not be recovered by the department and why action under Section 111(o) of the Customs Act, 1962 should not be initiated for having failed to fulfil the export obligation within the export obligation period of 5 years, and thus contravened the conditions of the notification No. 160/92-Cus./124/93-CUS. The show cause notice also proposed initiation of penal action under Section 112(a) of the Customs Act, 1962. 7. It is in connection with the above proceedings initiated under the Customs Act, 1962, that the applicant has filed an application to the Settlement Commission on 7-7-2000, to have the case settled. 8. In their application dated 7-7-2000 seeking settlement of the said case, the applicant disclosed and admitted as payable an amount of Rs. 29,24,383/- out of Rs. 65,79,872/- demanded in the said show cause notice dt. 15-7-99. The applicant sought the following issues to settled : (i) The show cause notice, besides seeking to recover additional duty, ....
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...., they could fulfil its export obligation only to the tune of Rs. 7,76,513/- only. (v) That they commenced commercial production on April, 1995. After commencement of the production, they were faced with the industrial dispute with its temporary workmen who had disrupted the entire production schedule. After this fracas when they were trying to get over production problems, in January, 1997, there was a major fire accident and the entire factory was gutted in the fire and the total damage was to the tune of Rs. 7 Crores. However, they could get only Rs. 5.11 Crores on insurance amount. The amount received from insurance company was paid to IDBI who had lent a large sum to the applicant. In the meanwhile, the export obligation period expired in July, 1999. During these two years they could not revive the unit. They therefore, approached the DGFT, New Delhi, for extension of the export obligation period in June, 1993, so that the export obligation could be effected. But the said application was rejected by DGFT. They also approached the Grievance Committee of DGFT, New Delhi for reconsideration of extension of the export obligation period in March, 2000, bu....
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....eposited Rs. 29,24,383/- on 21-11-2000 by way of cheque i.e. delay in payment by 32 days. 14. The applicant filed a miscellaneous application requesting, inter alia, condonation of delay in effecting payment of admitted duty liability of Rs. 29,24,383/- in terms of the interim order of the Settlement Commission dt. 8-9-2000. 15. In the reports dt. 22-8-2000 and 13-10-2000, the Office of the Commissioner of Customs & Central Excise, Goa, submitted, inter alia, various facts related to the importation/clearance of the said capital goods by the applicant, the show cause notice issued to them and arguments against admitting the application payment of duty in full and waiver of interest and penalty. 16. In their report dt. 20-11-2000 the office of the DGFT, New Delhi submitted, inter alia, (i) that the actual liability on the part of importer as per legal undertaking executed with DGFT's office was : 100% duty saved : Rs. 65,80,541/- Interest @ 24% p.a. Rs. 98,00,499/- From 15-9-94 to 30-11-2000 Total Rs. 1,63,81,040/- 17. The Office of th....
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....ted inter alia, various facts related to the importers, and brief facts relating to fire, revalidation of B. G. etc. the show cause notice issued to the applicant demanding duty foregone along with interest @ 20% per annum and action u/s 111(o) for contravening the conditions of the Notification No. 160/92-CUS. (as amended) and for imposing penalty u/s 112 (a) of Customs Act, 1962. (i) That there were no justifiable reasons for the applicant not to accept the duty liability of Rs. 36,55,786/- in respect of CVD. The applicant had clearly given an undertaking at the time of clearance of imported capital goods, that they would pay the duty foregone along with interest. (ii) That it is not correct for the applicant to say that there are no provisions for recovery of interest either in the relevant Notification No. 160/92-Cus. or in the import policy, that no interest can also be charged under Section 28AB of the Customs Act, 1962 for the reasons that the goods were imported in 1994 whereas Section 28AB was inserted in the Customs Act, 1962 for the first time by the Finance Act, 1996 and it was made applicable only from 29-9-96. In t....
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....y payable under the notification. They have however sought benefit of CVD on the ground that had they imported the goods in the normal course without availing. 26. EPCG, then they would have availed the MODVAT credit of CVD. The applicant has further represented that they had paid Rs. 18,11,600/- from their PLA account and this may be allowed to be adjusted against the CVD leviable of Rs. 36,55,478.63 because of the financial hardship. 27. For better understanding of the duty and interest liability, it is necessary to discuss the Exim Policy provision and the notification conditions. Chapter VI of Export Import Policy (1992-1997) and Chapter VI of Handbook of Procedure, Vol.-I deal with Export Promotion Capital Goods Scheme. As per the Exim Policy the capital goods may be imported at the concessional rate of Customs duty of 15% under Customs Notification 160/92 subject to an Export obligation of four times the CIF value of the imports within five years from the date of issue of licence. Para 45 of Exim Policy provides for the execution of a legal undertaking by the importers with the licensing authority supported by a bank guarantee for the fulfilment of the Export ....
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....granted under Notf. No. 160/92 in view of the failure to comply with the conditions of the notification. The same was agreed by the consultant at the time of final hearing held on 9-2-2001. 31. In view of the above, detailed discussions, we determine the entire duty (Basic and CVD) foregone, but for the exemption, as the duty amount finally payable amounting to Rs. 65,79,862/-. Out of this total amount of Rs. 65,79,862/-, the applicant has already paid Rs. 29,24,383/-. The balance amount of Rs. 36,55,479/- shall be paid by the applicant. 32. It is seen from the submission made by the consultant as well as the revenue on the issue of levy of interest are divergent. 33. The applicant in their submission w.r.t. issues to be settled have pointed out that there is no provision for recovery of interest either in the relevant Notification No. 160/92-CUS. or in the import policy and that no interest can be charged under Section 28AB of the Customs Act, 1962, for the reason that the goods were imported in 1994, where Section 28AB was made effective only from 28-9-96. 34. On perusal of the SCN it is seen that the SCN is silent about the provisions under which ....
