TaxTMI 
TaxTMI 
2023 (12) TMI 8
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....osed of by this common order. 2. Brief facts are that M/s. Ashok Leyland Nissan Vehicles Ltd. (ALNVL) is a joint venture between M/s Ashok Leyland Ltd. (ALL) and M/s Nissan Motors Co Ltd (NMCL) with a share holding pattern, in the ratio of 51% : 49% to manufacture Passenger Cars / Light Commercial Vehicles (LCV). M/s. ALNVL was incorporated as a Private Limited Company during May, 2008. It does not have any manufacturing facility of its own, and was getting vehicles manufactured by M/s. Renault Nissan Automotive India Pvt. Ltd, Chennai (M/s RNAIPL) and M/s ALL, Hosur under a Contract Manufacturing arrangement entered into with the said manufacturers. The passenger cars like 'Evalia and 'Stile' were being manufactured at M/s RNAIPL and the LCVs like 'Dost, 'Partner' and 'Mitr' were being manufactured at M/s ALL, Hosur. 'Evalia' models manufactured at M/s RNAIPL were being marketed by M/s. Nissan Motor India Private Limited (M/s.NMIPL) through their dealer network, while 'Stile' model manufactured at M/s RNAIPL and the LCVs manufactured at M/s ALL were being marketed by M/s ALL through their dealer network. 3. Based on intelligence, t....
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....rore during the period 2011-13. The said capital goods were imported under 51 EPCG licenses issued during the period 2011 to 2013. Further it is seen that M/s ALNVL had exported 286 'Evalia'/'Stille' vehicles under EPCG Scheme vide 23 shipping bills through M/s NMIPL and M/s. ALL, respectively, totally valued at FOB Rs. 25.79 Crore through various shipments. 7. The investigation revealed a case of violation of the provisions of EPCG licenses on the main ground that M/s.ALNVL had failed to fulfil the Export obligation. The DGCEI-CZU had registered a case of violation of the provisions of the Export Promotion Capital Goods Scheme (EPCG Scheme, for short) in the import of capital goods for the manufacture of 'Evalia' and Stile Model vehicles by M/s Ashok Leyland Nissan Vehicles Ltd. Subsequently, during February, 2016, the case was transferred to the Directorate of Revenue Intelligence, Chennai Zonal Unit (DRI-CZU) for carrying out further investigation. Documents were verified and statements recorded. During the course of investigation, M/s ALNVL had voluntarily deposited a total amount of Rs 11.92 Crore by submitting demand drafts towards their Customs d....
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....pses in regard to 26 EPCG licenses and passed the following : ORDER " 1) In respect of M/s.Ashok Leyland Nissan Vehicles Ltd., Kochar Towers, # 19, Venkatanarayana Road, T. Nagar, Chenai - 600017 for imports in Sea Customs, Chennai, I order as below : (i) I demand customs duty of Rs.21,43,78,078/- (Rupees Twenty One Crore, Forty Three Lakh, Seventy Eight Thousand and Seventy Eight only) as detailed against fourteen licenses in Table-2 at para no.34.1 of this order from M/s Ashok Leyland Nissan/Ashok Leyland Limited under section 143(3) of the Customs Act, 1962 read with Notification no. 102/2009- Customs dated 11/09/2009 and the bonds furnished thereof, for non- fulfilment of export obligation; (ii) I demand Interest at the rate of 15% from Ashok Leyland Nissan as per Notification No. 102/2009-Customs dated 11.09.2009 on the duty demanded at (1) above from the date of import of the goods; (iii) the exemption availed under notification no.102/2009-Customs dated 11/09/2009 in respect of the capital goods imported as detailed against three licenses mentioned in Table-3 at para no.374 of this order. I demand customs duty of Rs.4,17,93,473/- ....
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....ection 111(d) and 111(0) of the Customs Act, 1962. However I give option for redemption of the said goods U/s 125 of the Customs Act 1962, on payment of redemption fine of Rs. 15,00,00,000/- (Rupees Fifteen Crores Only); (x) I order confiscation of the goods other than the seized goods mentioned at (b) above, valued at Rs.32,28,71,910/- (Rupees Thirty-Two Crore, Twenty-Eight Lakh, Seventy-One Thousand, Nine Hundred and Ten, only) (A.V.), under section 111(d) and 111(0) of the Customs Act, 1962. However, I give option for redemption of the said goods U/s 125 of the Customs Act 1962, on payment of redemption fine of Rs. 3,00,00,000/- (Rupees Three Crores Only); (xi) I Impose a penalty of Rs. 5,00,00,000/-(Rupees Five Crores Only) on Ashok Leyland Nissan/Ashok Leyland Limited under section 112 (a) of the Customs Act, 1962; (xii) I order appropriation of an amount of Rs.11,92,05,288/- (Rupees Eleven Crore, Ninety Two Lakh, Five Thousand, Two Hundred and Eighty Eight, only) voluntarily deposited by them, towards the duty demanded above; and (xiii) I order enforcement and adjustment of the bank guarantees executed by them, with ....
