TaxTMI 
TaxTMI 
2014 (4) TMI 55
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....7-Cus dt. 03/06/1997 as well as Excise Notification No.1/95-CE dt. 04/01/1995. Entire production of shrimp feed/prawn/shrimp made using the duty free materials and capital goods were required to be exported. 3. As required by LOP, undertaking was given by the appellant executing an agreement on 15/12/1993 to fulfill conditions thereof and started commercial production on 01/11/1994. On 25/11/1997 there was an amendment to the LOP allowing the appellant to manufacture shrimp feed with the annual capacity of 10,000MTs and shrimps and prawn (processed only) 1200MTs annually. Besides that, approval was subject to condition that the appellant shall maintain 57% NFE as against 61% stipulated in the earlier LOP dated 28/06/1993 (Ref: Page 61 of appeal folder). 4. Second amendment to the LOP was made on 24/02/1998 (Ref: Page 72 of the appeal folder) and a revised agreement was executed by the appellant on 26/03/1998 giving undertaking to export shrimp feed, shrimp and prawns (processed) so as to achieve minimum export turnover of USD 632.00 millions in five years as under: 1st year (1998 - 19 99) USD 32,00,000 2nd year (1999 - 2000) USD 120,00,000 3rd year (2000 - 2001....
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.... under Section 114A of the Customs Act, 1962 and Rs.1,02,94,164/- under Section 11AC of the Central Excise Act, 1944, reduced by the amounts paid by the appellant on de-bonding. (vi) Penalty of Rs.10 lakhs was imposed on the unit for the various contraventions of the conditions of the respective Notifications and law. 6. Appellant failed to succeed before the learned adjudicating authority raising various pleas as recorded by learned adjudicating authority in Para 4 to 6 of the adjudication order. That authority hearing the appellant on different dates recorded that it failed to satisfy the conditions of Notification No.53/97-Cus. and Notification No.1/95-CE and also violated provision of Chapter No.IX of EXIM Policy 1997-2002 as well as failed to comply with the condition No.2(i), (ii) and (vi) of the LOP and agreement dated 26/03/1998. It was also recorded that the appellant failed to acquire foreign exchange as stipulated by the LOP and as amended from time to time and agreement executed in that behalf. 7. Learned Authority found that the appellant failed to submit quarterly report to the VEPZ authorities and also sold shrimp feed in DTA without permission of the Develo....
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....issioner of VEPZ and violated the condition of the LOP as well as relevant provisions of EXIM Policy and Hand Book of Procedures. 12. Learned Adjudicating Authority also noticed that in Para 14(b) of the penalty order, Development Commissioner mentioned that the Board of Approvals for 100% EOUs & EPZs in its 2nd (2002 series) in its meeting dated 05/03/2002 held that the Ravulapalem unit of the appellant was not EOU for the period from 01/04/1998 to 19/07/2001. Hence, the FOB value of exports of Rs.5,208.73 lakhs made for the review period i.e. upto 31/03/2001 mentioned in the appellants letter dated 24/03/2002 could not be treated as EOU exports and thereby there was shortfall in fulfillment of minimum NFE while Export Performance/Export Obligation for the period from 01/11/1994 to 31/03/2001 was required to be 100%. 13. Violation of law made by the appellant became patent from penalty order passed by the Development Commissioner. Appellant cleared entire quantity of shrimp feed manufactured by it in DTA in violation of the LOP norm. So also when the appellant expressed difficulties as to no export for shrimp feed, it should not have imported or indigenously procured raw ma....
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....eply to show-cause notice at page 113 of the appeal folder. 18. Referring to page 134 of the appeal folder, appellant submitted that for the period from 01/04/2002 to 31/03/2003, there was export of shrimps and shrimp feed of the value of USD 90,46,146.58 and that satisfied the export obligation as well as foreign exchange earnings. It was also submitted that for the period 01/04/1999 to 31/03/2000, State Bank of India has certified that the appellant received USD 31,60,603.59 from sale of shrimp feed. Further, the SBI certificate at page 128 shows export of shrimp value of USD 3,952,901.07 for the period April 19998 to 30/10/1998 (Reference page 128 of appeal folder). Page 129 of the appeal folder exhibits that USD 39,52,901.07 was received by the appellant during the period 1998-99 and export documents were negotiated through SBI. It was accordingly submitted that foreign exchange earnings made by the appellant exhibited by page 128 to 135 of the appeal folder were as under: PERIOD Foreign exchange earned from deemed export Deemed export of supply of feed against dollar Export of shrimp Foreign exchange earnings not mentioning the goods exported For....
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....xport: Virlon Textile Mills Ltd. Vs. CC, Mumbai [2007(211) ELT 353 (SC)] Juned Bilal Memon Vs. CCE, Surat-II [2008(221) ELT 45 (LB)] 23. Further reliance was placed by the appellant on the following decisions to submit that once the unit of the appellant was de-bonded by the exit order dated 21/08/2003 (Ref: page 145 of the appeal folder), Department cannot reopen a case: Sudhan Spinning Mills (P) Ltd. Vs. CCE, Madurai [2008(227) ELT 142 (Tri.)] Mphasis Ltd. Vs. CC, Bangalore [2007(218) ELT 587 (Tri. Bang.)] CCE&C, Surat Vs. Amitex Silk Mills P. Ltd. [2007(216) ELT 589 (Tri. Ahmd.)] 24. It was also submitted that the appellant was entitled to the exemption benefit under Notification No. 196/94 dated 08/12/1994 in instead of Customs Notification No. 53/97 dated 03/06/1997. 25. On the aforesaid grounds it was prayed by the appellant that adjudication having been made contrary to the facts and evidence on record remand of the matter may be made to examine the permission of the Development Commissioner relating to DTA sales and foreign exchange earnings and pass appropriate order. ARGUMENT ON BEHALF OF REVENUE 26. Learned AR inviting attention to the Bills....
