TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 828
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...., 1962 and Rule 25 (1) (a) of the Central Excise Rule, 2002 However, I give an option to the party to redeem the said goods on aggregate payment of Redemption Fine of Rs 75,10,000/- in respect of both type of goodsre imported as well as procured indigenously: 2. I confirm demand of Customs duty (inclusive of Education Cess and Secondary & Higher Education Cess) amounting to Rs. 71,89,177/- (Rupees seventy one lakh eighty nine thousand one hundred seventy seven only) under Section 28(4) of the Customs Act, 1962 and I appropriate the amount Customs duty of Rs.58,76,842/- heady deposited by the party vide TR & Challar. No 318 dated 07-16 toward the cantamed demand of Customs duty. 3. I confirm demand of Central Excise duty amounting to amounting to H1600/(Rupees five thousand six hundred only), under Section 11A(4) of the Central Excise Act, 1944, 4. I charge and demand interest on the above confirmed demand of Customs duty and Central Excise duty from the party under Section 28AA of the Customs Act, 1962 and Section 11AA of Central Excise Act, 1944 and appropriate the amount of interest of Rs 2,14,948/ deposited by the party vide TR-6 Challan No.3187 dated 20.07 16 towards t....
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....not be demanded and recovered from them under Section 28(4) of the Customs Act, 1962 and why the amount of Customs duty of Rs. 58,76,842/- deposited by the party vide IR-6 Challan No 3187 dated 20.07.16 at the time of taking provisional release of seized machine should not be appropriated towards the said liability, (ii) (b) Central Excise duty amounting to Rs 5600/ (Rupees five thousand six hundred only). as detailed Annexure-A, should not be demanded and recovered from them under Section 11A(4) of the Central Excise Act, 1944, (iii) interest at the appropriate rate payable on the said amount of Customs duty and Central Excise duty not paid by them, should not be demanded and recovered from them under Section 28AA of the Customs Act, 1962 and Section 11AA of Central Excise Act, 1944; the amount of interest of Rs. 2,14,948/ deposited by the party vide TR-6 Challan No 3187 dated 20.07.16 at the time of taking provisional release of seized machine may not be appropriated against the total liability of interest calculated under Section 28AA of the Customs Act, 1962; and (iv) Penalty in terms of Section 112, 114A and 117 of the Customs Act, 1962 and Section 11AC of the Central....
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....ansferred from the appellant's EOU unit at Noida to the appellant's EOU unit at Greater Noida under proper documentation. However, due to paucity of space the said machines were kept at the premises of the job worker. * As the goods were cleared on EOU unit from the appellant's to another EOU unit, there should have been no demand for duty. * In case duty is demandable in respect of above, the same should be allowed only after allowing the depreciation as provided by Notification No.53/2003. * No penalty is imposable on the appellant and no redemption fine would be imposed as no element of fraud, suppression of facts, willful mis-statement etc. were found. 3.3 Learned Authorized Representative reiterates the findings recorded in the orders of the lower authorities. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 Impugned order records as follows:- "I have gone through the case records including record of PH and citations Appeal are as under- (a) whether machines/goods imported/procured duty free removed under job work challans by 100% EOU from bonded premises to DTA unit without observing any ....
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....requirements to be complied with great precision by the manufacturer exporters working under EOU scheme without any deviation. Otherwise, the EOU scheme will be in a total chaos and interest of Revenue will be jeopardized. The present act of removal of machines/goods by the Appellant, a 100% EOU, from their bonded premises without observing any prescribed procedure and without obtaining permission in this regard from the proper authority cannot be accepted as mere ignorance on part of them but a deliberate act with malevolence motive showing utter disregard to the basic endeavor of scheme to enjoy the undue benefit of exemption. It is a well known principle of law that "Ignorance of Law is no excuse". As per Section 111(j) of the Customs Act 1962, any dutiable or prohibited goods brought from a place outside India and removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission shall be liable to confiscation. Similarly, as per Rule 25(1) of Central Excise Rules 2002, if any producer, manufacturer, registered person of a warehouse or an importer or a registered dealer removes any excis....
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..... (3)(d)(1)(i)], exemption from payment of the duty of customs on imported capital goods for manufacturing export articles is available, subject to the condition that the unit executes a bond, binding himself to pay on demand, an amount equal to duty leviable on the goods and interest on the said duty from the date of duty free import of the said goods till the date of payment of such duty, if such capital goods are not proved to the satisfaction of the proper officer to have been installed or otherwise used within the unit. In the instant case, the Appellant removed the capital goods imported duty free under EOU Scheme to other DTA unit and thus not installed/not used within the unit for manufacturing export articles and made them liable for payment of an amount equal to duty leviable on the goods and interest on the said duty from the date of duty free import of the said goods till the date of payment of such duty. It is already found that the said Appellant removed the impugned machines/goods in deceitful manner under job work challans and for this reason any benefit prescribed under relevant Act or Rules or Notifications or under FTP is not available to them. It is well settled....
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.... Section, mere deposit of duty/interest before issuance of SCN not necessarily negates situation mentioned in the said Section. Penalty under Section 11AC of Central Excise Act, 1944 is an exemplary punishment for an act of intended deception by the assessee to evade duty by adopting any of the means mentioned in the Section 11AC. Hon'ble CESTAT, Principal Bench, New Delhi, in a recent case of CCE, Kanpur vs. P.P. Polyplast (P) Ltd., reported in 2017 (346) E.L.T. 409 (Tri. Del.) categorically decided that "Penalty Imposition -Payment of duty prior to show cause notice Settled law that when statutory elements for imposition of penalty are present, there is no discretion for penalty -Payment of duty, prior to issue of show cause notices, is no ground for not imposing penalty - Section 11AC of Central Excise Act, 1944." The question of whether the penalty and interest could be imposed when the duty has been deposited before issuance of show cause notice is already settled by the Hon'ble Supreme Court, in the case of Union of India v. Rajasthan Spinning & Weaving Mills [2009 (238) E.L.T. 3 (S.C.)] wherein the Hon'ble Supreme Court has taken a view that the payment of duty/d....