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.... to an unauthorised premises; and (vii) I impose penalty of Rs.10,00,000/-(Rupees Ten Lakhs Only) on M/s Caparo Engineering India Limited, T-1, T-2, SIPCOT Industrial Estate, Sunguvarchatram, Sriperumbudur Taluk, Kanchipuram District, Tamilnadu 602106 for having installed the diverted Impugned capital goods Imported under the EPCG Scheme In an unauthorised premises. 3) In respect of M/s Ashok Leyland Nissan Vehicles Ltd, Kochar Towers, # 19, Venkatanarayana Road, T. Nagar, Chennai-600017 for Imports in Air Customs, Chennai following orders are passed: (i) I demand customs duty of Rs.38,59,980/- (Rupees Thirty Eight Lakh, Fifty Nine Thousand, Nine Hundred and Eighty only) as detailed against three licenses In Table-2 at para no. 34.1of this order from M/s Ashok Leyland Nissan/Ashok Leyland Limited under section 143(3) of the Customs Act, 1962 read with Notification no. 102/2009- Customs dated 11/09/2009 and the bonds furnished thereof, for non-fulfillment of export obligation; (ii) I demand interest at the rate of 15% from M/s Ashok Leyland Nissan/Ashok Leyland Limited as per Notification No. 102/2009 Customs dated 11.09.2009 on the duty dem....
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....Obligation. Summary of Duties & Interest (as applicable) Fines & Penalties ordered: Notice Duty(Rs.) Redemption Fine (Rs.) Penalty(Rs.) I. Sea Port, Chennai M/s Ashok Leyland 21,43,78,078/- 15,00,00,000/- 5,00,00,000/- 4,17,93,473/- 3,00,00,000/- 10,77,24,468/- 71,47,851/- M/s Renault Nissan NA NA 10,00,000/- M/s Gestamp Automotive Chennai NA NA 10,00,000/- M/s Myoung Shin India Automotive NA NA 10,00,000/- M/s Daejoo Automotive NA NA 10,00,000/- M/s MS Global India Automotive NA NA 10,00,000/- M/s Cosma International NA NA 10,00,000/- M/s CAparo Engineering India NA NA 10,00,000/- II. Air cargo, Chennai M/s Ashok Leyland 38,59,980/- 30,00,000/- 6,00,000/- 12,26,700/- 6,00,000/- III. M/s Renault Ni....
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.... 12. The imported goods covered under all the licenses and that of supporting manufacturers were installed accordingly. Commercial production commenced and sales/ supplies started including export of goods. Installation certificates were obtained from the prescribed authorities and submitted to the JDGFT, Chennai. The demand for passengers vehicles were bit low. The licensing conditions required submission of installation certificates within 6 months from the date of import and the export obligation had to be fulfilled equivalent to 50% in value during first block of 4 years /6 years and the balance 50% in the second block of 6years/ 8 years as the case may be. While the appellants were able to fulfil the 50% obligation in time for the Commercial vehicles they could not meet the deadline in respect of passenger vehicles, though there had been exports of few quantity of passenger vehicles as well. Further, in few cases, the supporting manufacturers, instead of installing the goods in the premises endorsed in the authorizations, had installed in a different location; which was their own different unit or their sister concern. The supporting manufacturers did not keep the appellant....
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....otice dated 15.09.2016 in respect of 26 EPCG Authorizations alleging (i) non-fulfillment of export obligation (ii) Diversion of Capital goods and (iii) non- availability of capital goods. Accordingly, the duty demands were raised in the notice as detailed below : SI no Break -up of demand Amount involved (in Rs) (i) Proportionate duty towards non-fulfilment of EO 21,82,38,058 (ii) Duty in respect of Diverted goods 10,77,24,468 (iii) Duty in respect of diverted goods including non-fulfilment of EO 4,17,93,473 (iv) Duty in respect of the unavailable goods 83,74,551 Total Demand 37,61,30,550 Besides the above duty demand, the notice also sought to impose interest and penalties besides proposal for confiscation of the seized goods and invocation of Bank guarantees executed with customs at the time of import. The notices were sent to seven supporting manufacturers proposing penalties on them for non-compliance at their end. Merger of the JV Company with Ashok Leyland 15. The Ld. Counsel submitted that, a commercial dispute arose between the JV Partners - viz. Ashok Leyland and Nissan Motor which resulted ....
