TaxTMI 
TaxTMI 
2008 (8) TMI 64
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....e Development Commissioner, Noida Export Processing Zone for recycling of ferrous and non-ferrous scrap- while the item permitted for import are various types of ferrous and non-ferrous scrap, their finished products for export are segregated ferrous and non-ferrous metal scrap, ingots, metal granules, slag (byproduct), zinc oxide, lead oxide and Iron (byproduct). They are operating as an EOU since November 2001. They import only the metal scrap. They don't have any imported capital goods. Vide letter dated 15/2/08, of the Development Commissioner, the bonding period of the unit was extended for one year for 2008-09. The Appellant Company was importing metal scrap free of Customs duty under Notification 53/97-CUS dated 03/06/97 and subsequently under its successor Notification No. 52/03-CUS dated 31/3/03. Under both these exemption Notifications, the duty exemption is subject to the condition that the goods imported free of duty are used for production or manufacture of goods for export out of India and unit achieves Positive Net Foreign Exchange earning (NFEP). NFE is calculated cumulatively for a period of five years from the commencement of production by the following formula :-....
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.... of the Appellant Company, inquiry was conducted overseas with the customs authorities of USA and Italy from where a number of consignments of metal scrap had came. On completion of inquiry, the Additional Director General, DRI issued a show cause notice dated 17/1/07 to the three Appellants asking them to show cause to the Commissioner of Central Excise, Delhi- I as to why - (i) 1338.507 MTs of imported scrap seized from factory premises on 20/1/06 and 50.40 MTs of metal scrap covered under B/E/ No. 481200 and 481211 dated 19/1/06, seized from factory premises on 03/2/06 and 104.08 MTs of metal scrap covered under B/E/ No. 480394 and 480396 dated 16/1/06 seized at ICD Tughlakabad on 21/1/06 and 21/4/06 should not be confiscated under Section 111 (d), (m) & (o) of the Customs Act, 1962; (ii) Benefit of Notification 52/03-CUS should not be denied in respect of the seized goods mentioned in para (i) and Customs duty at the applicable rate and calculated on the value of the goods as per the tariff rate in force, on the date of cancellation of warehouse licence, should not be demanded under Section 28 of the Act; (iii) the private landed warehousing licence issued to the Appel....
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....er invoicing and misdeclaration of grade of the scrap and also denied the benefit of duty exemption under Notification 52/03-CUS in respect of the seized goods; (b) ordered the confiscation of the goods under seizure under Section 111 (d), (m) & (o) of the Customs Act for misdeclaration of value & description and violation of post importation condition and imposed redemption fine of Rs. five crore in lieu of confiscation; (c) ordered cancellation of the private bonded warehouse licence issued to the Appellant company; (d) imposed penalty of Rs. two crore on Shri R.K. Maheshwari and penalty of Rs. 50,000,00/- on Shri A.C. Sebastian under Section 112 (a)/114A of the Customs Act and Rule 26 of the Central Excise Rules; (e) ordered enforcement of bond in respect of 104.08 MT of seized goods at ICD which had been provisionally released, and (f) ordered recovery of duty from the Appellants company in respect of the seized goods, on account of denial of the benefit of Notification 52/03-CUS, but directed that the duty would be quantified by the jurisdictional Assistant Commissioner, and also ordered imposition of penalty on the Appellant company under Section 114A of the Ac....
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.... licence of a 100% EOU, when its LOP is still valid. (vi) The duty demand on the seized goods is linked with the issue of achieving positive NFE and if there is shortfall, the recovery of duty has to be in proportion to the shortfall in achieving positive NFE. The exercise of determining whether an EOU has achieved positive NFE involves determining the value of Exports and the value of imports and payments made in foreign exchange towards commission, royalty etc. But no such exercise has been done in the adjudication order passed by the Commissioner and without any such calculation, he has given a finding that the Appellant company has failed to achieve positive NFE. Having done so, instead of quantifying the duty demand, the job of quantification of duty demand has been passed on the Divisional AC who has quantified the duty demand and also imposed penalty under Section 114A vide order in original dated 29/7/08. This order was passed by the AC without giving any opportunity of hearing to the Appellants. Moreover the AC has quantified the duty demand as if the seized goods have become liable to duty on debonding-the quantum of duty liability in respect of seized goods is not in ....
