Custom, Excise & Service Tax Tribunal
Airport Authority Of India vs Commissioner Of ... on 25 September, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.C/109/2009
[Arising out of Order-in-Original No.8492/2009 dt. 31.1.2009 passed by the Commissioner of Customs(Exports)-Seaport, Chennai]
Airport Authority of India Appellant
Versus
Commissioner of Customs(Exports-Seaport),
Chennai Respondent
Appearance:
Shri R. Parthasarathy, Advocate For the Appellant
Ms. Indira Sisupal, AC (AR) For the Respondent
CORAM :
Honble Shri R. Periasami, Technical Member
Honble Shri P.K. Choudhary, Judicial Member
Date of Hearing : 27.5.2015
Date of Pronouncement : 25.9.2015
FINAL ORDER No.41254/2015
Per R. Periasami
1. The appeal is filed against Commissioner of Customs (Seaport-Exports) order dt. 31.1.2009 .
2. The brief facts of the case are that Airport Authority of India (AAI), a Public Sector Undertaking, had obtained duty free certificates under Served From India Scheme (SFIS, for short) from Joint Director General of Foreign Trade (JDGFT), New Delhi. Based on the intelligence by DRI that appellant had imported various restricted items such as Radars, Airport Navigational Equipments, VHF Equipments, DME Equipments etc. with accessories classifiable under CTH 85261000 and 85269190 through Chennai Seaport claimed exemption from Customs duty under SFIS certificates in terms of Notification 92/2004-Cus. dt. 10.9.2004. It was alleged that as per para-3.6.4.5 of Foreign Trade Policy (FTP), 2004-09 (w.e.f 1.4.2006) SFIS certificates can be used for import of any capital goods including spares, office equipments etc. related to any service sector business of the service provider which are otherwise freely importable under ITC (HS) Classification of EXIM code. Whereas the appellants imported the above equipments which are restricted items and not eligible for utilization of SFIS scrips for customs duty to the extent of Rs.10,44,94,796/-. The ADG DRI, New Delhi after detailed investigation and recording various statements from persons issued a SCN dt. 31.1.2008 answerable to Commissioner of Customs (Exports), Chennai, Bombay and New Delhi demanding customs duty of Rs.9,46,01,417/-, Rs.1,34,14,918/- and Rs.93,995/- for the imports made through Chennai, Mumbai and Delhi respectively. SCN also proposed for confiscation of the goods under Section 111 (d) and also proposing for penalty under Section 112 (a) and (b) of Customs Act, 1962. SCN also proposed for appropriation of entire Customs duty already paid by them in respect of all the three imports. The Ministry had appointed the Commissioner of Customs (Exports), Chennai as a common adjudicating authority to decide all the three cases vide Notification No.74/2008-Cus. dt. 23.6.2008. The adjudicating authority after following principles of natural justice in his order dt.31.1.2009 denied the benefit of exemption notification 92/2004-Cus in respect of impugned goods covered in the SCN and ordered as under :
(i) Confirmed the demand of Rs.9,46,01,417/- in respect of imports made through Chennai covered under Bill of Entry No.5444158 and 5444157 both dt. 3.9.2007 and 599590 dt. 14.11.2007 along with interest under section 28 (2) read with section 28AB of Customs Act and also confiscated the impugned goods valued at Rs.30,50,53,885/- under Section 111(d) of Customs Act and imposed redemption fine of Rs.3 crores under Section 125 and also appropriated an amount of Rs.8,79,39,477/- and imposed penalty of Rs.50 lakhs on the appellant under Section 112.
(ii) In respect of imports made through Mumbai Customs,. covered by B/E 761494 dt. 23.4.2007 and 782829 dt. 27.7.07 confirmed the demand of Rs.1,34,14,918/- and confiscated the goods valued at Rs.4,28,29,750/- and imposed redemption fine of Rs.42 lakhs and also appropriated the entire amount of Rs.1,34,14,918/- and imposed penalty of Rs.7 lakhs.
