Customs, Excise and Gold Tribunal - Bangalore
Asian Peroxide Limited vs The Commissioner Of Customs And Central ... on 15 September, 2006
Equivalent citations: 2007(114)ECC145, 2007ECR145(TRI.-BANGALORE), 2007(208)ELT457(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the Order-in-Original No. Cus-02/2006 dated 06.1.2006 passed by the Commissioner of Customs & Central Excise, Guntur.
2. In the impugned order, the Adjudicating Authority has passed the following order with reference to the application dated 5.11.1997 filed by the appellant for declaring Nadendla Kandriga Village as Warehousing station. The application dated 5.11.97 filed by APL for declaring Nadendla Kandriga Village as Warehouse cannot be accepted to having been rejected by the Commissioner and informed accordingly to APL as they failed to fulfill the conditions imposed thereon for declaring the same as warehousing station. The appellants strongly challenge the decision of the Commissioner.
3. Shri G. Shiva Dass, the learned Advocate, appeared for the appellants and Shri K. Sambi Reddy, the learned JDR, for the Revenue.
4. The learned Advocate, urged the following points:
(i) The appellants are 100% EOU in Kotlapulur Village, Sullurpet. They manufacture and export Hydrogen Peroxide and Sodium Perborate. The events leading to the present appeal in a chronological fashion was outlined as given below:
Date Events
5.3.87, 3.12.1993 and 26.5.95 Permission granted by Government of India for setting up of unit in Kotapolur Vilage 13.11.1995 Acceptance of bond by Assistant Commissioner, Nellore, regarding 100% EOU of Asian Peroxide Ltd. (APL) 21.2.1997 APL makes a request to the Government for permission to import one number of DG set.
17.4.1997 Approval given by the Government for the above import subject to inter alia the condition that the DG set will be used in the bonded premises only.
19.6.1997 Development Commissioner in Visakhapatnam EPZ gives permission to import DG set subject inter alia to the condition that the goods will be imported into the EOU premises and on observance of the normal procedure including execution of a transit bond.
28.7.97 APL imports DG set under B/E No. 39661/28.7.97 and transports the goods under the cover of double duty transit bond bearing No. 8717/19.8.97 The goods are deposited in Nadendla Kandriga village (NK Village).
26.9.1997 Grama Panchayat authorities issued an order permitting them to install the machinery for the power plant.
Oct-Nov,1997 Appellants came to know that the place where DG set was kept fell under another village called Nandendla Kandriga Village 5.11.1997 Appellants requested the Commissioner of Customs, Guntur to declare Nandendla Kandriga Village as customs warehousing station.
This permission is sought before the expiry of three months from the date of the execution of the bond.
19.5.1998 Details sought for by the Superintendent of Central Excise 25.5.1998 Appellants submit all the details to the department 8.2.99 The department sought clarification regarding the distance between the EOU and the Nandendla Kandriga Village.
16.2.99 Appellants submitted to the department that the distance was 300 meters and confirmed that the captive power plant would be connected only to the EOU.
16.8.99 The department sought for Memorandum of Articles of the Appellants 18.8.99 The Appellants submitted the documents to the department 15.8.99 The Superintendent of Central Excise sent a report to the Commissioner about the DG set imported.
20.8.99 The Deputy Commissioner of Customs confirms to the Asst. Commissioner that the Transfer bond has been closed after receipt of rewarehousing certificate November 1999 Officers visited the premises at Nandendla Kandriga Village and seized the DG set.
7.1.2000 & 13.1.2000 The appellants informed the Commissioner about the entire issue and requested him to intervene in respect of declaring Nandendla Kandriga Village as a warehousing station 31.1.2000 Show Cause Notice issued to the appellants alleging that the DG set imported has been cleared to a place outside the EOU premises and therefore condition No. 5 of the Notification 53/97-Cus dated 3.6.1997 was violated by the Appellants.
24.2.2001 Reply filed to Show Cause Notice 26.2.2001 Dy. Commissioner of Central Excise informs the Commissioner of Central Excise to reconsider the appellants' request to declare Nandendla Kandriga Village as warehousing station.
22.8.2002, 24.9.2002, 8.10.2002, 5.11.2002, The appellants again requested the Commissioner of Customs & Central Excise to declare the said village as a warehousing station 11.12.2002 and 22.2.2003.
