Custom, Excise & Service Tax Tribunal
(I) Mr. P. Suresh, Manager M/S. Suvarna ... vs (I) The Commissioner Of Customs & ... on 7 December, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: C/113 - 114/2006 & C/93/2007 (Arising out of Order-in-Original No: NO.Cus-07/2005 (Commr.) dated 14.12.2005 passed by the Commissioner of Customs and Central Excise, Guntur.) 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes (i) Mr. P. Suresh, Manager M/s. Suvarna Aqua Farms & Exports Limited (ii) M/s. Suvarna Aqua Farms & Exports Limited (iii) The Commissioner of Customs & Central Excise, Guntur. Appellant Vs. (i) The Commissioner of Customs & Central Excise, Guntur. (ii) The Commissioner of Customs & Central Excise, Guntur. (iii) M/s. Suvarna Aqua Farms & Exports Limited Respondent
Appearance Shri B. Venugopal, Advocate for the appellant.
Shri M. M. Ravi Rajendran, JDR for the revenue.
CORAM SHRI M. V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) SHRI B. S. V. MURTHY, HONBLE MEMBER (TECHNICAL) Date of Hearing: 07.12.2010 Date of decision: 07.12.2010 FINAL ORDER No._______________________2010 Per Shri M. V. Ravindran (Oral) All these three appeals are filed against the same Order-in-Original and hence, are being disposed of by a common order.
2. Appeal No.C/113 & 114/2006 are filed by the appellant-assessee and an employee while Appeal No.C/93/2007 is filed by the revenue.
3. Heard both sides and perused the records.
4. The relevant facts that arise for consideration are, during the period 1994-1997 the appellant company imported capital goods for production of shrimp/frozen shrimp in their ponds and to export products out of India as a 100% EOU. The appellants availed benefit under Notification No.196/194 Cus. dated 8.12.1994. On a specific information that the appellant was engaged in the contravention of the Notification, officers visited the premises and found that the appellant had cleared shrimps to DTA, there was a shortage of capital goods i.e., 385 Nos. of Paddle Wheel Aerators, 4 Nos. of Diesel Generators in the EOU. After the investigation was concluded, show cause notices were issued. The Adjudicating Authority confirmed the demand raised. Aggrieved by such an order, appellant preferred an appeal to the Tribunal in appeal No.326/2003 which was disposed of by the Tribunal by Final Order No.700/2005 dated 6.5.2005 (as reported at 2005 (190) ELT 284). By the said order, in paragraph 7, this bench directed the Adjudicating Authority in the following terms.
Applying the ratio of the Tribunals judgment cited by the learned Counsel, RF and penalty are set aside and the matter is remanded to the original authority to quantify the duty after granting them depreciation up to the point of payment of duty as held in the judgment cited by the learned Counsel. The appeal is allowed in the above terms.
5. The current impugned order is an independent proceeding for the missing goods and alleged clearances made to DTA without Development Commissioners permission. The Adjudicating Authority after following the principles of natural justice came to the conclusion by holding against the appellant, and passed the following order.
(a) In terms of Section 72 of the Customs Act, 1962 read with Notification No.196/94-Cus dated 8.12.1994 as amended and the conditions of the Bond executed by SAFEL and as per the work sheet enclosed, I confirm the duty demand of Rs.9,44,498/- along with applicable interest chargeable with effect from 17.06.2002 on 385 Paddle Wheel Aerators found short during the physical verification on 18.6.2002;
(b) In terms of Rules 196 of the erstwhile Central Excise Rules, 1944 read with Notification No.19/95-CE dated 23.2.1995 and the conditions of the Bond executed by SAFEL, I confirm the duty demand of Rs.2,69,250/- along with interest @ 20% per annum from the date of procurement to the date of payment of duty, on 4 Diesel Generating Sets cleared by them into DTA without permission and intimation;
(c) In terms of Condition No.6 of the Notification No.196/94-Cus dated 8.12.1994 and 10/95 CE dated 23.02.1995 read with Section 3 of Central Excise Act, 1944 and in terms of conditions of the legal undertaking, letter of permission, B. 16 Bond and General Bond executed by M/s. SAFEL, I demand an amount of Rs.5,33,974/- along with applicable interest. (interest to be reckoned from 30th September of the year in respect of clearances made in the financial year);
(d) In terms of Section 112 of the Customs Act, 1962, I impose a penalty of Rs.5,00,000/- (Rupees Five Lakh only) on SAFEL;
(e) In terms of Rule 25 of the Central Excise Rules, 2002, I impose a penalty of Rs.2,00,000/- (Rupees two lakhs only) on SAFEL;
(f) In terms of Rule 26 of the Central Excise Rules, 2002 / Rule 209-A of the erstwhile Central Excise Rules, 1944 and Section 112 of the Customs Act, 1962, I impose a penalty of Rs.10,000/- (Rupees ten thousand only) and Rs.10,000/- (Rupees ten thousand only) on Shri P. Suresh, Manager of SAFEL and Shri M. Siva Prasad, Authorised Signatory of SAFEL respectively.
