TaxTMI 
TaxTMI 
2024 (12) TMI 367
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....d goods takes place at the time of clearance from the warehouse, in terms of Section 15(1)(b). In support of this proposition the following cases are being relied upon. Ferro Alloys Corpn Lid vs. Collr. of Customs (Appeals), Bhubaneswar, 1995 (77) E.LT. 310 (Tribunal - LB) (Refer to Sr No. 11 of the Compilation) Cosmo Ferrites Ltd. Versus Commissioner of Central Excise, Chandigarh. [2014 (8) E.LT. 633 (Tri-Del.) (Refer to Sr No. 12 of the Compilation) 2.1 Learned Counsel for the appellant further submits Where the warehouse is situated in a place where there is no Customs Port or Custom Station or Commissionerate exists, then the Central Excise Officers act as customs officers too, deriving powers from the Customs Act, 1962. In this regard, Notifications mentioned at Sr No. 5 of the Compilation may be referred to. Thus, the Central Excise officers having jurisdiction over the warehouse are also Customs Officers, for administering the Customs Act. In the present case too, at every stage, even prior to receipt of the imported goods under the into-bond bill of entry, till the finished goods manufactured in bond, are supervised and approved by the Central Excise Of....
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.... the same, the Commissioner, Surat also highlighted the issue to the Chief Commissioner and sought clarification, and pending theclarification the Commissioner, Surat had given the Appellants a verbal assurance to maintain status qua until revert from the CBEC. (vi) Appellants' vide pplication dt. 31.7.2017 wrote to the Commissioner, Surat, and explained about the manner of manufacturing in detail and again sought amendment of the private bonded warehouse license, to include the complete manufacturing premises. 2.2 The Appellants further submit that following inter-departmental Communications and reference to the Central Board of Excise and Customs/Central Board of Indirect Taxes and Customs, clearly show that since 1986 manufacturing activities were permitted to be carried out within the Central Excise registered premises, with the knowledge and approval of the Central Excise /Customs officers concerned: i. Letter of the Commissioner, Central Excise, Customs and Service Tax, Surat-II to Chief Commissioner of Central Excise, Customs and Service Tax, Vadodara dated 6.6.2017mentions the following: That since 1986 manufacturing in the premises has bee....
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....e same is placed on the following cases: Sedco Forex International Drilling Inc vs Commr of Cus., Mumbai [2001 (135) ELT 625 (Tri-Mumbai)] Maintained by the Hon'ble Supreme Court of India in Commissioner v. Sedco Forex International Drilling Inc. [2005 (179) ELT. A39 (SC)] (Refer to Sr No.18 of the Compilation). Commissioner of Customs, Kandia vs PSL Lid [2015 (327) ELT 706 (Tri. Mumbai)] (Refer to Sr No. 19 of the Compilation). Hindalco Industries Ltd vs CC Ahmedabad [2024 (2) TMI 25] (Refer to Sr. No.20 of the Compilation). Aban Loyd Chiles Offshore Limited vs Commissioner of Customs [2006 (200) ELT 370 (SC)] (Refer to Sr No.21 of the Compilation). Ram Parvesh Singh & Ors vs State of Bihar & Ors [2006 (8) SCC 381] (Refer to Sr No.22 of the Compilation) 2.3 The Appellants submit that the license issued to the Appellant under Section 58 of the Customs Act, 1962 was amended on 1.9.2017 with corresponding amendment in the permission granted under Section 65 too, on 1.9.2017. These amendments were made to the licence and permission earlier granted on 28.5.2014. By this amendment, the request made on 6.11.2015 to include the ....
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.... and Completion Certificates of the ONGC projects towards which imported goods were consumed/utilized. These certificates demonstrate that the inputs in question were used in manufacture of goods which were supplied to petroleum operations.The Appellants submit that once the goods have been supplied to ONGC projects, the end-use condition attached to Sl. No. 357 of Notification No. 12/2012-Cus has been fulfilled. These goods are also otherwise covered by list 13 attached to Sl. No. 356 of Notification No. 12/2012-Cus, exempting from payment of both BCD and CVD.The Appellants further submit that, once manufactured goods have been exported, the desired purpose has been achieved and duty ought not to be demanded. 2.5 The Impugned Order has denied the benefit of Notification No. 12/2012-Cus dated 17.03.2012 to the Appellant on the ground that the Appellant failed to follow the conditions scrupulously and accordingly placed reliance on the order in CE v. Hari Chand Shri Gopal [2010 (260) ELT. 3 (SC)]. The Appellants submit that this decision is not applicable to present case as the Department was all along well aware of the fact that the Appellants were carrying out the activity outs....