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....ulapalem Unit of the appellant was not at all EOU from 01/04/1998 to 19/07/2001. In such circumstances the appellant cannot be said to have made any deemed clearance for that period. In view of the penalty imposed by Development Commissioner, no deemed export is proved and appellant failed to fulfill its export obligation as well as failed to achieve NFEP requirement. Accordingly, the FOB value of export for the relevant period cannot be considered towards fulfillment of NFE obligation. 30. The appellant having failed to fulfill the basic condition of the notification as to its eligibility, it is not entitled to any benefit under law. It was further argued that Notification No.53/97-Cus. was an incentive given to aquaculture farms and appellant not being so, made undue gain. Therefore undue benefit availed by the appellant is required to be restored back to the treasury with interest and penalty to protect interest of Revenue. 31. It was further argued by Revenue that merely filing the return and showing DTA clearance in page 61 & 62 of the appeal folder, it shall not get immunity from the levy without real permission letter produced before learned Adjudicating Authority. Sec....
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.... Total duty payable by the Unit From To Rs. Rs. Rs. Rs. 01/08/1999 31/03/2000 13,51,42,830 2,47,24,760 72,52,923 3,19,77,683 01/04/2000 31/03/2001 32,99,01,845 5,28,11,877 1,77,92,681 7,06,04,558 01/04/2001 31/03/2002 16,26,40,330 2,56,13,827 1,09,26,399 3,65,40,226 Total 62,76,85,005 10,31,50,464 3,59,72,003 13,91,22,467 IMPORTED RAW MATERIALS IMPORTED SPARES Period Assessable value of imports Basic Customs Duty Addl. Customs Duty Total duty payable by the Unit From To Rs. Rs. Rs. Rs. 01/08/1999 31/03/2000 28,88,046 9,18,563 6,72,908 15,91,471 01/04/2000 31/03/2001 75,67,872 21,01,075 19,97,107 40,98,182 01/04/2001 31/03/2002 43,32,679 11,80,562 11,37,933 23,18,495 Total 1,47,88,597 42,00,200 38,07,948 80,08,148 37. The foreign exchange earned by the appellant as appears at page 136 of the appeal folder is as under:- Period Direct exports made Feed supplies against USD Total exports made In USD Rs. I....
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....the shrimp/prawn processed unit as EOU. Development Commissioner held that there was violation of conditions of EOU by the appellant. 39. Appellant relied on Titan Medical Systems Pvt. Ltd., V. CC, New Delhi - 2003 (151) ELT 254 (SC) to submit that when export obligation was discharged, no proceeding can be reopened. It was noticed in the reported decision that while applying for a license, the appellants set out the components they would use and their value and such value was only an estimate and the value which was indicated in the application was very large whereas what was actually spent was a paltry amount. Licensing authority did not take steps to cancel the licence. The licensing authority also did not claim that there was any misrepresentation. Apex Court held that once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. Present case of the appellant is that it had defrauded the Customs claiming exemption of Customs duty at the time of export and lat....
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..../articles and as a rule every 100% EOU was obliged to export its entire production and earn foreign exchange. This was what was called as Physical Exports. However, this rule had certain exceptions. There existed two types of DTA sales under the said Policy, namely, DTA sales against rupee and DTA sales against foreign exchange which was similar to physical exports. This latter category was known as 'Other Supplies in DTA'. Therefore, to put it in brief, 'Other Supplies in DTA' was equated with physical exports which, as stated above, was the general rule for 100% EOU. In other words, the general rule was physical exports and other supplies in DTA was equated to physical exports. This equation was necessary because other supplies in DTA gave certain benefits to the economy like preservation of foreign exchange, import substitution, savings of transportation costs and to provide competitiveness and level-playing field for Indian exporters. According to the Revenue, the expression occurring in the second proviso to Section 3(1), namely, 'allowed to be sold in India' was applicable only to DTA sales against rupee and not DTA sale against foreign exchange. But Hon'ble Court held that D....
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.... to such sales the exemption under Notification no. 2/95-CE, since DTA sales against foreign exchange will come under para 9.9. One cannot ignore the fact that DTA sales in foreign exchange provides for better money value as compared to DTA sales in rupee. Therefore, if DTA sales against rupee are allowed the benefits of Notification No. 2/95-CE, DTA supplies, which are at par with physical exports, cannot be denied the same benefits. This decision of Apex Court was followed by Larger Bench of Tribunal in the case of Juned Bilal Memo V. CCE, Surat II - 2008 (2210 ELT 45 (LB). When appellant failed to prove lawful DTA clearance, it fails to gain from the apex Court judgment. 43. Reliance of the appellant was on Sudhan Spinning Mills (P) ltd. V. CCE, Maduriai - 2008 (227) ELT 142 (Tri) which was a stay order which has no precedential value. 44. Appellant further relied on the decision in the case of Mphasis Ltd. V. CC, Bangalore - 2007 (218) ELt 587 (Tri - Bang). Tribunal in that case was given to understand that the goods which were in the premises shared by the customer of the appellants had already been de-bonded on payment of appropriate duty. The Adjudicating authority had....