AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 1624
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....l Lathe Machines and their accessories for C.I.F. value Rs. 1,30,09,500/- (J. Yen 3,67,50,000/-). Against the said license, the appellant imported 5 Nos. of Horizontal Lathe Machines and their accessories vide Bill of Entry No. 1397 dated 18.06.1999 (Assessable value Rs. 47,10,122.48) and Bill of Entry No. 545 dated 07.06.1999 (Assessable value Rs. 78,94,514.53). The appellant availed concessional rate of duty at the rate of 10% as provided under Notification No.29/1997 dated 01.04.1997. 1.1. However, the appellant failed to fulfil their export obligation during the first block of two years i.e., 12.05.1999 to 11.05.2001. A demand notice was issued vide letter dated 27.03.2002, demanding payment of differential duty on unfulfilled portion of export obligation, along with interest. The said notice is pending adjudication. 2. The appellant approached the Directorate General of Foreign Trade (DGFT), Patna requesting for extension of export obligation period and inclusion of additional items in their licence for fulfilment of export obligation. As requested by the appellant, the export obligation period was extended by the DGFT, Patna and certain new/additional items were include....
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....e said period. 6.2. As M/s. Timken India Pvt. Ltd. was granted Star Trading House status on or after 1st April, 2006, the investigating officers were of the view that the supplies made to M/s. Timken India Ltd. before 1st April, 2006 would not qualify as deemed export straightaway unless their name and E.P.C.G. Licence number were properly endorsed in the shipping bills of M/s. Timken India Ltd., as required under Para 5.6 of the Foreign Trade Policy (FTP), Handbook of Procedures. 7. During the course of further investigation, Mr. Ashit Chatterji, Manager (Taxation) of M/s. Timken India Ltd., in his letter dated 18.09.2008, inter alia informed that they had declared M/s. Omni Auto Ltd. as their supporting manufacturer and co-Licencee for procuring raw material under Advance Authorization in the recent past (31-08-2006) and had been fulfilling export obligations from time to time. 8. On the basis of the information procured from M/s. Timken India Ltd., Jamshedpur, the statement of Mr. Bikas Chandra Banerjee / appellant no. 2, Accounts Manager of M/s. Omni Auto Ltd. was again recorded, wherein he revealed that the appellants had only calculated the job charges towards fulfil....
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....ith interest, under Section 28 of the Customs Act, 1962 read with Notification No.29/97-Cus dated 01.04.1997 as per provisions of the bond executed by the noticee no.1, by invoking the extended period of limitation. The notice also proposed to impose penalty on the appellants. Further, confiscation of the capital goods imported against the impugned EPCG Licence was proposed under Section 111(o) of the Act, along with enforcement of bonds executed at the time of import as well as encashment and appropriation of the Bank Guarantee furnished by the appellant. An amount of Rs.10,00,000/- already deposited was proposed to be adjusted. 10. During adjudication proceedings, Ld. Principal Commissioner of Central Excise, Kolkata-I Commissionerate, vide the impugned Order-in- Original No. 01/Pr. Commr./Kol-I/C.Ex./2016-17 dated 24.05.2016, passed the following order: - "(i) Five numbers of Horizontal Lathe Machines and their accessories and two units of total memory parts for computer of Horizontal Lathe Machines having assessable value of Rs. 1,26,04,637.01 (Rupees One crore Twenty-six lakh Four thousand Six hundred Thirty-seven and Paisa One only) imported under Bills of Entry N....
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....be paid may be recovered by enforcing the two Bonds executed (valued Rs. 34,59,061.00 &Rs. 20,63,787.00 totalling Rs. 55,22,848.00) and encashment of Bank Guarantee No. 99/21 dated 10.03.99 & 99/251 dated 23.06.99 furnished (amounting to Rs. 17,29,550.00 and Rs. 10,31,900/-) and appropriating the Cash Security of Rs. 10,00,000/- voluntarily deposited by the noticee No.1 towards payment of Customs duty vide TR-6 Challan No. 01/2008-09 dated 23.09.2008 &02/2008-09 dated 31.10.2008 received in the SBI, Patna (Main Branch)." 11. Aggrieved by the confirmation of the demands mentioned supra, the appellants herein have filed these appeals. 12. The Ld. Counsel appearing on behalf of the appellants submitted that initially, they had failed to fulfil the export obligation, but later, the DGFT, Patna had amended the Licence and extended the export obligation period, by inclusion of additional export items. It is submitted that the DGFT had issued a certificate on 31.01.2012 wherein the DGFT has regularized the export obligation and certified that the appellant has fulfilled their export obligation in respect of the ....
