Custom, Excise & Service Tax Tribunal
Sahuwala High Pressure Cylinders Pvt ... vs Visakhapatnam-Cus on 4 March, 2020
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Appeal No. C/1412/2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Customs Appeal No. 1412 of 2011
(Arising out of Order-in-Original No.1/2011 dated 28.02.2011 passed by Additional
Commissioner of Customs, Visakhapatnam)
Sahuwala High Pressure .. APPELLANT
Cylinders Pvt Ltd.,
Plot No. 04, Survey No. 42,
G.Block, Autonagar,
Visakhapatnam - 530 012.
VERSUS
Commissioner of Customs, .. RESPONDENT
and Service Tax Visakhapatnam- Cus 4th Floor, Customs House, Port Area, Visakhapatnam, Andhra Pradesh - 530 035.
Appearance Shri B. V. Kumar, Advocate for the Appellant.
Shri C. Mallikarjun Reddy, Superintendent for the Respondent. Coram: Hon'ble Mr. ASHOK JINDAL, MEMBER (JUDICIAL) Hon'ble Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER No. A/30774/2020 Date of Hearing:10.02.2020 Date of Decision:04.03.2020 [ORDER PER: ASHOK JINDAL]
1. The appellant filed an appeal against the impugned order.
2. The facts of the case are that appellant is a 100% EOU, obtained a letter of permission from Development Commissioner, Visakhapatnam for manufacturing and export of High Pressure Cylinders. In the course of their operation, the appellant imported/procured capital goods and raw material and had made advance DTA sale as permitted by the Development Commissioner, but did not export any finished goods thereby failed to achieve positive Net Foreign Earnings (NFE). Vide letter dated 11.01.2010, the appellant approached to the Development Commissioner for debonding (2) Appeal No. C/1412/2011 of their unit along with "In Principal Permission" dated 08.01.2010. As per clause (e) Para 6.18 of Foreign Trade Policy, 2009-14, the appellant shall assess duty liability arising out of debonding and submit details of such assessment to the jurisdictional Customs and Central Excise authorities. Accordingly, the appellant submitted the details of assessment of duty vide letter dated 11.01.2010 and on 23.01.2010, the Revenue intimated the total dues payable by the appellant on debonding. At the time of debonding the appellant filed 10 bills of entry on 24.02.2010 for imported raw material which were imported by availing duty exemption in terms of Notification No. 52/2003-Cus dated 31.03.2003 as amended. The appellant proposed for assessment on the value of raw materials mentioned in respective bills of entry for ware housing at the time of import and at the rates of duty in force at the time of debonding. The values as furnished by the appellant were accepted and the goods were assessed at the rate of duty prevailing on the date of filing of the Bills of Entry in terms of Para 4(b) of Notification No. 52/2003-Cus dated 31.03.2003 and duties were assessed accordingly. Thereafter, on re-examination of duty assessment, it was found that the raw material would be covered under "said goods" referred to in condition (3)(d)
(ii) in para 1 of Notification No. 52/2003-Cus dated 31.03.2013 as amended. As per the said provision, in case of failure to achieve positive Net Foreign Exchange Earnings equal in amount to the portion of duty foregone at the time of import to account to the duty leviable on said goods for exemption contained in said Notification. The duty so payable shall bear the same provision as the unachieved portion of NFE along with interest from the date of importation till payment of such duty. Therefore, the duty worked out to be paid by the appellant is 5,33,51,674/- whereas the appellant has paid Rs. 4,59,42,136/-. Therefore, there is a differential duty payable by the appellant to the tune of Rs. 74,09,538/- against the bills of entry filed on (3) Appeal No. C/1412/2011 22.04.2010. Further, the appellant procured duty free indigenous goods, capital and consumables against CT-3. The appellant furnished a list of indigenous capital goods on 22.02.2010 for debonding, computing the duty payable, after allowing the depreciation on the capital goods at the assessable value and applying the rates of duty in force at the time of debonding. As the appellant has not achieved positive NFE, the duty foregone along with applicable interest was to be collected from the appellant and the assessment order dated 22.04.2010 was reissued. But in terms of para 9.12 of Foreign Trade Policy 2009-14, it was found that certain goods which were defined as capital goods were not mentioned in the list of capital goods furnished by the appellant for debonding. Whereas, Para 8(i) of the Notification No. 22/2003-C.E. has prescribed duty payable on indigenous capital goods procured by an EOU as amended by Notification No. 26/2008-C.E. dated 05.05.2008. Further in terms of Para No. 3 of Circular No. 12/2008-Cus dated 24.07.2008, in case unit has not achieved positive NFE in the above manner, the duty foregone at the time of import shall be paid on such value of goods in proportion to non-achieved portion of NFE. Therefore in terms of condition (4) (b) of Para 1 of Central Excise Notification No. 22/2003-C.E. dated 31.03.2003 it was found that appellant paid duty and short paid of duty Rs. 21,03,122/-. Therefore, a show cause notice dated 27.04.2010 was issued to the appellant to demand differential duty as mentioned herein above along with interest from the appellant. The matter was adjudicated, demand of duty was confirmed against the said order. Appellant is before us.