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....ity certificated produced after the importation is also in compliance of the Notification. The Appellants further submit that the recent decision of Supreme Court in Mother Superior-2021 (376) ELT 242 in the context of interpretation of an exemption notification applies in this case. 2.6 The Appellants further submit that the duty demand in present case is revenue neutral, as evidenced by below: a. In case of manufactured goods which have been exported, duty drawback is available b. In case of manufactured goods which have been supplied to ONGC projects, the supplies are against ICB Contracts. Thus, the same are deemed export, and deemed export benefits qua the same are available. The Appellants further submit that the following export benefits are available to the Appellant for physical as well as deemed exports. a) Brand Rate of Duty Drawback- reimbursing the duties paid on the finished goods exported out of India b) Merchandise Exports from India Scheme (MEIS) c) Advance Authorization Scheme-granting completion exemption from payment of import duties on inputsphysical/Export benefits available on deemed exports (Supplies to ONGC....
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....2006 (200) ELT 370 (SC)] wherein the Hon'ble Supreme Court of India has held that extended period of limitation cannot be invoked when the when the activities were carried on with the approval of the Department (Refer to Sr No.29 of the Compilation). 2.8 The Appellants further submit that the goods in question are not liable to confiscation as no wrong has been committed. Accordingly redemption fine also is not payable. Confiscation has been proposed under Section 111(j) and 111(o) of the Customs Act.Section 111(j) is only applicable to goods removed from warehouse without permission from Proper Officer. As set out above and in the Appeal in detail, the goods were removedfrom the warehouse with permission from the concerned Proper Officer. Thus, Section 111(j) is not applicable.The Appellants further submit that Section 111(0) is applicable only if any post import condition set out in the exemption has been violated, unless the non-observance of the condition was sanctioned by the Proper Officer. The post import condition allegedly violated in the present case is that the goods were not used for further manufacture in bonded warehouse. However, the undertaking of manufacturi....
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....fficient to carry out the manufacturing operations. They have themselves admitted in their defence reply that the manufacturing activity was carried out by them in an open yard adjacent to bonded warehouse. Thus it is established beyond any doubt that the condition of notification no. 12/2012-customs has not been fulfilled. The notification is to be interpreted in terms of the language used therein and is to be strictly followed. 3.1 Learned Authorized Representative further stated that the appellants have also relied upon procedure adopted by them since 1988 and the documents filed by them at different stages before the Central Excise/Customs officers. He submits that this argument cannot justify the wrong practice followed by them. The SCN has been issued subsequent to the issue of licences under section 58 and Permission to manufacture under section 65 of the Customs Act in 2014. Any wrong practice for an earlier period cannot justify the wrong done after 2014. He submits that as far as their claim that the procedure adopted by them was in the knowledge of department, the adjudicating authority has given clear and unambiguous findings in this regard (Para 6.5.1 and 6.5.2 at page....
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....nce issued in 2014. In 2017 the complete manufacturing unit in Hazira has been incorporated in the Appellant's licence issued under section 58. This amendment dates back to 2014. 3.6 He contended that appellant's contention that the permission given for the larger area in 2017 should be given effect from 2014, is also not tenable. There is nothing in the Act or Rules which empower any authority granting licence or permission to give it with retrospective effect. The case laws relied upon by the appellants have been distinguished by the adjudicating authority. In para 6.8 of Order-in-original. 3.7 He further submits that the principle of revenue neutrality will be applicable in this case. All the supplies by the appellants to ONGC are supplies to projects under ICB. Whatever duty is paid on the inputs is available as deemed export benefit to the appellants. Thus the demand of the duty itself is revenue neutral. The imported goods were used for supply to offshore oil exploration or exploitation projects. Thus the ultimate purpose of the imported goods has been fulfilled without causing any loss of exchequer. 3.8 Learned Authorised Representative further submits that thei....
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....ase of violation of Customs Act and/or Bonds so executed. The reading of section 28(4) does not have any adverse impact on the demand so made. He submits that the appeal filed by the Appellants are liable to rejected. 4. We have considered the rival submissions. We find that undisputed facts that appellant obtained duty free goods availing benefit of Notification 12/2012-Cus dated 17.03.2012. One of the condition of the said notification is that the parts and raw materials imported should be used in the manufacture of goods in accordance with Section 65 of the Customs Act. The notification prescribes as under: S. No. Chapter or Heading or Sub-heading or tariff item Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 357 84 of any other Chapter Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of offshore oil exploration or exploitation Nil Nil 41 Condition No. Conditions 42. If,- (a) The parts and raw materials are used in the manfaucture of goods in accordance with the provi....
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....ded that the provisions of this Chapter shall continue to apply to the goods already deposited in the warehouse. (4) Where the licence issued under section 57 or section 58 or section 58A is cancelled, the goods warehoused shall, within seven days from the date on which order of such cancellation is served on the licensee or within such extended period as the proper officer may allow, be removed from such warehouse to another warehouse or be cleared for home consumption or export : Provided that the provisions of this Chapter shall continue to apply to the goods already deposited in the warehouse till they are removed to another warehouse or cleared for home consumption or for export, during such period.] The section 65 of Customs Act 1962 read as under: SECTION 65. Manufacture and other operations in relation to goods in a warehouse. - (1) [With the permission of the Principal Commissioner of Customs or Commissioner of Customs and subject to the provisions of section 65A] and such conditions] as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods. ....
