TaxTMI 
TaxTMI 
2008 (9) TMI 214
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5 EPCG licences under 5% EPCG Scheme issued to them. (d) The appellant-company imported furnace oil and filed 7 bills of entries for a total quantity of 8000 MTs claiming the said furnace oil as consumables covered under EPCG scheme in pursuance of the licences issued to them and cleared the same paying concessional customs duty availing the benefit of Notification No. 55/2003. The imported fuel was used for generating electricity. (e) On the basis of intelligence that the appellant-company has wrongly availed the exemption for fuel as consumables, the officers of DGCEI commenced investigations on 9-2-2005. The appellant-company deposited a sum of Rs. 2.11 crores (approx.) in March, 2005 with the Kandla Customs House under protest during the course of investigation. (f) While investigations by the DGCEI authorities were in progress, 7 show cause notices (each show cause notice covering one bill of entry) were issued in May, 2005 by the Appraiser Customs answerable to the Asst. Commissioner of Customs, Kandla proposing to deny the benefit of exemption to furnace oil and the appellant filed replies to the above show cause notices. (g) In pursuance of the investigations b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce oil as consumable. (f) Therefore, the allegation and finding that the appellant-company has furnished wrong/incorrect information and mis-lead the DGFT authorities is incorrect. (g) At the time of import, to the customs authorities, valid licences have been produced; the imported goods have been correctly declared and the goods have been assessed and duty paid. Under these circumstances, there is no misdeclaration whatsoever to the customs authorities. (h) Once a licence is issued unless the licence is cancelled by the DGFT authorities, the customs authorities are bound to follow the terms of the licence and to grant the benefit of the Notification No. 55/2003. (i) He relies on the following judgments :- (a) M/s. Indian Hotel Co. Ltd. v. CCE, Mumbai [2006 (204) E.L.T. 439 (Tri.-Mum.)] (b) CCE, Jalandhar v. Osaka Alloys & Steels Pvt. Ltd. [2007 (211) E.L.T. 543(P & H)] 5. Ld. Jt. CDR defends the order of the Original Authority and submits the following :- (a) The public notice dt. 28-1-2004 while permitting import of spares including Refractories and consumables radically changes the method relating to application for licences and procedure for issue of li....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... portion of Notification No. 55/2003 dt. 1-4-2003 and the relevant portion of Public Notice No. 42 dt. 28-1-2004 are reproduced. Para 5.1 governing EPCG scheme: "5.1. The scheme allows import of new capital goods including CKD/SKD thereof as well as computer software systems at 5% customs duty subject to an export obligation equivalent to 5 times CIF value of capital goods to be fulfilled over a period of 8 years reckoned from the date of issuance of licence over a period of 8 years." Notification No. 55/2003 dt. 1-4-2003: "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table annexed hereto from so much of the duty of Customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as is in excess of the amount calculated at the rate of five per cent ad valorem and from the whole of the additional duty and special additional duty leviable thereon respectively under sections 3 and 3A of the said Customs Tariff Act. The exemption unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quarters directly with a copy endorsed to the concerned RLA. In such cases, based on the recommendations of Head quarters EPCG Committee/approval of competent authority the concerned RLAs will issue the EPCG licence accordingly. 5.3.1 The Licensing Authority, after issue of EPCG licence on the basis of certificate from the Independent Chartered Engineer (CEC) furnished by applicant shall forward a copy of licence along with copy of CEC to concerned jurisdictional Central Excise Authority. 5.3.2 The licence holder (whether registered with Central Excise authority or not) shall produce to the concerned licensing authority a certificate from the jurisdictional Central Excise authority confirming installation of capital goods at the factory of the licence holder or his supporting manufacture(s)/vendor-(s) within six months from the date of completion of imports. 2. A new para 5.3.4 subtitled "Import of Spares including Refractories, Catalysts & Consumables" is added as under :- 5.3.4 (i) The applicant may also apply for import of spares including refractories, catalyst and consumables under the EPCG scheme. The application may contain list of plant/machinery installed in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d or manufactured". This does not refer to fuel meant for running the machinery and the wordings cannot be construed to convey that the fuel is included in the said term. Similarly SI. No. 5 of the table to the customs notification refers to spares for the existing plant and machinery of the licence holder. This term also cannot be construed as including fuel. 7.4 The Id. Jt. CDR pointed out that the Notification No. 53/2003 has subsequently been amended specifically permitting import of fuel. The period involved in the present case is prior to that amendment. 7.5 The import under EPCG scheme has two aspects. One is the licensing angle and the other is the duty exemption. The powers and responsibilities of by the customs authorities and DGFT authorities run parallel. Action to suspend a licence or cancel a licence or action for violation of licensing angle such as non - fulfilment of export obligation within the specified period ought to be dealt with only by the licensing authority. In this case itself, it is noticed that for certain alleged violation in relation to the application filed for EPCG licence, the DGFT authorities have issued a notice for ab initio cancellation o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....art. The certificate as well as the application clearly indicated that the import of the fuel is for used to produce electric power and therefore, there is no warrant for imposition of penalty on Shri Deepak C. Shah as well as on the appellant company. 