3. The Learned Counsel for the appellant submits that facts of the case are not in dispute. The only dispute is that on which date duty is payable by the appellant and at what rate.
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Appeal No. C/1412/2011
4. He submits that in terms of Notification No. 52/2003-Cus dated 31.03.2003 as amended the appellant was liable to pay duty in terms of clause 8(4) proviso at the rate in force on the date of debonding and they have paid duty accordingly. Further, in terms of Notification No. 52/2003-CE dated 31.03.2003 as amended. Clause 8, they are liable to pay at the rate in force on the date of debonding or clearance for indigenously procured capital goods. Therefore, impugned order for demanding differential duty is not sustainable.
5. He further submits that as per Notification No. 132/2004-Cus (NT) dated 25.11.2004 no interest is payable by appellant being 100% export oriented unit (undertaking).
6. In support of his claim he relied on the following decisions:
a) Business process Technologies (I) Pvt Ltd., Vs CC, Bangalore [2010 (249) ELT 248 (Tri-Bang)]
b) Bombay Alloy Steel Industries Pvt Ltd., Vs UOI [1988 (38) ELT 262 (Bom)]
c) Kiran Spinning Mills Vs Collector of Customs [1999 (113) ELT 753 (S.C)]
d) Simplex Castings Ltd., Vs UOI [1998 (104) ELT 318 (A.P)]
7. On the other hand, the Learned AR submits that in terms of Notification No. 52/2003-Cus dated 31.03.2003 as amended, the appellant are liable to pay duty in terms of Clause 3 (d) (I) of the said Notification wherein the appellant are required to pay duty from the date of import. Therefore, the differential duty has rightly been demanded. He also submits that interest is also demanded correctly as per the said terms of the notification. Further, he submits that in terms of Notification No. (5) Appeal No. C/1412/2011 22/2003-CE dated 31.03.2003 Clause 4(b) the appellant is liable to pay duty from the date of procurement of the said goods till the payment of duty. Therefore, the impugned order is to be upheld
8. Heard the parties.
9. From the arguments advanced by both sides, the following issues emerge:
1) whether appellant is liable to pay duty from the date of demanding of their unit on the rate of duty prevailing on such date or at the rate of duty prevailing at the time of import?
2) whether the appellant is liable to pay interest for the intervening period or not?
Issue No.1
10. For better appreciation of the issue, Notification No. 52/2003-CUS dated 31.03.2003 as amended is extracted here:
(3) The unit executes a bond in such form and for such sum and with such authority, as may be specified by the said officer, binding himself, -
(a) to bring the said goods into the unit or and use them for the specified purpose mentioned in clauses (a) to (e) in the opening paragraph of this notification;
(b) to maintain proper account of the receipt, storage and utilization of the goods;
(c) to dispose of the goods or services, the articles produced, manufactured, processed and packaged in the unit, or the waste, scrap and remnants arising out of such production, manufacture, processing or packaging in the manner as provided in the [Foreign Trade Policy] and in this notification;
(d) to pay on demand -
(I) an amount equal to duty leviable on the goods and interest at a rate
as specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) issued under section 28AB of the said Customs Act on the said duty from the date of duty free import of the said goods till the date of payment of such duty, if
(i) in the case of capital goods, such goods are not proved to the satisfaction of the said officer to have been installed or otherwise used within the unit, within a period of one year from the date of (6) Appeal No. C/1412/2011 import or procurement thereof or within such extended period not exceeding five years as the said officer may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow;
(ii) in the case of goods other than capital goods, such goods as are not proved to the satisfaction of the said officer to have been used in connection with the production or packaging of goods in accordance with SION for export out of India or cleared for home consumption within a period of three years from the date of import or procurement thereof or within such extended period as the said officer may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow:
Provided that no such clearance or debonding of capital goods under the Export Promotion Capital goods Scheme of Chapter 5 of the Foreign Trade Policy shall be allowed if the unit has not fulfilled the positive NFE criteria at the time of clearance or debonding in terms of Para 6.18(d) of Foreign Trade Policy:
Provided further that -
(a) Such clearance or debonding of capital goods may be allowed on payment of duty on the depreciated value thereof and at the rate in force on the date of debonding or clearance, as the case may be, if the unit has fulfilled the positive NFE criteria taking into consideration the depreciation allowable on the capital goods at the time of clearance or debonding. In case of failure to achieve the said positive NFE, the depreciation shall be allowed on the value of capital goods in the same proportion as the achieved portion of NFE.