10.3.2003 Commissioners of Customs & Central Excise vide Order-in-Original No. CE-22/2003 dated 10.3.2003 confirmed the proposals in the Show Cause Notice.
6.10.2004 On appeal, the CESTAT remanded the matter for denovo adjudication PRESENT PROCEEDINGS 9.2.2005 The Joint Commissioner informs the appellants that there was no permission from the Development Commissioner which was required for declaring the village; that the appellants are advised to obtain necessary permission from the Development Commissioner 24.2.2005 & 1.3.2005 The appellants requested the Development Commissioner seeking permission for inclusion of additional location in Nandendla Kandriga village as an EOU.
7.3.2005 Development Commissioner granted permission to include the additional location (covered by Survey No. 4,5,6,8 & 10 of Nandendla Kandriga Village) to the existing EOU of the Appellants; that the letter of permission may be deemed to be amended to the above extent.
23.2.2005 The appellants filed written submissions before the Commissioner of Central Excise & Customs, Guntur 6.1.2006 Commissioner of Central Excise & Customs, Guntur has rejected the application for declaring Nandendla Kandriga Village as warehousing station on the ground that the Jt. Commissioner has already rejected the application and the same has attained finality.
(ii) The Commissioner has refused to declare the Nandendla Kandriga Village as Warehousing station on the ground that the Joint Commissioner had already communicated the decision of the Commissioner not to declare the Nandendla Kandriga Village as Warehousing station. He has held that the appellants ought to have filed an appeal against the communication received from the Joint Commissioner. It was submitted that the letter of the Joint Commissioner dated 09.02.2005 did not contain any indication whatsoever that the same was issued by the Joint Commissioner communicating the decision of the Commissioner. The above ground was taken by the appellants in their written submission filed on 23.02.2005. It is only now that the Commissioner records that the said letter was communicated based on a decision taken by the Commissioner.
(iii) The letter of the Joint Commissioner contained a stipulation that since the Development Commissioner had not granted approval to the additional premises as an EOUm the application made by the appellants cannot be considered. There was no necessity for the appellants to file an appeal against the letter of the Joint Commissioner as they were not aggrieved with the same.
(iv) Revenue has always been contending that the letter written by an authority is not an appealable order. Reliance is placed on the following decisions.
a. Smithkline Beecham Asia Ltd. v. CCE, Vizag b. Chalthan Vighag Khand Udyog Sahakari Mandli Ltd. v. CCE
(v) The competent authority to grant approval to the EOU and to recognize a premises for setting up an EOU is the Development Commissioner. The Development Commissioner has recognized the additional premises where the appellants had deposited the DG set as an EOU. This recognition is by way of amendment to the original letter of approval. Once the Development Commissioner had recognized the place where they had deposited the DG set as an EOU, Customs authorities cannot contend to the contrary. Reliance is placed on the following decisions:
a. CCE, Hyderabad v. Sanghi Spinners (I) Ltd. Final Order No. 1090/2006 dated 22.06.2006 b. Ginni International Ltd. v. CCE, Jaipur
(vi) The appellants found that the existing premises situated in Kotapolur Village, was short of space to accommodate the DG set imported. Hence, even before the expiry of the three months from 19.8.1997 when the Transit bond was executed, they applied to the Commissioner for declaring the Nandendla Kandriga Village as a Warehousing station under Section 9 of the Customs Act in their letter dated 5.11.1997. There was much correspondence between the department and the appellant. The proposed power plant at Nandendla Kandriga Village is only 300 meters away from the present EOU premises. The Development Commissioner recommended the request of the appellant on 26.02.2001. Despite this, the Joint Commissioner, on 09.02.2005, issued a letter stating that an approval was to be obtained from the Ministry of Commerce/Development Commissioner and since the same was not there, the application was rejected. When the appellants were told that the only impediment for declaring the Nandendla Kandriga Village as a Warehousing station was that there was no permission from the Development Commissioner, they approached the Development Commissioner for necessary permission. Accordingly, the Development Commissioner, vide his letter dated 7.3.2005, granted the permission. It was urged that the permission granted by the Development Commissioner is in the nature of an amendment to the original permission and would date back to the date of original letter of approval. The following case-laws were relied on:
a. CCE v. M.P.V. and Engg. Industries 2003 (153) ELT 485 (SC) b. CC (Imports), Mumbai v. Tullow India Operations Ltd.