6. The learned counsel would submit that as regards the duty on the shrimps cleared to DTA without permission of the Development Commissioner, the judgment of the Honble Supreme Court in the case of Commissioner of Central Excise, Visakhapatnam-II Vs. M/s. NCC Blue Water Products Ltd. - 2010-TIOL-73-SC-CX would cover the issue in their favour. As regards the shortage of the capital goods i.e., 385 Nos. of Paddle Wheel Aerators, 4 Nos. of Diesel Generators, it is his submission that they had taken a plea before the Adjudicating Authority that these Paddle Wheel Aerators were available in the premises and if required, the Adjudicating Authority can cause examination. It is his submission that the Adjudicating Authority did not cause the examination of the goods and confirmed the demand. It is also his submission that the Adjudicating Authority did give them the benefit of depreciation as per the direction of the bench but the depreciation given was only up to the time of de-bonding of the goods but not till the payment of duty. He would submit that there was no shortage as the appellant had sold the entire quantity of aerators as per the direction of Honble High Court of Andhra Pradesh in companys writ petition No.74/2006. He would rely upon the affidavit filed by the responsible person of the company before the Honble High Court. As regards the 4 Nos. of Diesel Generator Sets, he would submit that they are not disputing the liability to discharge of duty but are only seeking re-quantification of duty, as depreciation needs to be reworked.
7. The learned JDR would submit that the Paddle Aerators were not available on the date of verification and hence, depreciation given by the learned Commissioner is itself wrong on which point they are in appeal. As regards the Diesel Generator Set, it is his submission that they were not found in the EOU and action for demanding of duty as per law is correct.
8. On a careful consideration of the submissions made by both sides, we find that (i) as regards the duty liability on the DTA clearances of the shrimps allegedly done by the appellant, it is seen that the relevant period in this appeal is 1994 to 1997. During the relevant period, provisions of Section 3 (1) were not amended and the decision of this Tribunal in the case of Commissioner of Central Excise, Visakhapatnam Vs. M/s. NCC Blue Water Products Ltd. (supra) was in an identical situation as is in this case. Since the decision of Commissioner of Central Excise, Visakhapatnam Vs. M/s. NCC Blue Water Products Ltd. (supra) is upheld by the Honble Supreme Court, wherein they have settled the law that even if goods are removed without permission of Development Commissioner, the duty liability arises on the assessee is of the excise duty and not the customs duty. During the relevant period, there was no excise duty on the shrimps which were cleared in the local market, hence, there cannot be any duty liability. The judgment clearly covers the issue in favour of the assessee and respectfully following the same, we set aside the demands confirmed by the Adjudicating Authority on this point. (ii) As regards duty liability of the appellant on the 385 Nos. of Paddle Aerators and 4 Nos. of Diesel Generator Sets, the duty liability on the Diesel Generator Set is not be disputed by the assessee, as they were admittedly found outside the EOU premises. The only question remains to be addressed is regarding the allowance of depreciation to the appellant. As per our Final Order in the appellants own case (as reproduced in paragraph 4 of this order), the depreciation has to be worked out till the point of payment of duty. This order needs to be followed in by the Adjudicating Authority and hence, in order to re-quantify the amounts as per our direction in the appellants own case, we set aside the demands confirmed by the Adjudicating Authority on the Diesel Generator Sets and remand the matter back to him for considering it in accordance with the directions and law. As regards the duty demand on 385 Nos. of Paddle Aerators, we find that the appellant has been taking a plea before the Adjudicating Authority that these Nos. of Paddle Aerators are available in the EOU premises. This plea was taken by the appellant during the personal before Adjudicating Authority. On careful perusal of the impugned order, we find that the Adjudicating Authority has not recorded any findings on the plea taken by the appellant. In the absence of any clear findings, we are unable to go into the submissions on the issue. In view of this, the duty liability worked out on the Paddle Aerators also needs to be re-quantified considering this plea made by the assessee. Accordingly, the duty liability on Paddle Aerators is also set aside and the matter is remitted back to the Adjudicating Authority to reconsider the issue afresh after following principles of natural justice. The Adjudicating Authority will also reconsider the issue of imposition of penalty.
8.1 As regards claim of the department in their appeal, since we are remanding the matter back to the Adjudicating Authority to examine the entire issue in accordance with law, the appeal has become infructuous.
8.2 Accordingly, the appeals are disposed of as indicated hereinabove.
(Pronounced and dictated in open Court) (B. S. V. MURTHY) Member (T) (M. V. RAVINDRAN) Member (J) //rv// 8