(iii) In respect of imports made through New Delhi, he confirmed the demand of Rs.93,995/- for the goods covered under B/E 778081 dt. 6.10.2007, 779381 dt. 8.10.2007 and 792303 dt. 22.10.2007 and confiscated the goods valued at Rs.3,00,351/- and imposed a redemption fine of Rs.30,000/- and also appropriated the entire customs duty already paid and imposed a penalty of Rs.5000/-. Aggrieved by the impugned order, the appellant filed the present appeal.
3. Ld. Advocate Shri R. Parthasarathy appearing for the appellant submitted a written synopsis and reiterated the same and the grounds of appeal. He submitted that AAI who is a service provider earned Rs.913.20 crores of foreign exchange in the year 2004-05 from the services provided to air travel passengers, airlines arriving and departing to various destinations from various airports in India owned and controlled by them. They are entitled to duty credit of Rs.10% of the foreign exchange so earned under SFIS. He submits that they are entitled for the credit of Rs.91.3 crores and they have filed application on 31.12.2005 to DGFT for issue of SIFS licence and the DGFT issued 25 SFIS scrips on 4.7.2006. Accordingly, they have imported Radars, Navigational Equipments etc. He submits that these items are restricted for import and require a licence in terms of ITC (HS) and they have applied and obtained licence from Ministry of Communication and Information Technology from the Department of Telecommunications - Wireless and Planning Coordination Wing. He also submits that there is no dispute on the importation of goods under the licences annexed at pages 17 to 21 of appeal paper book-Vol-II. Copy of Grant of Authorization from DGFT for 25 SFIS are annexed at page 12,13,14 and they have correctly used SFIS scrips for payment of customs duty on the said goods and the goods were allowed for clearance after debiting SFIS scrip in terms of Notfn 92/04-Cus. whereas the department issued SCN and demanded customs duty on the ground that the goods are not freely importable as per the policy provisions prevailing on the date of import and the SFIS scheme permitted only goods which are otherwise freely importable under ITC (HS) classification. He submits that they have paid the customs duty at the investigation itself.
4. He submits that object of SFIS scheme is to accelerate growth in export of services so as to create a powerful and unique "served from India" brand instantly recognized and respected world over. He drew our attention to para 3.6.4.3 of SFS Policy and as per the same they are entitled to duty credit of 10% of foreign exchange earned. As per para 3.6.4.5 of FTP 2004-05 as on 31.8.2004, the duty credit may be used for import of any capital goods including spares, office equipments etc. related to the main line of business of the appellant. He submits that same provisions continued in 2005-06. Only in 2006-07 (as on 1.4.2006), para 3.6.4.5 was amended and the restriction was introduced in the policy that SFIS scrips may be used for import of any capital goods including spares, office equipments etc; that are otherwise freely importable under ITC (HS) classification of EXIM items. He therefore submits that policy provisions prevailed for the financial year of export 2004-05 for which SFIS duty credit scrip was issued specifically permitted import of capital goods and spares etc. The condition that the capital goods must be otherwise freely importable did not exist in 2004-05 and 2005-06 policy. Therefore, the endorsements in the licence issued by SFIS scrip issued by DGFT did not incorporate any condition.
5. He further submits that appellant earned foreign exchange for export of service for the year 2004-05 and the licence was issued in 2006-07 and in the endorsement made in SFIS licence it is clearly indicated that the duty credit entitlement can be used for import of any capital goods, spares etc. He further submits that in response to their letter dt. 31.5.2007, DGFT vide letter dt.19.6.2007 which is annexed in page 32 of paper book (Vol-II) where the DGFT has clarified that for the SFIS scrips issued under FTP (RE -2005) Policy, para 3.6.4.5 of FTP [RE-2005] issued on 8.4.2005 is applicable for import under subject scrips. He submits that DGFT has categorically clarified that they are entitled to utilize the credit under SFIS scheme as per the policy prevailing during 2005-06 - RE-2005 and also submits that Departments contention that credit cannot be utilized to pay duty on the items imported in 2007-08 is contrary to the clarification given by the DGFT. He relied the following decisions :-
1. Richardson Hindustan Ltd. Vs UOI
1988 (37) ELT 496 (Bom.)
