TaxTMI 
TaxTMI 
2011 (3) TMI 593
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....ial Economic Zone allowed in-principle debonding of the EOU by an order dated 16.1.2003, which stipulated conditions including that the applicable duties of Customs/Central Excise be paid on the imported/indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock. Accordingly, the appellant paid a total amount of duty of Rs.9,20,18,299/- on 22.5.2003 in respect of the imported raw materials in stock. The basic customs duty (BCD) component of this amount was calculated @ 5% (instead of the normal rate of 25%) in terms of Notification No.21/2002-Cus. dated 1.3.2002 (serial No.84). The Assistant Commissioner issued a certificate dated 28.5.2003 to the effect that the appellant had paid the applicable duties amounting to Rs.9,20,18,299/- on 22.5.2003 in connection with debonding of their unit in terms of the in-principle debonding permission given by the Development Commissioner on 16.1.2003. On 10.7.2003, the Development Commissioner issued final debonding order pursuant to directions of the Hon ble Bombay High Court in Writ Petition No.5884 of 2002. The final debonding order cancelled with immediate effect the letter of permission (LOP) dated ....
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....he appellant reiterated the grounds of this appeal and submitted that the payment of duty made by them on 22.5.2003 was in terms of condition No.5 of Notification 53/97-Cus. He submitted that the impugned demand of duty is under condition No.6 of Notification 53/97-Cus. According to the learned counsel, condition 6 is not applicable to the facts of this case and, therefore, the demand of duty is not sustainable in law. According to him, the appellant was entitled to avail the benefit of Notification 21/2002-Cus. while paying duty on the raw material which was in stock on the date of payment of duty. Condition No.5 (which required the importer to follow the procedure set out in the Customs [Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods] Rules, 1996) of this Notification was substantially complied with by the appellant. In this connection, it was further submitted that the procedural requirements under Notification 53/97-Cus. were essentially similar to the procedure laid down under the above Rules and, therefore, the appellant, who had followed the procedure as above under Notification 53/97-Cus., should be held to have virtually complied with the a....
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....istant Commissioner of Customs to have been used in the manufacture of final product for export out of India arose under the B-17 bond executed by them. The raw materials which were in stock on 22.5.2003 were not shown, to the satisfaction of the Assistant Commissioner, to have been used in the manufacture of final products for export out of India. Therefore, it was open to the Revenue to enforce the bond under condition No.6 of Notification 53/97-Cus. to recover the differential amount of Customs duty leviable on such raw materials. What was liable to be recovered from the appellant in respect of the imported raw materials was the amount of duty forgone at the time of importation. The entire BCD and CVD were forgone at the time of importation and, therefore, it was open to the Revenue to recover these duties from the EOU on the ground of violation of condition 6 of Notification 53/97-Cus. and by way of enforcement of the B-17 bond against them. Towards the duty forgone at the time of importation, the appellant paid only an amount of Rs.9,20,18,299/- on 22.5.2003 in connection with the debonding of the EOU. Hence they are liable to pay the differential amount of duty as demanded by....
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....3 (SC). The learned JCDR submitted that there was no period of limitation where the department chose to demand a duty in terms of the bond executed by the appellant. In this connection also, case law was cited, viz. Atlas Dye Chem Industries vs. CC, Ahmedabad 2008 (224) ELT 104 (Tri.-Ahmd.), Endress + Hauser Flowtec (I) Pvt. Ltd. vs. CCE, Aurangabad 2009 (237) ELT 598 (Tri.-Mumbai) etc. 6. The Bench queried the learned counsel as to (a) whether the payment of duty on 22.5.2003 was based on any assessment on ex-bond bill of entry, (b) when and where was the raw material used in the manufacture of finished goods and (c) when were such finished goods cleared from the EOU. The learned counsel could not give any categorical answer to these queries. 7. We have carefully considered the submissions. Mainly the following issues were agitated in this case: (i) Whether the appellant is eligible for the benefit of concessional rate of duty under Notification No.21/2002-Cus. dated 1.3.2002 (Serial No.84) in respect of the imported raw materials found in stock at the stage of debonding of the EOU; (ii) Whether the demand of customs duty raised on the appellant in ....
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....owards Basic Customs Duty (BCD), Countervailing Duty (CVD) and Special Additional Duty (SAD) on 22.5.2003. (This payment of customs duty was certified by the jurisdictional Assistant Commissioner on 28.5.2003). The amount of BCD was calculated at the concessional rate (5%) in terms of Notification 21/02-Cus. (Serial No.84) as against the normal rate (25%). In the show-cause notice dated 20.6.2005, it was alleged that the appellant was liable to pay BCD at the normal rate and to pay proportionately higher amounts of CVD and SAD. Accordingly, the appellant had to pay total duty of Rs.2,96,92,793/- (BCD + CVD + SAD). Hence the demand of differential duty of Rs.1,42,34,222/- proposed in the show-cause notice. 8.1 The appellant s claim for the benefit of concessional rate of duty under Notification 21/02-Cus. is linked to condition 5(b) of Notification 53/97-Cus. It has been argued that the payment of duty made by them on 22.5.2003 was in terms of condition No.5(b) of Notification 53/97-Cus. and similar condition of Notification 52/03-Cus. We find it difficult to accept this argument of the appellant inasmuch as, as rightly submitted by the learned JCDR, the said condition was a....