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.... tax compensation cess under sub-section (9), of section 3 of the Customs Tariff Act, 1975 (51 of 1975.) have been paid in accordance with section 47; (iii) on removal of the goods from another warehouse in terms of section 67, a bill of entry for home consumption under clause (a) of section 68 has been presented and the integrated tax under sub-section (7) and the goods and services tax compensation cess under sub-section (9), of section 3 of the Customs Tariff Act, 1975 (51 of 1975.) have been paid before the goods are so removed from that other warehouse; (iv) the provisions of section 59, subject to the following modifications therein, have been complied with, namely :- (a) for the words "bill of entry for warehousing", the words "bill of entry for home consumption" shall be substituted; and (b) for the words "amount of the duty assessed", the words "amount of duty assessed, but not paid" shall be substituted; (C) the duty payable in respect of warehoused goods referred to in clause (A), to the extent not paid, is paid before the goods are removed from the warehouse in such manner as may be prescribed. (2) The provisions of ....
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....quest of the appellant. 6. The appellant had also obtained license under Section 65 of the Customs Act for undertaking manufacturing and other operations in Bond. The first license under Section 65 was issued to the Appellants on 31.03.1986. Thereafter, the license was issued in the new name of appellant on 28.05.2014 and it was subsequently amended on 01.09.2017. The aforesaid amendment took place consequent to the Revenue realizing that it is not possible to manufacture the kind of product that the appellants are manufacturing within the bonded premises. The appellant raised the said ground for amending their license under Section 58 to cover the entire manufacturing unit registered under Central Excise vide their letter dated 06.11.2015. In the said letter they suggested as follows: "8. While the aforementioned licensed ware house has limited area within this central excise registered manufacturing yard, the actual manufacturing takes place across the excise registered yard as a matter of practice followed till date. In this regard your good self may appreciate the fact that the Oil Exploration Platforms/Rigs/Floating Vessels/Ships cannot be manufactured with the fou....
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....house on filing of in bond Bill of entry and double duty bond and the same goods are warehoused. Subsequently, the material is issued for the manufacturing under section 65 of the Customs Act, 1962 as per condition of Notification on the request of Licensee as and when required. All the manufacturing activity is being carried out in across yard / Central Excise Registered premises approved by the then Commissioner Central Excise, Customs, Service Tax, Surat-l and not in the Private Bonded Warehouse as required under Section 65 of the Customs Act, 1962. This practice is followed since 1986. The licence get renewed every year by the Assistant Commissioner of Division with the approval of the Commissioner, Central Excise, Customs & Service Tax, Surat-II. (C) Therefore, it is not feasible to manufacture the huge structures required for ONGC Platforms, Oil Exploration Machineries in the Private Bonded Warehouse as permitted manufacturing operations in the Private Warehouse space under section 65 of the Customs Act, 1962 due to the limited space of Private Bonded warehouse. In the case of ship building, a new Sr. No. 469A in place of Sr. No. 469 has been inserted in original Not....
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.... revenue interest this scheme is more wider and precise to protect the revenue interest, should there be any violation or deviation in its compliance. 6..... 7..... 8. It may be added that since the existing practice followed by M/s L& THEL is going on since 1986 and they are manufacturing goods of national importance, which are supplied to Indian Navy, Coast Guard, ONGC etc. Since it has become the established customs practice which is in-operation for the last 33 years it would be unreasonable to stop it with immediate effect, and adversely effect the manufacture and clearance of various goods of National Importance. Therefore, under these situation I am requesting Division and range officers for maintaining status quo in respect of existing procedure till the new and revised procedure solving aforesaid difficulties are prescribed by the Board. Therefore the matter may be treated on urgent basis as in the coming GST scenario, in such situations issues will become highly confused and difficult to comprehend. Accordingly, it is kindly requested to address the situation as soon as possible in the interest to safeguard revenue as well as national strategic ....
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....scheme in the Foreign Trade Policy, should prevail over technical irregularities that were repaired in the fullness of time. Visiting detriment of confiscation and penalties under Sections 111 and 112 of Customs Act, 1962 in the light of such rectification, and compliance with export obligation, would not be appropriate." 12. The appellant has also relied on the following decisions:  Telkar Food Products Pvt Ltd. 2007 (211) ELT 450 (Tri. Chennai)  Condor Footwear (I) Ltd. 2019 (367) ELT 653 (Tri. Amd.)  Arjun Sahlot 2016 (344) ELT 44 (Del.)  Krishna Filaments Ltd. 2000 (115) ELT 148 (Tri.) In the aforesaid cases the amendment in various licenses were held to be applicable from the date when the original license was issued. Telkar Food Products Pvt Ltd. 2007 (211) ELT 450 (Tri. Chennai) "2. After hearing both sides and considering their submissions, we find that the appellants were obliged to export "Pickles" in terms of the licence issued on 31-8-1995 so as to be entitled to exemption from payment of duty on the capital goods imported by them under EPCG Scheme. The period allowed for this pu....