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....of EO. However, the Committee directed the RA to verify about submission of installation certificates and also that the matter has not been adjudicated by the adjudicating authority. 16.3 In respect of the remaining 12 licenses, the appellant approached the Policy Relaxation Committee (PRC) which again considered the merits of the case and vide their decision dated 02.04.2019, condoned all the procedural irregularities like diversion and installation of capital goods in a location other the one endorsed in the authorization and granted extension of export obligation period unconditionally. 16.4 The Ld. Counsel argued that DGFT, Delhi which is the Competent Authority in respect of FTP, had seen merits in the request made by appellant and granted extension of export obligation in respect of all the 26 licenses and condoned the procedural lapses in respect of 12 out of the 26 licenses as well. While there had been no directions by the RA for granting the relief in respect of 12 licenses, the conditions imposed in respect of 14 licenses are all generic in nature. Compliance in terms of the decisions of the EPCG/PRC Committees by the appellants 17. The appellants then ....
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....he 14 authorisations on 22.05.2019, 28.05.2019 and 20.06.2019 which is well before the date of passing the impugned order by the adjudicating authority. They were awaiting a date for personal hearing before the adjudicating authority to submit the details of order passed by DGFT Committee and the compliances on their end. 17.7 It is submitted that if only the adjudicating authority had granted a personal hearing they would have made a detailed submission about the decision of Committee meetings and subsequent compliance etc. made by the appellant. In fact DGFT authorities were kind enough to adhere to their decision and advised the appellants to go ahead and complete the EO which the appellants did complete. 18. It is argued by the Ld. Counsel that the Adjudicating Authority had passed the order in haste without considering the facts and the approvals granted by the Competent Authority (i.e DGFT) in this matter. The Adjudicating Authority was very well aware of the decisions of the EPCG Committee and PRC Committee in allowing extension of time for fulfilling export obligation for two years and condoning all the procedural lapses vis installation of capital goods i....
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....lment of EO and consequently no demand of duty or interest. For the same reasons there cannot be an order for confiscation, imposition of fine and penalties as well. The order passed by adjudicating authority is illegal and needs to be set aside in toto. 18.6 Further, the demand raised in SCN and the amounts confirmed in the impugned order for the 14 EPCG authorizations pertain to 50% of the EO only since the allegation was only with reference to non fulfilment of EO pertaining to first block. During the visit of the DGCEI and DRI , appellants had enough time to fulfil the balance 50% in terms of the FTP and the Customs notifications as well. The SCN refers to only 50% of non-fulfilment of EO. The appellants state when substantive provisions of the law have been complied with (Exports have happened and precious foreign exchange has been realised), it is incorrect on the part of the adjudicating authority to deny the benefit earned by appellants alleging procedural non-compliance; which in fact has been complied. The reason for passing the impugned order is that appellants failed to inform about the compliance. In fact, appellants had informed about the order dt.13.02.2019 passed....
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....ranted the EODCs. [Export Obligation Discharge Certificate] 20.1 In respect of the balance 14 cases, the EPCG Committee allowed extension of EO period for two years. However, the EPCG Committee had put a condition that the customs department should not have adjudicated the case. As per the advice by the JDGFT, Chennai who are bound by the decision of the DGFT the appellants completed the exports, paid the composition fees. They then submitted applications with the JDGFT, Chennai for issuance of EODC which is under process. 21. The DGFT being the Competent Authority having granted extension of time to fulfil the Export obligation and also condoned the procedural lapses in toto, and the appellants having fulfilled the Export obligation in full in respect of all the 26 cases of Authorizations and obtained EODC in respect of 12 out of the 26, it is prayed that by the Ld. Counsel that impugned Order-in-Original No. 69637/2019 dt 21.06.2019 may be set aside. 22. In addition, the Ld. Counsel for appellants submitted that the SCN is issued by DRI. However, they do not intend to contest the issue whether the SCN issued by DRI is proper and valid. The appellant has filed affid....
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....fulfilment of export obligation against 26 EPCG licenses for the first block period within 30 days nor paid customs duty after expiry of 3 months from the date of expiry of block year. The importer during October 2016 to January 2019 vide several letters addressed to Commissioner had several times only sought extension of time to reply to the notice and for postponement of personal hearing on the ground that they were seeking extension to fulfil export obligation. From December 2016 onwards they have been representing the DGFT authorities to consider their request for extension of two years for the first block period which ended during April 2016 and the request was rejected by the EPCG Committee on 20.02.2018, for the reason by which that the matter was under adjudication by Customs. 26. In spite of making repeated representations for review of the order of rejection of the request for extension, however, on 13.02.2019 the DGFT authority had granted extension of 2 years in respect of 14 license subject to certain conditions. One of the conditions was that the adjudication proceedings should not have been completed by the Customs. Ld. Special counsel argu....
