TaxTMI 
TaxTMI 
2013 (9) TMI 26
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....inimum Export performance, within a period of five years, to the tune of US Dollar One Million or 5 times the CIF value of imported capital goods, whichever is higher; The appellant imported capital goods valued at Rs. 120,29,60,194/- during the period 1999-2000 duty free under Notification No. 53/97-Cus., dated 3-6-1997. Accordingly, the appellants were required to achieve an export performance of Rs. 601.48 crore in five years; however, during the period 1999-2000 and 2000-2001 the appellants could achieve an export obligation of only Rs. 2.95 crore. The appellants also stopped the manufacturing activities in September, 2000. 2.2 Inasmuch as the appellants failed to fulfill the export obligation, a show-cause notice dated 27-2-2004 was issued demanding import duty of Rs. 61,24,18,364/- under the provisions of Notification No. 53/93-Cus. read with Sections 61 & 72 of the Customs Act, 1962 and also in terms of the bond executed by them. Interest on the said duty amount was also demanded. The show-cause notice also proposed to penalize the appellants under Sections 112(a), 117, Section 72 of the Customs Act and confiscate the imported goods under Section 111(o) of the Customs Act....
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....61 and 72 of the Customs Act, 1962 and in terms of the bond executed by the appellants. He also confirmed the demand for interest on the above duty amount under the provisions of Section 72 & 61 of the Customs Act. He has further held that capital goods, spares and raw materials totally valued at Rs. 126,59,47,384/- excepting raw materials used in the manufacture of goods valued at Rs. 2,95,29,133/- are liable to confiscation under Section 111(o) of the Customs Act and in lieu of confiscation, he has asked the appellants to pay a fine of Rs. 20 crore. He has further confirmed the penalty of Rs. 6 crore on the appellant firm and a penalty of Rs. 5 crore each on the Chairman and Managing Director. The appellants are before us against this order. 3. The Ld. Counsel for the appellant submits that vide letter dated 27-3-2009 the Development Commissioner, SEEPZ has permitted them to function as an EOU for a period of 5 years effective from 1-4-2009 with an export obligation of US $ 5,06,07,290/- and they have been permitted to import raw materials and components of US $ 3,54,25,100 and spares and consumables valued US $ 20,24,290/- and net foreign exchange earnings to be achieved has ....
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....ter dated 25-8-2006 informed the department as follows :- "In this connection, we write to inform you that M/s. Krishna Filaments Ltd., was granted letter of permission No. PER/228/(1998),/EOB/180/98 dated 9-9-1998 for establishment of new undertaking for manufacture of HDPE/PP Ropes at Betegaon, Thane. The unit was issued Green Card No. 430 dated 21-10-1998, valid upto 30-9-2001. The performance of the unit was monitored by this office for the period upto 1999-2000 based on quarterly reports (AJ 99, JS'99 & OD'99) submitted by the unit wherein they indicated the date of commencement of production as 27-4-1999 and export on 19-7-1999. The unit did not meet the obligations during the period for which they submitted the quarterly performance reports due to which, the performance of the unit as kept 'Under Watch Category' during the first year i.e. 1999-2000 of the first block of five years period i.e. 1999-2000 to 2003-04. Subsequently, the unit did not submit performace report. The unit was issued show cause notice under FTDR Act on 13-7-2001 for non-submission of annual performance reports. In response, the unit vide their reply dated 20-5-2002 stated that they commenced Tria....
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....t of the Hon'ble Bombay High Court in the case of Suresh Chand & Sons v. UOI, reported in 2010 (254) E.L.T. 421 (Bom.) in support of his contention that when the warehousing period has expired duty and interest are recoverable under the provisions of Sections 61 & 68 of the Customs Act, 1962. He has also relied on the judgment of this Tribunal in the case of Asian Alloys Ltd. v. CCE, Delhi reported in 2006 (203) E.L.T. 252 wherein it was held that capital goods or raw materials procured by the 100% EOU, which are not used for the specified purpose and goods manufactured were cleared clandestinely into DTA, in such a case the question of allowing depreciation on the value of the goods does not arise and such capital goods are liable to confiscation under Section 111(o) of the Customs Act. The said judgment of this Tribunal was also upheld by the Hon'ble Punjab & Haryana High Court reported in 2010 (252) E.L.T. A47 (P & H). The ld. AR also relies on the decision of this Tribunal in the case of Stilbene Chemicals Ltd. v. CCE, Vishakhapatnam, reported in 2008 (224) E.L.T. 110 (Tri.-Bang.) and the decision of the Hon'ble Apex Court in the case of Mediwell Hospital v. UOI, 1997 (89) E.L.....
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....ods. This is not correct. The rate be applied for demand of duty is the rate prevailing of date of deemed removal and to that extent there is an error in the computation of duty demand, which needs to be rectified. 6.2 The next question for consideration is what should be the value on which duty can be demanded on the capital goods and whether the appellant would be eligible for any depreciation or not. In the instant case, the goods are imported under Notification No. 53/97, dated 3-6-1997. Condition No. 5 of the said notification reads as follows : "Where it is shown to the satisfaction of the Assistant Commissioner of Customs that the said unit has been allowed by the Development Commissioner or the said Board to clear any of the said goods for being taken to any other place in India in accordance with the Export and Import Policy. (a) such clearance of capital goods, material handling equipment, office equipment and captive power plants may be allowed on payment of an amount equal to the customs duty leviable on such goods on depreciated value thereof and the rate in force on the date of payment of such duty; (b) such clearance of goods (including container, suitabl....
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.... home consumption and no duty is payable on such removal. In the instant case the LOP as well as the private bonded warehousing licence expired in 2001 and the unit no longer had the status of EOU or a private bonded warehouse after the expiry. Therefore, the ratio of the decision of Paras Fab International case has no application to the facts obtaining in the present case. Similarly, in the case of Bee International relied upon by the appellant, the issue related to extension of warehousing period to be co-terminus with the export obligation period imposed under SIA and the Board vide Circular dated 3-12-1985 had clarified that bonding/warehousing period should be liberally extended upto the validity period of the LOP. In the instant case, the LOP expired in September, 2001 and the bonding period was not extended thereafter. Therefore, the facts are clearly distinguishable. In the Essar Oil Ltd. case relied upon by the appellant, it was observed that in the case of Kesoram Rayon decided by the Hon'ble Apex Court, the deeming section was applied only to the limited extent of finding out the rate of duty applicable as provided under Section 15 of the Customs Act, 1962 and the said j....
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....ements relied upon by the appellant has no application whatsoever the facts involved in the present case and accordingly, we reject the contentions raised by the appellant in this regard. 6.5 Inasmuch as the appellants have failed to fulfil the terms and conditions of the exemption, the goods are liable to confiscation under the provisions of Section 111(o) of the Customs Act, 1962. The ld. Adjudicating authority has imposed a fine of Rs. 20.00 crores in lieu of confiscation. Inasmuch as the appellant had been allowed to function as an EOU from April 2009 onwards, we are of the view that in the facts and the circumstances of the case, the imposition of a nominal fine in lieu of confiscation would suffice. Accordingly, we set aside the fine of Rs. 20 crore imposed on the appellants and reduce the same to Rs. 1 crore instead. A penalty of Rs. 6 crore on the appellant and Rs. 5 crore each on the Chairman and Managing Director has been imposed under the provisions of Section 112(a) of the Customs Act, 1962. Inasmuch as the appellant has failed to fulfil the export obligation and the goods are liable to confiscation, imposition of penalty is justified, but the question is whether any....