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....d capital goods shall make a declaration before the Assistant Commissioner of Customs, in such form as he may specify, binding himself to pay on demand an amount equal to the duty leviable on such capital goods but for the exemption contained herein in respect of which the conditions specified in column (2) of the Table have not been complied with." In this connection, reference may be invited to CBEC, Circular No. 131/95-Cus, (F.No. 605/166/95-BBK, dt. 20th Dec., 1995) conveying the amendments effected to the Notifications Nos. 107/95-Cus., 80/95-Cus., 106/95-Cus., 107/95-Cus., 128/94-Cus., 111/95-Cus., 110/95-Cus & 79/95-Cus. vide notification Nos. 145/95 to 149/95, dt. 19th Sept. 1995. The effect of the amendment as conveyed in the said circular were : (a) The requirements of execution of Bond/legal Undertaking with the Licensing authorities and production of evidence in this regard has been done away with. (b) In case of non-fulfilment of the conditions of the Notifications interest at the rate of 24% per annum on the duty becoming payable shall also be recoverable form the date of clearance of imported goods till the dat....
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....ok Singh v. Asstt. Collector - AIR, 1992 S.C. 1756 (7) Ashapura Mineral Co. v. State of Gujarat - 1993 (89) S.T.C. 289 (8) J. K. Synthetics Ltd. v. Commercial Tax Officer - 1993 (68) E.L.T. 246 (Tribunal) (9) Venkata Subbarao v. State of A.P. - AIR - 1965 S.C. 1773 (10) H. L. Mehra v. State of Maharashtra - AIR, 1971 S.C. 1130 (11) M. Gangaraju & Sons v. State of A P. - AIR 1965 A.P. 60 (12) Ferro Alloys Corpn. Ltd. v. A. P. State Electricity Board - AIR 1993 S.C. 2005 (13) Narinder Chand v. V. T. Him Pra - AIR 1971 S.C. 2399 (14) B. C. Banerjee v. State of M. P. - AIR 1971 S.C. 517 (15) Prem Nath Khandelwal v. Asstt. Collector - 1970 (77) I.T.R. 949 (16) I.T.O. v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. - 1975 (101) I.T.R. 457 (17) Gulbanu Razack v. Asstt. Commissioner of I. T. - 1990 (186) I.T.R. 226 (18) State of Andhra Pradesh v. Mothey Gangaraju - 1963 (14) STC 112 (19) Ballarpur Industries Ltd. v. UOI - AIR 1990 Bom. (D.B.) 239 (20) M. P. Mittal v. State of Haryana - AIR, 1984 SC 1888 (21) ....
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....r could not fulfil the export obligation. The notice was issued by Customs for recovery of duty and interest. The Tribunal has held as below : "The notification itself does not provide for payment of interest by the importer. The undertaking by the importer referred to in condition (3) of the notification was only to "pay on demand an amount equal to the duty leviable on such capital goods but for the exemption." The provisions of the Customs Act, 1962 also do not justify demanding interest. Section 28AA of the Act only applies where the duty demanded under Section 28 is not paid within three months from the date of the confirmation of the duty. Section 28AB will not be attracted in this case, the demand for duty not having arisen as a result of any of the factors specified in the proviso under sub-section (1) of Section 28. The departmental representative points to the provisions of paragraph 45 of the Policy, and paragraph 103 of the Handbook of Procedures referring to the legal undertaking required to be furnished by the importer and applying for a EPGC licence. This undertaking provides a clause that the importer shall pay full amount of Customs duty saved, and 24% intere....
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....ension in the export obligation period vide their letter dt. 1-6-1999 detailing therein, various force ma --- reasons which were beyond their control on amount of which they could not fulfil their export obligation; however, the DGFT had rejected their request vide DGFT's letter dt. 14-2-2000/2-3-2000 F. No. 20/873/94/EPCG III. Further the applicant had approached the Grievance Committee for extension of their export obligation period vide their letter dt. 6-3-2000. However the same was also rejected. 43. The Commission finds it proper to refer to the Wanchoo Committee Report, the genesis of settlement machinery for taxation laws in India, which, while commenting on the deleterious effect of frequent disclosures schemes on the level of compliance among the tax paying public and the morale of the administration, observed, inter alia : "This does not mean that the door for compromise with an errant tax payer should remain forever closed. In the administration of fiscal laws, whose primary objective is to raise revenue, there has to be some room for compromise and settlement. A rigid attitude would not only inhibit a one time tax evader or an unintending defaulter from maki....
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....st day of March, 2001. (Rule 57AB of Central Excise Rules, 1944) In the instant case the capital goods imported by the Applicant obviously must have been received in his factory prior to 1-3-2001, hence he becomes ineligible for availment of any Cenvat credit equivalent to CVD portion of his duty liability that he may choose to pay after 1-3-2001. The transitional provisions under Rule 57AG also do not help the Applicant's cause, since only that amount of Modvat credit earned by him and lying unutilised as on 1-4-2000 shall be allowable as Cenvat credit. As held by the Apex Court in the case of Kolhapur Canesugar Works Ltd. v. Union of India reported in 2000 (119) E.L.T. 257 (S.C.), "if a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds than, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards.......Thus the operation of repeal or deletion as to the future and the post largely depend on the savings available. In a case where a particular provision in a statute is omitted and in its place another provision dealing with t....