(vii) The Government Policy Resolution of 1980 says that the Customs shall declare the place as a warehousing station. The use of the word 'shall' makes it imperative on the Commissioner to declare the place as a warehousing station once an application is made. Further, the CBEC has issued several Circulars from time to time directing that the requests of the EOUs for declaration of the required area as warehouses need to be decided expeditiously and a liberal approach should be adopted. The following Circulars were cited.
a. Circular F.No. 305/111/86-FTT dated 12.09.96 b. Circular F.No. 473/16/88-Cus.VII dated 15.06.88 c. Circular F.No. 473/232/88-Cus.VII dated 28.11.88 d. Circular F.No. 473/19/92-LC dated 1.5.1992 e. Circular F.No. 473/43/93-LC dated 1.8.1994 f. Circular No. 29/95 dated 29.3.95 g. Circular No. 92/95-Cus dated 14.8.95 h. Circular No. 76/99-Cus dated 17.11.99
(viii) The authorities should only ensure that proper facilities and securities for the goods were made before granting permission. Once enough security is provided, then the Commissioner is duty bound to declare the area sought for as a warehousing station.
(ix) As per Policy Resolution, all permissions for EOUs are to be given expeditiously. In law, it is presumed that what ought to be done is done is not objected by the concerned authorities. The appellants have repeatedly requested the Jurisdictional Commissioner to declare Nadendla Kandriga Village as a Warehousing station and no rejection has taken place. It is the submission of the appellants that they cannot be held responsible for the delay by the Commissioner in declaring the Nandendla Kandriga Village as a Warehousing station.
a. Priyanka Overseas Pvt. Ltd. v. Union of India b. Kuil Fireworks Industries v. CCE c. Sesu International v. CC 2002 (53) RLT 352 (Tri.)
(x) The Commissioner has held that the letter dated 7.3.2005 of the Development Commissioner has been issued under the present Foreign Trade Policy and application having been made by the appellants on 5.11.1997 cannot be made applicable. It was submitted that the earlier policy also empowered the Development Commissioner to add any additional premises to the existing EOU. He continues to hold that power under the present policy also. In terms of para 1.4 of the present policy, licences, permissions and certificates issued under the old policy would continue to be valid. Consequently, the permission granted by the Development Commissioner on 07.03.2005 would be deemed to be an amendment to the original letter of permission.
5. The learned JDR reiterated the findings in the Order-in-Original.
6. We have gone through the records of the case carefully. The Government of India has formulated the 100% EOU Scheme in order to promote exports. The EOUs are allowed to import Capital Goods and other raw materials free of duty in order to manufacture the specified product for export. Since the goods imported are duty free, it should be ensured that they are not misused. For that reason, the entire EOU premise is declared as a Bonded Warehouse under the Customs Act. In other words, the Competent Authority normally issues a Private Bonded Warehouse Licence to the EOU. Under Section 9 of the Customs Act, there is a provision to declare a place as warehousing station. Only in a warehousing station, public warehouses may be appointed and private warehouses may be licenced. As per the Act, the power is with the Board. However, this power has been delegated to the Commissioner vide Customs Notification No. 33/94(NT) dated 01st July, 1994. Both the Ministry of Finance and the Ministry of Commerce are responsible for the proper implementation of the 100% EOU Scheme. The CBEC has actually issued instructions that the provisions of the Warehousing Chapter should not be applied rigidly to the 100% EOUs, as they are engaged in export production and export promotion rather than warehousing of imported goods. In fact, when the Custom Houses and Collectorates insisted on production of space certificate before the goods are imported and allowed to be transported, the CBEC issued clarification in its letter dated 12.09.1986 that it is not necessary to insist on the requirement of producing the space certificate which unnecessarily delays the clearance of goods imported by 100% EOUs. Therefore, there is force in the contention of the learned Advocate that a liberal approach was being adopted in respect of matters connected with 100% EOUs. The Board, in its Circular dated 15.6.88 decided to terminate the practice of granting ex-post-facto approval of waiver of the requirement of physical warehousing at the port of importation in respect of several cases including equipment, machinery and raw materials for 100% EOUs located outside the port city and therefore, in urgent need of equipment. The idea is to expedite clearances. The Board, in its Circular letter dated 28.11.1988, delegated its powers to Principal Collectors in respect of declaring a place as warehousing station under Section 9 of the Customs Act. In that letter, they have stated that only those places should be notified as Warehousing Stations where adequate facilities are available for appointing Public Bonded Warehouses. However, in the case of 100% EOUs, this condition can be relaxed and the declaration shall only be for the purpose of warehousing of goods imported by 100% EOUs. They have further stated that in respect of goods imported by 100% EOUs, a liberal approach could be adopted in granting extension of warehousing period. On 1.8.1994, the Ministry, vide Notification No. 33/94 (NT)-Cus. dated 1.7.1994, empowered the Collectors of Customs to declare a place as warehousing station in respect of 100% EOUs. The idea is that the delegation would decentralise decision making and thereby help reducing the delays in setting up 100% EOUs which in turn will facilitate the export effort. In the year 1999, the CBEC decided that in respect of EOUs/EPZs etc., execution of a single B-17 bond is sufficient for all statutory purposes. Thus, it is abundantly clear that the Government of India and CBEC have always adopted a very liberal approach towards the EOUs in order to promote exports. All procedures have been modified to curtail rigid adherence to rules.