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....n this case, the show cause notice does not quantify the duty chargeable. From the Commissioner's letter dated 21/07/08 to ADG, DRI it appears that a corrigendum to the Show cause notice dated 17/1/07 was to be issued by the DRI. But when no corrigendum was issued by the DRI and six month's time limit given by the Hon'ble Delhi High Court vide its order dated 22/11/07 in this case was going to expire, the Commissioner, instead of approaching the Hon'ble High Court for extension of the time limit, adjudicated the incomplete show cause notice. The order does not discuss at all as to how the NFE achieved, after taking into account the export of the resultant products obtained by processing of the seized scrap as per the Hon'ble High Court's order dated 22/11/07 and exports made earlier, is negative and if it is negative, what is the proportion of unachieved portion of NFE to the positive NFE to be achieved, which is relevant for quantification of the duty to be recovered. The Commissioner, without any discussion, whatsoever, has simply given a finding that the Appellant company has failed to achieve positive NFE and on this basis has concluded that they are not eligible for duty exemp....
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...., if it is noted that a 100% EOU has not achieved positive NFE, the Development Commissioner shall initiate penal action under Foreign Trade (Development & Regulation) Act, 1992. 3.2.1 From the above provisions of the EXIM policy it is clear that it is the Development Commissioner who is responsible for monitoring the performance of a 100% EOU in meeting the export obligation and achieving positive NFE, and determining for each five year block from the date of commence of production of the unit ,whether it has achieved positive NFE, and it is the Development Commissioner who is empowered to take penal action and even cancel the LOP of a unit, which fails to comply with the conditions of the LOP. It is only when the LOP has been cancelled by the Development Commissioner that the unit has to be debonded. In this case there is no evidence that the DRI's investigation report was sent to the Development Commissioner. In fact, the Development Commissioner, vide letter dated 15/2/08 has extended the LOP for one year i.e. for 2008-09. Tribunal in case of Vishal Footwear Ltd. vs. CC, New Delhi reported in 1999 (114) E.L.T. 60, relying upon the Board's circular No. 29/95-CUS dated 1....
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....ent relies on declaration made by the supplier in the exporting country, it has to show as to how such declaration was procured. In this case, the copies of the reports received from the Customs authorities of the exporting countries have not been given to the Appellants in spite of their request for the same. In respect of 50.40 MTs of Scrap covered by B/E/ No. 481200 & 481211 dated 19/1/06, the only evidence of under invoicing, relied upon by the Revenue is the inspection certificate issued by M/s Alex Stewart, England, the assayers, as per the requirement of para 2.32(1) of the EXIM Policy for import of metal scrap originating from war affected countries, for certification that scrap does not contain any arms, ammunition, mines, shells etc. There no discussion in the commissioner's order as to how value of the goods mentioned in this pre-shipment inspection certificate is the actual price of the goods for export to India and why the invoice price does not represent the true transaction value. For determining the assessable value of any imported goods under sec. 14(1) of the Customs Act, what is relevant is their price for export to India, not their value in the expor....
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....er ,who quantified the duty demand without hearing the Appellants, the adjudication order itself suffers from a number of serious defects. We fail to understand as to how the Commissioner in para 48 of the order has arrived at the finding that-"the allegation of not attaining NFEP because of undervaluation is sustainable" without quantifying the total value of exports and total actual value of imports during the entire period of operation of the EOU. In this regard even the directions of Hon'ble Delhi High Court in its order dated 22/11/07 have been disregarded. Similarly it is not understood that when in para 44 of the order the Commissioner gives the finding that he does not find the allegation of import of "Brass Scrap Honey" to be true on the basis of CRCL reports received out of 45 samples drawn, how in para 47 of the order he gives the finding that-"going by the chemical analysis reports of CRCL now received, he is convinced that the noticee company has misdeclared the goods both in term of description and value". The order does not discuss as to what is the evidence of under-invoicing in respect of 1338.507 MTs of imported scrap seized from the factory premises and 104.08 MT....