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.... 3rd Block Year. 12.1. In this regard, it is the appellants' contention that DGFT is the proper authority to decide the fulfilment of export obligation; once the DGFT authorities have issued the certificate on 31.01.2012 certifying that the appellant had fulfilled their export obligation, it is not open to the Customs authorities to initiate any action by disregarding the Export Obligation Discharge Certificate (EODC) issued by the DGFT. 12.2. The Ld. Counsel for the appellants also made the following submissions : - (i) The appellant discharged its export obligation via direct as well as deemed exports. As regards deemed exports, the appellant submitted the Excise Invoices (representative copies at page 126-129 of PB) since inception of these transactions, certificate of Central Excise dated 15-03-2006 and minutes of the meeting dated 09-02-2007also the evidence of direct export duly certified by the Chartered Accountant as well as by submission of ANF-5B. DGFT issued certificate 06-09-2005 showing fulfilment of Export obligation (para 6 of O-IO) and thereafter issued EODC dated 31-01-2012. (ii) DGFT is competent authority to interpret the policy and ....
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....rized Representative of the Revenue submitted that the appellants have obtained the said certificate from the DGFT by mis-representing the facts, which has been admitted by the Deputy Director, DGFT, Patna. Accordingly, he contends that the EODC dated 31.01.2012 issued to the appellant has no validity. Thus, the Ld. Authorized Representative of the Revenue contends that the demands confirmed against the appellants vide the impugned order are legally sustainable. 14. Heard both sides and perused the appeal records. 15. We observe that the appellant-company was issued an EPCG Licence bearing No. P/CG/2098472/C/XX/52/N/99 dated 12.05.1999 for import of Five numbers Horizontal Lathe Machines and their accessories for C.L.F. value Rs. 1,30,09,500/-. Since the appellant had failed to fulfil their export obligation, they approached the DGFT, Patna seeking extension of export obligation period and also for inclusion of additional items in their said licence for fulfilment of export obligation. The Deputy Director General of Foreign Trade, DGFT, Patna, vide letter dated 06.09.2005 issued to the appellant, certified partial fulfilment of export obligation for the first block year. Howe....
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....the DGFT. Once the DGFT accepts the fulfilment of export obligation and the bond has been released, the Customs authorities cannot initiate any proceedings for contravention of the provisions of the Foreign Trade Policy. We observe that this view has been held by the Hon'ble Supreme Court in the case of M/s. Titan Medical Systems Pvt. Ltd. v. Collector of Customs, New Delhi [2003 (151) E.L.T. 254 (S.C.)]wherein it has been held as under:- "13. As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement, for issuance of a licence, that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be noted that....
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..... Moreover, no condition of the exemption was violated and therefore, there cannot any liability of penalty, as well." 16. In view of the above discussion and by relying on the decision cited supra, we hold that the DGFT is the competent authority to determine the policy and to determine as to whether the appellant has achieved fulfilment of the export obligation under the said policy or not. In the present case, as it is a fact on record that the DGFT has regularized the export obligation and held that the appellant had achieved the export obligation vide their letter/certificate issued on 31.01.2012, we find that the demands confirmed in the impugned order against the appellants herein on the ground that the appellants had not fulfilled their export obligation, are not legally sustainable. Thus, we hold that the demands of customs duty along with interest and penalty confirmed against the appellant in the impugned order are not sustainable and hence we set aside the same. Accordingly, we set aside the penalties imposed on M/s. Omni Auto Ltd., Jamshedpur (appellant- company/appellant no. 1), Mr. Bikas Chandra Banerjee (appellant no. 2) and Mr. Anil Roy, Managing Director (appel....