6.2 In the present case, the appellants obtained necessary permission to set up the captive power plant by the side of the existing EOU. The proposed power plant is situated in Nandendla Kandriga Village and there is a statutory requirement for declaring that place as a warehouse. The power to declare a place as warehouse for 100% EOU has been delegated to the Commissioner. The appellant applied even on 5.11.1997. After the above application was made, there was much correspondence between the appellant and the department. Unfortunately, in November 1999, the officers visited the premises at Nandendla Kandriga Village and seized the DG set. The appellants informed the Commissioner about the entire issue and requested him to intervene in respect of declaring the place as a warehousing station. But, Show Cause Notice was issued on 31.01.2000 alleging that the DG set imported has been cleared to a place outside the EOU premises and, therefore, condition No. 5 of the Notification 53/97-Cus dated 3.6.1997 was violated by the appellants. This indicates that the authorities have adopted a very rigid line in respect of the EOU. On 10.03.2003, the Commissioner issued an order confiscating the DG sets along with imposition of fine, penalty and demand of duty. When the matter came up before this Bench, the entire issue was remanded to the original authority directing the Commissioner to consider their application for declaring the place as a warehousing station and proceed thereafter to decide the matter afresh. On 09.02.2005, the Joint Commissioner informed the appellants that there was no permission from the Development Commissioner which was required for declaring the village as a Warehousing Station. The Development Commissioner gave his permission on 7.3.2005. On 6.1.2006, the Commissioner passed the impugned order stating that the issue had already been decided by him as communicated by the Joint Commissioner on 09.02.2005. While rejecting the applicant's request, the Commissioner has observed the following in para 9 of his order.
9. With regard to the Development Commissioner's letter No. 8/EOU-24A/SEZ/2005-07 dated 7.3.2005, wherein permission has been granted to include the additional location to the existing EOU of APL, I find that said permission has been granted under para 6.34(8) of the Foreign Trade Policy, 2004-2009. Therefore, the permission granted by the Development Commissioner cannot fulfill the requirements of the application dated 5.11.1997 under the respective EXIM Policy. Accordingly, APL are required to file a fresh application for extending the warehouse location in terms of the said permission granted by the Development Commissioner, which would be applicable from the date of approval of warehouse, if any.
6.3 The Commissioner, has not given any acceptable reason for rejecting the request of the appellant except to say that the Development Commissioner's permission is granted under the Foreign Trade Policy 2004-2009 and it cannot fulfill the requirements of the application dated 5.11.1997 under the respective EXIM Policy. In our view, the Commissioner has adopted a highly technical approach to the issue in question. This approach is quite contrary to all the clarifications and instructions issued by the Government of India/CBEC in respect of 100% EOUs. If the Commissioner's stand is approved, all the efforts of Government of India in furthering the export promotion would be nullified by the field officers. Moreover, the letter dated 09.02.2005 issued by Joint Commissioner to the appellant cannot be considered as an order of the Commissioner. In our view, the impugned order is perverse, to say the least. We set aside the impugned order and direct that the appellants' request for declaring the Nandendla Kandriga Village as a Warehousing station with effect from the date of their application i.e. 5.11.1997 and shall be considered favourably on receipt of this order without further delay.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)