2. CC Vs Oswal Agro Mills Ltd.
1989 (41) ELT 104 (Tribunal)
3. Adani Exports Ltd. Vs ACC Cochin
2006 (199) ELT 613 (Tri.- Bang.)
In the above cases, it is held that the benefit given by DGFT cannot be denied by customs. DGFT and Customs are two wings of the Govt of India and cannot take contradictory stand.
6. He further submits that in their case promissory estoppel is attracted and submits that SFIS scheme is post-export incentive scheme on the promise that benefit of 10% of foreign exchange can be used for import of goods and the customs cannot deny the benefit by holding that policy provisions of 2006-07 is applicable at the time of import. Therefore promissory of estoppel is applicable. In support of this, he relied the following decisions :-
1. Sanjaya Sales Corporation Vs Dy.CCI
1992 (57) ELT 579 (A.P.)
2. Indu-Nissan Oxo Chemicals Pvt. Ltd. Vs CC Kandla
2000 (120) ELT 625 (Tribunal)
3. UOI Vs Himsheel International
2011 (273) ELT 495
4. Jindal Aluminium Ltd. Vs JDGFT
2009 (243) ELT 651 (Kar.)
5. UOI Vs Hindustan Platinum (P) Ltd.
1989 (44) ELT 443 (BOm.)
6. Rizwan International Vs UOI
1994 (73) ELT 804 (Mad.)
7. On the confiscation and imposition of redemption fine and penalty, he submitted that the goods are not liable for confiscation as Section 111 (d) can be invoked only if import is in contravention of any prohibition imposed under the Customs Act or any other law. In their case, they have imported the said items under licences issued by WPC Wing, Govt of India. He submits that utilization of SFIS duty credit to pay customs duty on the imported goods is governed by FTP read with Notification No.92/2004 and there is no contravention under section 111(d) of Customs Act. He further submits that there was no seizure of goods nor any bond or bank guarantee was executed. Once the goods are not available for confiscation redemption fine cannot be imposed and no penalty can be imposed under section 112. He relied the following decisions :-
i) CC Bangalore Vs G.M. Exports
2012 (279) ELT 493 (Kar.)
ii) CC Amritsar Vs Raja Impex (P) Ltd.
2008 (229) ELT 185 (P&H)
iii) Shiv Kripa Ispat Pvt. Ltd. Vs CCE & Cus
2009 (235) ELT 623 (Tri.-LB)
iv) CC (Import) Mumbai V Finesse Creation Inc.,
2009 (248) ELT 122 (Bom.)
v) Chinku Exports Vs CC Calcutta
1999 (112) ELT 400 (Tri.) appeal dismissed by SC vide 2005 (184) ELT A36 (SC)
vi) Shiv Kripa Ispat P. Ltd.Vs CC
2009 (235) ELT 623 (Tri.-LB)
He submits that demand is unsustainable and pleaded to set aside the order and to allow their appeal.
8. Ld.A.R reiterated the findings and investigation report contained in the SCN and findings of OIO. He submits that date of import is relevant as any exemption or any policy provisions prevailing on the date of import of goods is relevant for custom purpose. He referred to para-9 of the order and ITC (HS) EXIM code. He submits that Radars, other equipments are restricted item and the same cannot be imported duty-free and submits that SFIS scheme scrip cannot be used for adjustment of customs duty on the restricted goods. He also submits that in the statements recorded from G.M. and Dy.GM, Executive Directors they have clearly admitted before the customs authorities that the goods are restricted and they have inadvertently used SFIS scrips for payment of customs duty on the restricted goods and also voluntarily paid entire demand in cash by various T.R. 6 challans and the same was appropriated by the adjudicating authority. He submits that the DGFT clarification relied by the advocate relates to only import of vehicles not pertaining to import of restricted items. Therefore, clarification is not applicable to the present case. He further submits that DGFT clarification was not produced or submitted before the adjudicating authority during the adjudication proceedings. Granting exemption of customs duty is strictly governed by any exemption issued under section 25 of Customs Act . Therefore, the customs have clearly followed as per the Notfn 92/04-Cus. and the Customs notification stipulates the policy in force and the exemption was correctly denied on the restricted goods. On the confiscation, section 111 (d) covers not only policy provisions but any contraventions of provisions under the Customs Act which attracts confiscation of goods. Therefore, the goods are rightly confiscated and redemption fine has been imposed and penalty is rightly imposed under section 112.