The notification no. 22/2003-CE dated 31.03.2003 as amended is also extracted here below:
4(b) in case of failure to achieve the positive Net Foreign exchange earning, the duty equal in amount to the portion of the duty leviable on the said goods but for the exemption contained in this notification and the duty so payable shall bear the same proportion as the unachieved portion of Net foreign exchange Earning bears to the positive Net Foreign exchange Earning to be achieved along with interest at the rate of as specified in the notification of the Government of India, Ministry of Finance, Department of Revenue issued under section 11Ab of the Central Excise Act, 1944, from the date of procurement of the said goods till the payment of such duty.
Clause 8(i) such clearance or debonding of capital goods may be allowed on payment of an amount equal to the excise duty on the depreciated value thereof and at the rate in force on the date of debonding or clearance, as the case may be, if the unit has fulfilled the positive NFE criteria taking into consideration the depreciation allowable on the capital goods at the time of clearance or debonding. In case of failure to achieve the said positive NFE, the depreciation shall be allowed on the value of capital goods in the same proportion as the achieved portion of NFE. The depreciation shall be allowed in straight line method as specified below, namely:-
(a) For computer and computer peripherals:
for every quarter in the first year @ 10%
for every quarter in the second year @ 8%
for every quarter in the third year @ 5%
for every quarter in the fourth & fifth year @ 1%
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Appeal No. C/1412/2011
Further as per Section 15 of the Customs Act, 1962 provides the date of determination of rate of duty and tariff valuation of imported goods.
11. The same is extracted here below:
S.15. Date of determination of rate of duty and tariff valuation of imported goods. -
(1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force,--
(a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under section 68, on the date on which the goods are actually removed from the warehouse;
(c) in the case of any other goods, on the date of payment of duty:
Provided that if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards.
12. As per Section 15 (1)(b) of the act, the duty is payable at the time when goods were actually removed from warehouse under Section 68 of the Act. Admittedly, in the case in hand, the appellant is a 100% EOU and having letter of permission to work as 100% EOU. As the appellant could not achieve positive NEP, the appellant applied for demanding and at the time of demanding filed bills of entry which are not in dispute. Therefore, in terms of Section 15 of the Act, the appellant is liable to pay duty at the rate prevailing at the time of debonding. This is also in consonance of Clause 8(3A)/ 8(4A) of the notification which provides that the appellant/ assessee is liable to pay duty at the rate in force on the date of debonding if unit failed to achieve said positive NFP. Therefore, with regard to the demand of duty of Rs. 74,09,538/-, the appellant is liable to pay duty at the rate of duty prevailing at the time of debonding of the unit. The duty is to be calculated accordingly.
13. With regard to indigenously procured capital goods in terms of Notification No. 22/2003-CE dated 31.03.2003 the clause 8(i) of the (8) Appeal No. C/1412/2011 notification clearly specifies that the duty is payable at the rate in force on the date of debonding. As per the said notification, the appellant is liable to pay duty at the rate in force on the date of debonding. Therefore, with regard to the demand of differential duty of Rs. 21,03,122/-, we hold that appellant is liable to pay duty at the rate of prevailing on the date of debonding. The duty is to be calculated accordingly. Issue No.2
14. In terms of Notification No. 132/2004-Cus (NT) dated 25.11.2004 the appellant are not liable to pay interest as held by this Tribunal in the case of Business Process Technologies India Pvt Ltd., (supra) where in this Tribunal held as follows:
5. We have considered the submissions made at length by both sides and perused the records. The issue involved in this case is whether the appellant, an export oriented unit, is liable to pay the interest for the period during which the capital goods (procured without payment of duty) were warehoused in export oriented unit. It is seen from the records that the appellants had warehoused the goods in 2003 and the validity of the said bond is up to 2008. It is undisputed that the appellants were granted permission for debonding in 2007.