8. In the light of the above, appeal No. C/13/2007 by M/s. Shah Alloys Ltd. is partly allowed by setting aside the penalty. The appeal of Shri Deepak C. Shah is allowed by setting aside the penalty imposed upon him. (Pronounced in Court on................. ) Sd/- (M. Veeraiyan) Member (Technical) Dated 15-2-08 9. [Conta per : Archana Wadhwa, Member (J)]. - I have gone through the order proposed by Ld. Member (Technical) and find that the issue of limitation, which was strongly contested before us by the ld. Advocate appearing for the appellants does not stand discussed by the ld. Member. The appellants have also vehemently pleaded that as per the settled law (a reference was made to various decisions of the Tribunal and other judicial authorities), once the licensing authority issues the licence, which have not been cancelled by them, the customs authorities have no choice, but to implement the said licences. Arg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of technical certification was shifted to the Chartered Engineer based upon which the licencing authority had to issue the EPCG licences. As such, he has observed that for a major departure, a system was put in place, where faith was reposed in trade for the purpose of issuing EPCG licences and in the present case such licences were issued on the basis of certificate by the independent Chartered Engineer. Inasmuch as the certificate of Chartered Engineer is not in accordance with the Notification No. 55/2003-Cus., he has held the appellant to be guilty of suppression, so as to invoke the longer period. 12. I am of the view that production of certificate is only a pre-requisite condition for issuance of licence by the DGFT authorities and does not absolve them from their responsibility to check and verify the correctness of the nexus of the import and export items under EPCG scheme. They are not legally bound to issue EPCG licences just based upon the certificate of the Chartered Engineer produced by the importer. If that be so, the issuance of a licence based upon the certificate of Chartered Engineer would become only a mechanical and clerical job, without any application of mi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irming demand of duty, but setting aside penalties on both the appellants is required to be followed or the appeals are to be allowed in toto, as held by Member (Judicial)? Sd/- &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; Dated 13-3-08 15. [Order per : Justice S.N. Jha, President]. - This appeal by the assessee has come up for hearing before me on diff....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uppression of facts, notice can be issued within a period of five years as against the normal period of one year and six months as the case may be. The appellant contested the show cause notice contending, inter alia, that the condition precedent for invoking the larger period of limitation was not satisfied and, therefore, the proviso to Section 28(1) could not be invoked and as such, show cause notice should be dropped being time-barred. The Commissioner of Customs by the order under appeal rejecting the case of the appellant confirmed the duty demand of Rs. 2,11,47,947/- as being short-paid differential duty along with interest and appropriated the amount already paid by the appellant, as stated above. He also imposed penalty of equal amount on the appellant and penalty of Rs. 10,000/- on the Chartered Engineer, Shri Deepak C. Shah, on whose certificates licences had been granted to the appellant. The notices issued earlier on 3-5-2005 were dropped. 18. On consideration of the case of the appellant and Shri Deepak C. Shah, whose appeal was heard along with the appellant's appeal, learned Member (Technical) - who wrote the leading judgment - took the view that no amendment in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irmed or dropped as being time-barred. Shri Thakore submitted that the learned Member (Technical) upheld confirmation of duty demand on the ground that there was no corresponding Customs Notification in accordance with the amended Trade Policy, but he did not go into the question of time-bar, that is, applicability of proviso to sub-section (1) of Section 28 of the Customs Act. Counsel submitted that there is no express finding in the order of the learned Member (Technical) on the point of limitation unlike the order of learned Member (Judicial), but by upholding the demand, on merit, the learned Member (Technical) impliedly rejected the plea of limitation, and thus the point of difference is whether the impugned duty demand is time- barred as held by learned Member (Judicial) or is not time-barred as impliedly held by learned Member (Technical). Counsel laid emphasis on the observation of the learned Member (Technical) about lack of evidence on the point of mala fide and non-suppression of facts and submitted that it was on that ground that he proposed setting aside of penalty imposed not only on Shri Deepak C. Shah, but also on the appellant-company. 22. On facts, Shri Thakore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was before the DGFT. That, in my opinion, would not be relevant to invoke the larger period under proviso to Section 28(1) of the Act, for, misdeclaration, suppression of facts etc., if any, must be before the Customs authorities. Under Section 46 of the Customs Act, the importer of any goods is required to submit a bill of entry to the proper officer, meaning thereby, an officer of the Customs who is assigned the functions of proper officer by the Board or the Commissioner of Customs. In the bill of entry, he is required to make relevant entries of the goods imported for home consumption or ware-housing in the prescribed form. Proviso to Section 28(1) refers to misstatement or suppression of facts etc. by the importer or his agent or employee at the time of import. The Customs Act nor any other law requires the importer to make any declaration of goods at the time of import before the DGFT. As a matter of fact, as rightly pointed out on behalf of the appellant, the Deputy DGFT vide his letter dated 18-4-2005 in response to the letter of the Directorate General, Central Excise Intelligence stated that before issuance of Public Notice No. 42 there was system of approval by the EPCG ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... down that when any duty has not been levied or has been short levied or erroneously refunded, or when any interest payable has not been paid etc., the proper Officer may in the case of any import by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; or in any other case, within six months from the relevant date, serve notice on the person chargeable with the duty. In terms of proviso, where duty has not been levied or has been short levied etc. by reason of collusion or any wilful misstatement or suppression of facts by the importer/exporter or his agent or employee, the notice can be served within five years from the relevant date. The relevant date has been defined in Section 28(3) to mean, in case of non-levy of duty, the date on which the goods are cleared. The goods in question in the instant case were cleared between 3-3- 2004 to 8-4-2004. In the absence of any material suggesting wilful misstatement of facts or suppression of facts etc. within the meaning of proviso to Section 28(1), I am inclined to agree with Member (Judicial) that the impugned show cause notice was time-barred and t....