Custom, Excise & Service Tax Tribunal
M/S. Kudremukh Iron Ore Co. Ltd vs Cc, Mangalore on 12 September, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing:12/09/2011
Date of decision:12/09/2011
Application No.C/ST/278/2008
Appeal No.C/741/2008
(Arising out of Order-in-original No.09/2008(Commr) dt. 19/8/2008 passed by CC, Mangalore )
For approval and signature:
Honble Mr. P.G. Chacko, Member(Judicial)
Honble Mr. M. Veeraiyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
M/s. Kudremukh Iron Ore Co. Ltd.
..Appellant(s)
Vs.
CC, Mangalore
..Respondent(s)
Appearance Mrs. Komala Choudhary, Advocate for the appellant.
Mr. M.M. Ravi Rajendran, JDR for the Revenue.
Coram:
Honble Mr. P.G. Chacko, Member(Judicial) Honble Mr. M. Veeraiyan, Member(Technical) FINAL ORDER No._______________________2011 Per P.G. Chacko This application filed by the assessee seeks waiver of pre-deposit and stay of recovery in respect of customs duty of over Rs.72 lakhs, penalty of Rs.10,000/- etc. After examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed at this stage. Accordingly, after dispensing with pre-deposit, we take up the appeal for disposal.
2. The appellant, a public sector undertaking, is also a 100% EOU. They are, principally, engaged in the mining of iron ore. During the material period, they used to convert the ore first into ore concentrate and then into pellets. The iron ore concentrate and pellets, both, were exported from their Mangalore plant which was part of a private bonded warehouse, at a distance of 67 Kms. from the mining area at Kudremukh, which was a part of another private bonded warehouse, from where the concentrate in the form of slurry was conveyed through underground pipeline to the Mangalore plant for conversion into pellets. In April, 1993, the appellant imported carbon steel pipes without payment of duty claiming exemption under Customs Notification No.13/81-Cus. dt. 14/2/1981, for the purpose of replacement of a segment of the underground pipeline at Kudremukh. The question considered by the adjudicating authority was whether the importer could claim the said pipes to be capital goods for the purpose of Notification No.13/81-Cus. The ld. Commissioner held that there was no evidence of the pipes having been used within the bonded area. Accordingly, the benefit of exemption was denied and the duty demand was confirmed against the party. He also imposed a penalty on them.
3. Ld. Counsel for the appellant submits that the manufacture of concentrate and pellets was undertaken, admittedly, in bonded area and that the imported pipes were used for replacement of a damaged section of the underground pipeline within the bonded warehouse premises at Kudremukh. The pipeline was used exclusively for conveyance of the ore from this bonded area to the other bonded area. It is submitted that the conditions of the above Notification were fulfilled by the appellant. According to the ld. Counsel, the decision of the Commissioner is unsustainable on facts and in law. Ld. Counsel has also raised another grievance which is that the documents produced by the appellant to show that the pipes were replaced within the bonded warehouse area at Kudremukh were not considered by the adjudicating authority. She submits that these documents have been mentioned in ground no.3.1 of the appeal. These documents include (i) a sketch of the mining leasehold sanctioned to the appellant jointly surveyed by the Land Survey Department, (ii) Warehouse licence No.2/82 dt. 31/12/1982 granted to the appellant, (iii) Note dt. 30/12/1992 prepared by the appellant detailing the location and history of the damages/leakages to pipeline noticed at various points and on various dates as spelt out therein, (iv) Material Procurement Requisition note dt. 16/6/1992 prepared by the appellant for obtaining financial sanction and approval for the purchase of ERW pipes and approval thereof dt. 16/8/1992, (v) details of issue of pipes from bond on 28/3/1994 & 16/5/1994 duly endorsed by the bond officer, for the damage repair work, etc. It is submitted that none of these materials was examined by the Commissioner in the proper perspective.
4. We have heard the ld. DR also who reiterates the findings of the Commissioner. It is submitted that the adjudicating authority clearly found that the materials produced by the party did not establish that the damaged portion of the slurry pipe was actually located within the bonded area.
5. After considering the submissions, we are of the considered view that the case should be re-adjudicated by the ld. Commissioner. Apparently, many of the documents produced by the importer was not examined by the Commissioner. These documents, perhaps, would have gone to establish that the imported pipes were used within the bonded area at Kudremukh. With regard to the appellants claim for the benefit of the notification, we note that the relevant condition attached to the Notification was to the effect that the importer should carry out their manufacturing operation in customs bond subject to such other conditions as might be specified by the jurisdictional Assistant Commissioner of Customs. It appears, it is not in dispute that they carried out their manufacturing operations in customs bond. They also executed a bond binding themselves to fulfil the export obligation and the conditions stipulated in the Notification including condition No.6. As per this condition, duty could be demanded only to the extent leviable on such of the imported goods as were not proved to the satisfaction of the Assistant Commissioner to have been used in the manufacture of articles for export. Undisputedly, the imported pipes were used for replacement of a segment of an underground pipeline which was exclusively used for bringing the raw material to the plant (bonded area) for the manufacture of the export goods. From the impugned order, it appears that the question whether the appellant violated any of the conditions of the Notification was not examined in the proper perspective by the ld. Commissioner. Further, it appears that all the documents produced by the party were also not taken into account. For these reasons, we set aside the impugned order and allow this appeal by way of remand with a request to the Commissioner to pass a speaking order on all the issues in accordance with law after giving the party a reasonable opportunity of being personally heard. The appeal stands allowed by way of remand. The stay application also stands disposed of.
(Pronounced and dictated in open court) (M. VEERAIYAN) MEMBER (TECHNICAL) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 5