9. The counsel for the appellant in rejoinder countered and drew attention to para-30 of the order wherein the adjudicating authority has clearly stated that licence requirement is not under dispute. The only dispute is utilization of SFIS scrip for customs duty as per Notfn 92/2004.
10. We have carefully considered the submissions of both sides and perused the records. The main issue before us is whether the benefit of exemption notification No.92/2004-Cus. dt. 10.9.94 availed by the appellant in respect of import of restricted goods i.e. Radars, Navigational Equipments, VHF Equipments & DME Equipments etc. under SFIS is correct or otherwise.
11. The period of import involved in the present case is between 23.4.2007 to 14.11.2007 and the appellant imported these equipments through Chennai, Mumbai, Delhi and cleared the goods by availing exemption notification No.92/2004 and adjusted customs duty liability by using SFIS scrips issued by the DGFT for the policy period 2004-2009. The appellants main contention that they are entitled to duty credit of 10% of foreign exchange earned by export of services during 2004-05 under SFIS scheme as the SFIS policy during 2004-05 (as on 31.8.2004) Para 3.6.4.5 allowed import of any capital goods under this scheme. They also contended that the restriction was introduced in the policy only in 2006-07 (RE 2006) (as on 1.4.2006) and the same is not applicable to the SFIS scrips issued for the exports made in 2004-05. The revenues contention is that as per policy para 3.6.4.5 and as per notification 92/2004, the said goods are restricted items and not freely importable on the date of importation of the said goods and the benefit of exemption notification is not eligible. The entire case was investigated by DRI and SCNs was issued answerable to Commissioner of Customs, Chennai, Mumbai, Delhi demanding duty on imports made through respective ports and it was adjudicated by common adjudicating authority appointed by Board vide Notfn No.74/2008-Cus. dt. 23.6.2008. The adjudicating authority dealt the issues in detail at para 30 to 35 of the impugned order. It is relevant to see the policy provision of SFIS scheme as envisaged for the policy period 2004-09 under para 3.6.4.3 and 3.6.4.5 of FTP year 2004-05 and 2006-07 (RE 2006) which is reproduced as under :
I) FTP2004-05 (as on 31.8.2004) before amendment
Served From India Scheme (SFIS)
Entitlement 3.6.4.3 All Service providers (other than hotels and restaurants shall be entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the preceding financial year.
Imports Allowed 3.6.4.5 Duty Credit entitlement may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables, related to the main line of business of the applicant.
In the case of hotels and stand-alone restaurants, the duty credit entitlement may also be used for the import of foods items and alcoholic beverages.
II) FTP 2005-06 (RE-2006) (as on 1.4.2006) (after amendment)
Served From India Scheme (SFIS)
Entitlement 3.6.4.3 All Service providers; Including Healthcare and Educational Service providers as well as Engineering Process Outsourcing (EPO) and Knowledge Process Outsourcing (KPO) service providers; of services listed in Appendix-10 of Handbook of Procedures (Vol.I) (other than service providers covered by Para 3.6.4.4) shall be entitled to duty credit scrip equivalent
to 10% of the foreign exchange earned by them in the preceding financial year. However, services or service providers as listed in Para 3.18.1 of Handbook of Procedures (Vol.I) shall not be entitled for benefits under the scheme.
Imports Allowed 3.6.4.5 Duty credit scrip may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables; that are otherwise freely importable underITC (HS) Classification of Export and Import Items. The imports shall relate to any service sector business of the applicant.
Utilization of duty credit earned under the scheme shall not be permitted for payment of duty in case of import of vehicles, even if such vehicles are freely importable under ITC (HS).