Capital goods were removed from the factory premises in January, 2008. The clauses of Notification No. 132/04-Cus., dated 25-11-2004 reads as under :
"In exercise of the powers conferred by sub-section (2) of section 61 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as said Act) and in supersession of the notification of Central Board of Excise and Customs, No. 67/95 (N.T.) Customs, dated the 1st November, 1995 vide number S.O. 870 (E), dated the 1st November, 1995, the Central Board of Excise and Customs, being satisfied that it is necessary so to do in the public interest hereby exempts interest accrued on the customs duties payable on the capital goods, components and spares of capital goods and material handling equipments (fork- lifts, overhead cranes, mobile cranes, crawler cranes, hoists and stackers), office equipments, captive power plants including captive generating sets, spares of captive power plants and captive generating sets, tools, jigs, gauges, fixtures, moulds, dies instruments and accessories, (other than raw materials, components and consumables) authorised to be imported by an export oriented undertaking or an Electronic Hardware Technology (EHTP) unit or a Software Technology Park (STP) Unit and warehoused under Chapter IX of the said Act, at the time of clearance from Customs Bended Warehouses under section 68 of the said Customs Act.
Explanation. - For the purposes of this notification, -
(i) "Electronic Hardware Technology Park (EHTP) unit" means a unit established under and in accordance with the Electronic Hardware Technology Park Scheme notified by the Government of India in the Ministry of Commerce, vide, notification No. 5 (RE-95)/92-97, dated the 30 April, 1995 and approved by the Inter Ministerial Standing Committee;
(ii) "export oriented undertaking" has the same meaning as assigned to "hundred per cent export oriented undertaking" in clause (ii) to the Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944); and
(iii) "Software Technology Park (STP) unit" means a unit established under and in accordance with the Scheme notified by the Government of India in the Ministry of Commerce, vide, notification No. 4(RE-95)/92-97, dated the 30th April, 1995 and approved by the Inter Ministerial Standing Committee".(9)
Appeal No. C/1412/2011
6. It can be seen from the above reproduced notification that Central Govt. has exempted the interest accrued on the customs duty payable by an export oriented unit. We also find that provisions of Section 61 clearly exclude the liability to pay interest for a period of 5 years from the date of bonding. We find that the decisions of this Bench in the case of Stelfast India P. Ltd. squarely covers the issue in favour of the appellant. We may reproduce the said ratio:
"On a careful consideration, we notice that the notification No. 67/95-Cus. dated 1-11- 1995 exempts interest accrued on the Customs duty payable on the warehoused goods under Chapter IX of the Customs Act. Both the authorities have failed to see this provision of law and, therefore, the confirmation of interest is not justified. Furthermore, the plea taken that the Customs Authorities has taken their own time to de-bond the unit from the EOU Scheme despite the Government of India, EOU Section of the Ministry of Industry granting permission to the appellant to withdraw from the EOU scheme on 20-2-1996 and in such a circumstance, interest is not payable in the light of the cited judgments is also a well taken ground. On both grounds, interest is not leviable and hence the impugned order is set aside. The appeal is allowed with consequential relief, if any."
15. In view of the above observations, we pass the following order:-
a) for imported capital goods, the appellant is liable to pay duty at the rate of duty prevailing on the date of debonding
b) the appellant is liable to pay duty for indigenously procured capital goods at the rate of duty prevailing on the date of debonding and
c) no interest is payable by the appellant
16. The Revenue is directed to calculate the duty at the rate prevailing on the date of debonding. If any, amount is payable by the appellant, the same is shall be paid within one month.
17. The Appeal is disposed of in the above terms.
(order was pronounced in court on 04.03.2020) (ASHOK JINDAL) MEMBER (JUDICIAL) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) Jaya