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....d. 4.5 Accordingly, the submission of the appellant that these goods/machines have been received back in their premises as per permission letter dated 24.05.2024 is also without any merits. The said letter is for movement of the seized/ confiscated goods under supardignama from the premises of M/s Samwon Precision Mould Mfg Pvt. Ltd. to the premises of M/sElentec India Pvt Ltd. The machineries seized have been confiscated by the the impugned order in original dated 31.03.2017. The confiscation has been upheld by the impugned order dated 11.01.2018. After confiscation the property in the confiscated goods vests with the government. The letter dated 24.05.2024 is reproduced bellow:- 4.5.1 In view of the above, we do not find any merits in these submissions as the seized machines were confiscated by order dated 31.03.2017 and allowed to be redeemed on payment of redemption fine of Rs.75,10,000/-. The said order of confiscation and redemption has been upheld by the Appellate Authority. Both the orders were passed prior to the date of permission. At the time of seizure or at the time of adjudication the goods were not in premises of the appellant. Further, even as per this letter thes....
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....ission of Excise duty on specified intermediate goods as per the Central Government Notification dated 11-8-1994, if captively consumed for the manufacture of final product on the ground that the records kept by it at the recipient end would indicate its "intended use" and "substantial compliance" with procedure set out in Chapter 10 of the Central Excise Rules, 1944, for consideration? The Constitution Bench answering the said question concluded that a manufacturer qualified to seek exemption was required to comply with the preconditions for claiming exemption and therefore is not exempt or absolved from following the statutory requirements as contained in the Rules. The Constitution Bench then considered and reiterated the settled principles qua the test of construction of exemption clause, the mandatory requirements to be complied with and the distinction between the eligibility criteria with reference to the conditions which need to be strictly complied with and the conditions which need to be substantially complied with. The Constitution Bench followed the ratio in Hansraj Gordhandas case (supra), to reiterate the law on the aspect of interpretation of exemption clause in para....
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.... been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve th....
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....our of the assessee. 41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. 42. In Govind Saran Ganga Saran v. Commissioner of Sales Tax, 1985 Supp (SCC) 205, this Court pointed out three components of a taxing statute, namely subject of the tax; person liable to pay tax; and the rate at which the tax is to be levied. If there is any ambiguity in understanding any of the components, no tax can be levied till the ambiguity or defect is removed by the legislature [See Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667; Indian Banks' Association v. Devkala Consultancy Service, (2004) 4 JT 587 = AIR 2004 SC 2615; and Consu....
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....he notification and exemption cannot be gathered by necessary implication or by construction of words; in other words, one has to look to the language alone and the object and purpose for granting exemption is irrelevant and immaterial. 45. In Parle Exports case (supra), a Bench of two-Judges of this Court considered the question whether non-alcoholic beverage base like Gold spot base, Limca base and Thumps Up base, were exempted from payment of duty under the Central Government notification of March, 1975. While considering the issue, this Court pointed out the strict interpretation to be followed in interpretation of a notification for exemption. These observations are made in para 17 of the judgment, which read as follows : "How then should the Courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal wi....
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....ollector of Central Excise v. Parle Exports (P) Ltd., (1989) 1 SCC 345, this Court while accepting that exemption clause should be construed liberally applied rigorous test for determining if expensive items like Gold Spot base or Limca base of Thums Up base were covered in the expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held 'that it should not be in consonance with spirit and the reason of law to give exemption for non-alcoholic beverage basis under the notification in question'. Rationale or ratio is same. Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit." 46. The above decision, which is also a decision of two-Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The q....
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....he tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State...." 50. In Tata Iron & Steel Co. Ltd. v. State of Jharkhand, (2005) 4 SCC 272, which is another two-Judge Bench decision, this Court laid down that eligibility clause in relation to exemption notification must be given strict meaning and in para 44, it was further held - "The principle that in the event a provision of fiscal statute is obscure such construction which favours the assessee may be adopted, would have no application to construction of an exemption notification, as in such a case it is for the assessee to show that he comes within the purview of exemption (See Novopan India Ltd. v. CCE and Customs)." 51. In Hari Chand case (supra), as already discussed, the question was whether a person claiming exemption is required to comply with the procedure strictly to avail the benefit. The question posed and decided was indeed different. The said decision, which we have already discussed supra, however, indicates that while construing an exemption notification, the Court has to distinguish the conditions which require strict ....
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....llowed on payment of customs duty on the value at the time of import and at rates in force on the date of payment of such customs duty; (c) such clearance of used packing materials such as cardboard boxes, polyethylene bags of a kind unsuitable for repeated use may be allowed without payment of any customs duty." 6.3 A plain reading of the above condition makes it absolutely clear that depreciation is permissible only when the capital goods are cleared after getting approval from the Development Commissioner for being taken to any other place in India in accordance with the EXIM policy. In the instant case no such permission has been obtained by the appellant from the Development Commissioner and the Development Commissioner has also not renewed the LOP when it expired in September, 2001. In the absence of any such permission, the question of allowing any depreciation on the value of the capital goods does not arise. As regards the duty demand on raw materials, if the raw materials are consumed in the manufacture of goods exported, then the demand of duty will not arise at all. Only in respect of raw materials lying unutilized still remaining in the bonded premises, the questi....