As seen from the above the FTP (2004-09) (RE 2006) from 1.4.2006 the imports allowed under SFIS was modified and SFIS scrip can be utilized for import of capital goods that are otherwise freely importable under ITC (HS) classification of export and import items. The goods imported are Radars, Navigational Equipments, VHF equipment and DME equipments etc. classifiable under Chapter 85261000 and Chapter 85269190, 85269110 and 85299020 of Customs Tariff. It is relevant to see the ITC (HS)classification of Export & Import code. The relevant schedule of ITC (HS)is reproduced as under :-
ITS (HS) Classification of Export and Import Items, Vol.3 (2004-09)
8526 Radar apparatus, radio navigational aid apparatus and radio remote control apparatus
8526 10 00
Radar apparatus Other
Restricted
8526 91
Radio navigational aid apparatus
8526 91 10
Direction measuring equipment
Restricted
8526 91 90
Other
Restricted
However, import of Global Positioning System (GPS) Receiver and Differential Global Positioning System (DGPS) Receiver is free
...
8529 Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528 8529 90 20 For communication jamming equipment Restricted
12. It is evident from the above ITC (HS) EXIM code, these items are restricted and not freely importable. Therefore, there is no dispute on the fact that policy provision in force at the time of importation and EXIM code confirms that SFIS scrip is to be utilized for Customs duty purpose only to the goods which are freely importable and not to the restricted goods.
13. On perusal of DGFT letter dt. 4.7.2006 and SFIS scrip No.0510185674/0/22/00 enclosed at page 13 & 14 of Appeal, we find the date of issue of SFIS scrips is 4.7.2006 i.e. after the date of amendment in 3.6.4.5 (w.e.f. 1.4.2006) where SFIS scrips allowed to be used for adjustment of customs duty only for the items which are freely importable.
14. Further, it is pertinent to state that any exemption of Customs duty on imported goods is governed under Customs Act and by way of exemption notification issued under Section 25 of Customs Act. The relevant Notfn. No.92/2004-Cus. dt.10.9.2004 fully exempts goods from customs duty on the goods imported against SFIS certificate, the extract of Notfn is reproduced as under:-
"Exemption to imports under Served From India Scheme Certificate. -In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods, namely, -
(i) in the case of hotel or stand alone restaurant or golf resort catering facility, capital goods including spares, office equipment, professional equipment, office furniture, consumables, related to its service sector business and food items and alcoholic beverages but excluding other products classifiable in Chapters 1 to 24 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and items not permitted to be imported as specified in para 3.12.4 of the Policy;
(ii) in the case of service provider other than hotel or stand alone restaurant, or golf resort having catering facility, capital goods including spares, office equipment, professional equipment, office furniture and consumables, related to its service sector business, but excluding the item not permitted to be imported as specified in para 3.12.4 of the Policy.
when imported into India against a Served From India Scheme Certificate (hereinafter referred to as the said certificate) issued under paragraph 3.6.4 of the Foreign Trade Policy, from, -
(1) the whole of the duty of customs leviable thereon under the First Schedule to the said Customs Tariff Act, 1975.
(2) the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act, 1975, and subject to the following conditions, namely :-
....."
The appellant is covered under clause (ii) of the notification as service provider other than Hotel and the notification exempts from the whole of customs duty & Additional Excise Duty on capital goods and spares etc. imported against SFIS scrip issued under paragraph 3.6.4 of the Foreign Trade Policy(FTP) (Emphasis supplied). Para 3.6.4 of FTP covers SFIS and as per sub para 3.6.4.5 of FTP 2004-09 (RE-2006) which is in force on the date of import is specific and the SFIS scrip can be utilized toward customs duty only for the goods that are otherwise freely importable under ITC (HS) EXIM code. As already discussed in the preceding paragraph, the Radars, Navigational Equipments & VHF & DME Equipments are specified as restricted items under heading 8526 of ITC (HS) EXIM Code.