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....filled within the time limit. As per para 5.11 of the HBP (EXIM Policy 2009-14) no further extension was possible for the first block year as one extension of 2 years can be given by the DGFT in case of Zero Duty EPCG scheme. The argument of learned counsel for the appellant that the adjudicating authority did not wait for implementation of the (extension) orders granted by the DGFT is without any basis. 31. The decision in the case of CCE Vs Harichand Shri Gopal - 2010 (11) TMI 13 (SC) was relied by the learned counsel to argue that when there is no compliance of the substantial condition, the delay cannot be condoned. In the case of Mangalore Chemicals Vs Deputy Commissioner - 1991 (55) ELT 437 (SC) the Hon'ble Supreme Court had held that distinction has to be made between procedural condition of a technical nature and the substantive condition. Non-observance of the former is condonable while that of the latter is not condonable as likely to facilitate commission of fraud and introduce administrative inconvenience. Learned special counsel prayed that the appeals may be dismissed. 32. Heard both sides. 33. The issues that arises for consideration ....
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....p; 15. 0430010918 102/2009 ✓ ✓ 16. 0430010919 102/2009 ✓ 17. 0430010928 102/2009 ✓ 18. 0430010929 102/2009 ✓ 19. 0430010931 102/2009 ✓ ✓ 20. 0430010932 102/2009 ✓ 21. 0430010939 102/2009 ✓ ✓ 22. 0430010946 102/2009 ✓ ✓ 23. 0430010988 102/2009 ✓ ✓ 24. 0430010989 102/2009 ✓ ✓ 25. 0430010990 102/2009 ✓ 26. 0430011130 103/2009 ✓ 27. 0430011131 103/2009 ✓ 28. 0430011132 103/2009 ✓ 33.3 The Ld. Counsel for appellant has explained that due to demerger of JV, its' further merger and due to bad market conditions th....
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....ssued letters dt. 13.03.2018, 07.05.2018, 19.05.2018, 28.05.2018, 2.106.2018, 25.06.2018, 19.11.2018 and 14.12.2018 to the DGFT Committees requesting to consider the extension of period. They also made request to inform the Customs authorities so as to keep the adjudication pending. The relevant part of letter dt. 21.06.2018 reads as under : "Respected Sir, This has reference to our representations on the subject and our latest letter requesting for a personal hearing to consider our case for extension of export obligation period and regularization of other alleged procedural irregularities. We have informed the Commissioner of Customs. (Chennai IV) who is adjudicating the issue that our request is under consideration by DGFT, New Delhi and had sought time. Customs authorities required a confirmation from the Office of the DGFT, to the effect that the issue is under consideration. We will be much obliged if our request is considered and a letter js sent to Commissioner of Customs (Chennai-IV), Custom House, Chennai." 33.9 The SCN is dated 15.09.2016. The adjudication was kept pending on the repeated requests made by ....
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.... of passing the order, there was no evidence before the adjudicating authority for compliance of the conditions and therefore there is no error in completing the adjudication. Another argument put forward by the Ld. Counsel is that, the extension of two years has to be computed from the year 2016 which is the end of first block period. In that case even if extended, the EO cannot be considered as fulfilled as the appellants have fulfilled EO much later only. 33.12 We have given careful consideration to the arguments of the Special Counsel. For better appreciation, the relevant part of the decision of the EPCG Committee passed on 13.02.2019 is as under : Sl.No. Firm's Name and Numbers EPCG Authorisation No. Subject Decision of the EPCG Committee 13. M/s.Ahok Leyland Vehicles Limited (Formerly Ashok Leyland Nissan Vehicles Limited 001/36/218/245/AM-17/EPCG-I 26 EPCG authorisations (i) Permission for shifting of capital goods in respect of 26 Authorisations to the premises of M/s.Ashok Leyland Ltd. M/s.Ashok Leyland Vehicles Ltd. (ii) The earlier installation of the Capital goods covered from Serial No.18 to ....
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....hority). This has the approval of DG. 33.13 The SCN has been issued in 2016 alleging the non-fulfilment of 50% EO, and diversion of capital goods. The appellants were informing the adjudicating authority about the steps taken for getting extensions of time. Further on 25.03.2019, they submitted letter to the adjudicating authority informing that they are in the process of complying with the conditions of the EPCG Committee's decision. This being so, it was incumbent upon the adjudicating authority to give the appellants reasonable time to comply with the conditions and should not have passed the order in a hurried manner even without grant of personal hearing. The EPCG Committee had not prescribed any time limit for compliance of the conditions. The assessee is then supposed to comply within a reasonable time. The assessee has been diligent to comply within a time period of about three months. These authorizations / EPCG licenses are issued as part of Foreign Trade Policy for export benefits so as to earn foreign exchange for the country. The DGFT and Customs have to act hand in hand to give effect to the object of issuing such beneficial schemes....