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....ermission. As regards condition (5) of Notification 21/02-Cus., it was applicable only to import of raw materials. Therefore there is no question of the appellant complying with condition 5(b) of Notification 53/97-Cus. or condition 5 of Notification 21/02-Cus. and consequently the plea made by the counsel for liberal construction of such conditions in view of the apex court s decision in Compack s case has no relevance. For the same reason, neither the Tribunal s decision in the case of Samtel Color Ltd. relied on by JCDR nor the Supreme Court s judgment in the case of Thermax Ltd. vs. Collector [1992 (61) ELT 352] cited in the memo of appeal is relevant. (The learned counsel has not pressed into service the Thermax judgment which is said to be under review by a larger bench of the apex court). In the result, the appellant s claim for the benefit of concessional rate of duty under Notification 21/02-Cus. read with condition 5(b) of Notification 53/97-Cus. is ill-conceived and unsustainable. 8.3 Let us now approach the issue from a different angle and see what would be the result. The appellant would not have chosen to pay duty on the raw materials at concessional rate of d....
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.... to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs. The period of limitation for service of the show-cause notice has also been laid down under sub-section (1) of Section 28. Where the amount of duty is rupees one crore or less, the show-cause notice has to be served by the Commissioner of Customs or, with his prior approval, by any officer subordinate to him. Where the amount is more than one crore rupees, the show-cause notice has to be served only with the prior approval of the Chief Commissioner of Customs. It is under sub-section (2) that the proper officer, after considering the reply (if any) to the notice, determines the amount of duty due from the person concerned. This sub-section also requires such person to pay the amount determined by the proper officer. Thus Section 28 of the Customs Act is the only provision for collection, from a person through a process of adjudication, any amount of customs duty which has not been levied or has been short-levied or erroneously refunded. Therefore, for recovery of customs duty from a person without doing violence to Article 265 o....
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.... Customs/Central Excise to have been used in the manufacture of articles for export and any penalty imposed under Customs Act, 1962 or Central Excise Act, 1944 and rules or regulations made thereunder as the case may be. The bond was executed in terms of condition No.6 of Customs Notification 53/97 which required every EOU to execute a bond binding itself to fulfil export obligation and other conditions stipulated in the Notification and also to pay on demand an amount equal to the duty leviable on the goods (imported by the EOU) as are not proved to the satisfaction of the Assistant Commissioner of Customs to have been used in the manufacture of finished goods for export. A similar bond was required as per condition No.3 of Customs Notification 52/2003 also. Therefore the show-cause notice was demanding duty in terms of condition (10) of the aforesaid B-17 Bond read with condition (6) of Notification 53/97-Cus. and condition (3) of Notification 52/2003-Cus. 9.3 It is not in dispute that what was demanded from the appellant was an amount of customs duty which the EXIM Policy required them to pay on the raw materials in stock at the time of debonding vide para 6.20(a....
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....acture of articles for export can fall in this category. Similarly, any raw material imported duty-free and brought into the factory but clandestinely disposed of instead of being used in the manufacture of articles for export may also fall in the same category. Any duty-free imported raw material cleared from the Unit for job work but not returned after job work might also get covered in the same category. Thus raw materials which were imported by an EOU and cleared duty-free under any of the aforesaid Notifications but not physically available, nor duly accounted for by the Unit, would be covered by the above italicized phrase and, therefore, if the Unit fails to prove to the satisfaction of the Assistant Commissioner that such goods were used in the manufacture of articles for export, it would be liable to pay, on demand, an amount equal to the customs duty leviable on such goods. No such eventuality can arise in the case of raw materials imported by the EOU duty-free, duly received in the factory, duly accounted for in the records and physically present in stock (verified by the Bond Officer) on the date of debonding of the Unit. Therefore, we hold that the raw material found i....
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....an be said about the appellant with reference to Notification No.52/03-Cus. also. Thus debonding of the Unit rendered it liable to pay the customs duty which was forgone at the time of import of the above raw material. This liability to pay the duty is in tandem with para 6.20(a) of the EXIM Policy/2002-07 also. Suppose the Unit does not pay the above duty at the appropriate stage of debonding, or short-pays it, a cause of action arises for the department to issue a demand notice to the Unit under Section 28(1) of the Customs Act. 9.6 The B-17 Bond executed by the appellant contains provisions which appear to indicate that Section 28 of the Act could be invoked for the above purpose. Condition No.2 of the bond refers to a notice of demand of duties, rent and charges claimable under the Customs Act, Central Excise Act and rules/regulations made thereunder . This condition reads thus: We, the obligors, shall pay on or before a date specified in a notice of demand all duties, rent and charges claimable on account of the said goods under the Customs Act, 1962, Central Excise Act, 1944 and rules/regulations made thereunder together with interest on the same from the date....
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....he Central Government s Public Health Scheme, imposed stringent poor-people-friendly conditions to be complied with by a hospital importing medical equipments and seeking duty-free clearance under the Notification. It cannot be applicable to an EOU having to pay customs duty on its stock of imported raw materials by reason of its debonding as per the EXIM Policy provisions. The EOU s case is clearly distinguishable from the case of a hospital having to pay customs duty on a medical equipment imported by it duty-free in the past under Notification 64/88-Cus., on account of breach of continuing obligations imposed by the Notification. For this reason, the Supreme Court s decision in C.T. Scan Research Centre case is also not applicable. In that case, the apex court followed its own earlier decision in Jagdish Cancer and Research Centre case [(2001) 6 SCC 483]. In both the judgments, the court was dealing with cases of duty-free import of medical equipments under Customs Notification No.64/88 which imposed on importer-hospitals continuing obligations such as providing free medical treatment to not less than 40% of outdoor patients, reserving not less than 10% of beds for poor patients....