Custom, Excise & Service Tax Tribunal
Industrial Chemicals Manufacturing ... vs Nhava Sheva on 11 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEALS NOS: C/265 & 266/2004
[Arising out of Orders-in-Original No: 65/2003 dated 30/09/2003 & 58/2003 dated 06/10/2003 passed by the Commissioner of Customs (Import), Nhava Sheva.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Ramesh Nair, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Industrial Chemicals Manufacturing Co. Ltd.
Appellant
Vs
Commissioner of Customs (Import)
Nhava Sheva
Respondent
Appearance:
Shri Yahya Ghogari, Advocate with Mr. D.M. Thakur, Advocate for the appellant Shri Ahibaran, Additional Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 11/12/2014 Date of decision: 11/12/2014 ORDER NO: ____________________________ Per: Ramesh Nair:
The appeals are directed against Orders-in-Original No: 65/2003 dated 30/09/2003 and 58/2003 dated 06/10/2003 passed by the Commissioner of Customs (Import), Nhava Sheva. Since common issue is involved, both the appeals are taken up together for disposal.
2. In the impugned orders, the learned Commissioner confirmed duty demands and imposed penalties as under:
S. No. Appeal No. Duty (`) Penalty (`) 1 C/265 /2004 11,55,443/-
11,55,000/-2
C/266/2004 23,42,114/-
23,42,000/-
2.1. The facts of the case are that the appellant, M/s. Industrial Chemicals Manufacturing Co. Ltd., imported goods under value based advance licence obtained through transfer from original licence holder and claimed benefit of Notification No. 203/92-Cus dated 19/05/2002. A show cause notice dated 26/03/1999 was issued wherein it was alleged that the manufacturer-exporter who transferred the advance licences to the present appellant have taken the input stage MODVAT credit under Rule 57A of the Central Excise Rules, 1944 and hence violated the condition V(A) of Notification No. 203/92-Cus. Therefore, the importer-appellant is not entitled for the exemption of the said Notification.
2.2. In the adjudication order, the learned Commissioner has denied the exemption Notification No. 203/92-Cus and confirmed the charges of the show cause notice and confirmed duty demands and imposed penalties as mentioned above.
3. Shri Yahya Ghogari along with Shri D.M. Thakur, learned counsel for the appellant submits that, in the impugned order exemption has been denied and customs duty was confirmed on the ground that the manufacturer-exporter, who is the transferor of the licence in this case, has availed MODVAT credit. It is his submission that as regards the compliance of the condition of non-availment of MODVAT credit is casted on the part of the transferor of the licence and therefore, the appellant being a transferee of licence cannot be held responsible for any violation of the conditions of the exemption Notification, committed by the transferor. He submits that the appellant is that the appellant is the bona fide transferee of the licence and the appellant has made the import of the goods under a valid transferred licence. He further submits that, in the show cause notice, it is contended that transferor of the licence has declared in the shipping bill/AR4 that they have not availed MODVAT credit. Though it was alleged that the transferor has made a wrong declaration in the show cause notice, no evidence was adduced by the Revenue to hold the declaration of the exporter as wrong. On this ground also, the allegation made in the show cause notice and confirmed by the learned adjudicating authority is without any basis and not sustainable. It is his submission that the appellant being a transferee of the licence, is not accountable for any violation of the conditions of the Notification, if any, committed by the transferor of the licence.
4. The learned Additional Commissioner (AR) appearing on behalf of the Revenue, reiterates the findings of the impugned orders.
5. We have carefully considered the submissions made by both the sides and perused the records. In the show cause notice, the allegations made and the Commissioner confirmed in adjudication holding that the transferor-exporter has availed MODVAT credit and therefore, the appellant is not entitled for the exemption Notification No. 203/92-Cus. It is observed that neither in the show cause notice nor in the impugned order, the allegation of availment of MODVAT credit by the transferee of the licence was supported by any evidence from which any inference can be drawn that the exporter has availed MODVAT credit. Though the adjudicating authority has recorded that there is a declaration of non-availment of MODVAT credit by the exporter on the shipping bill/AR4s. However, it could not be established by the adjudicating authority by adducing any evidence that the declaration is incorrect or false. In such a situation, it cannot be concluded that the exporter has availed input stage MODVAT credit in terms of Rule 57A of the Central Excise Rules, 1944 and there is any violation of condition (V)(A) of Notification No.203/92-Cus.
5.1. In the present case, the demand of customs duty was confirmed on the appellant, who is the transferee of the advance licence. However, as regard the condition of non-availment of MODVAT credit provided under Condition No. V(A) of Notification No. 203/92-Cus., the obligation is on the exporter and not on the transferee of the licence. Therefore, the entire basis of the show cause notice and the consequent confirmation of demand is incorrect.
5.2. On the identical issue, the Larger Bench of this Tribunal, in the case of Hico Enterprises vs. Commissioner of Customs 2005 (189) ELT 135 held that the transferee of the licence cannot be held responsible for compliance of the Condition V(a) of the Notification No. 203/92-Cus. This Larger Bench decision has been upheld by the honble Supreme Court [2008 (228) ELT 161 (S.C)] in Civil Appeal No. 2418 of 2006.
6. In view of the above settled legal position and considering the facts and circumstances of the case, we are of the considered view that the learned Commissioner has wrongly denied the exemption Notification No. 203/92-Cus to the appellant and confirmed the customs duty demand by denying the benefit of exemption Notification No. 203/92.
7. In view of our above discussion and settled legal position on the issue involved, we allow the appeals of the appellant with consequential relief, if any, in accordance with law.
(Pronounced in Court) (P.R. Chandrasekharan) Member (Technical) (Ramesh Nair) Member (Judicial) */as 2