15. It is pertinent to state that where an exemption of customs duty is to be allowed under the said notification the provisions of the notification has to be strictly applied as on the date of import and the SFIS scrip can be used to adjust customs duty only on an item which is freely importable under FTP ITC (HS) EXIM Code. It is not a case here of any contravention of import export regulations but on exemption of customs duty under the notification. The appellants contention that DGFTs clarification on import/export shall prevail over customs and customs authority cannot interpret the policy is not at all relevant to the facts of this case. Rather, we find the Customs is only implementing the FTP Policy provisions envisaged as per para 3.6.4.5 of FTP 2004-09 (RE-2006) as it stood at the relevant time of import and as specified in the Customs Exemption Notification 92/2002. Therefore, the appellants relying the Tribunal decision in the case of Adani Exports Ltd. (supra) and Bombay High Court decision in the case of Richardson Hindustan Ltd. (supra) are not all applicable to the present case as it is not the case here that Customs ignored the policy or any interpretation of DGFT, rather in the present case it is the department implemented the FTP policy provision in letter and spirit as existed at the relevant period of import. There is no dispute on the fact that the goods, Radars & VHF & DME are restricted items under ITC (HS) EXIM code and there is no dispute on the fact that para 3.6.4.5 of FTP 2004-09 (RE-2006) stipulated that SFIS can be utilized for customs duty adjustment only on the goods which are freely importable and not to any restricted items.
16. It is relevant to state that as rightly held by the adjudicating authority in his findings at para-30 of order that the department has not challenged the importability of impugned goods under FTP but the dispute is restricted to payment of customs duty on the restricted goods through SFIS scrip under the Notification 92/2004. The appellants are entitled to utilize the SFIS scrips for import of any capital goods which are freely importable. That being the case, there is no overlapping of power of DGFT or Customs vice versa. Therefore, the above citations relied by the appellant on this issue is distinguishable and not applicable to the present case for the reasons explained above.
17. Similarly, the appellants relied the DGFT letter dt.19.6.2007 and on perusal of the said letter, we find the JDGFT had issued the said clarification regarding import of Air Field Fire Fighting and Rescue vehicles. It is seen that the JDGFT had clearly stated that utilisation of duty credit for import of Air Field Fire Fighting & Rescue vehicles under SFIS is permitted provided the same is freely importable under ITC (HS). The DGFTs above clarification confirms the departments stand that SFIS scrip cannot be utilised for customs duty adjustment on import of restricted goods. Therefore, the appellants relying the DGFT clarification is of no help to the appellants to the present appeal. The para-3 of CBEC circular No.3/2008-Cus. dated 24.1.2008 as relied by the adjudicating authority had clearly stated that the goods restricted for imports are not allowed clearance under the SFIS & other schemes. This confirms that both DGFT and CBEC are implementing in the policy provisions and not against each other as claimed by the appellants.
18. The appellants another plea that promissory estoppels is attracted in the present case as the foreign exchange realized in 2004-05 and the relevant para 3.6.4.5 as existed as on 31.8.2004. Therefore the department is estopped in denying the benefit when the goods are imported in 2006-07. The above contention is totally unacceptable and without any legal basis. It is a fact that SFIS scrips are issued based on foreign exchange remittance received over previous years and the DGFT issued the SFIS scrips to appellant on 4.7.2006 and utilization of scrip should be as per the condition of FTP as existed on the date of import. It is a settled law that any clause policy provision should be strictly enforceable prospectively w.e.f. from the date of such amendment. In the present case, para 3.6.4.5 of FTP 2004-09 (Re-2006) w.e.f. 1.4.2006 stipulates the utilization of SFIS scrip for customs duty only on the freely importable goods and the customs notification 92/2002 allows exemption as per the policy in force. Therefore, there is no promissory estoppel attracted in the present case. The citation relied by the appellants are not applicable to the facts of this case.
19. In view of the foregoing discussion, we are unable to accept the appellants plea that SFIS scrip should allowed to be used for payment of customs duty on the Restricted goods i.e. on Radars, Navigational Equipments, VHF & OME Equipments which are restricted for import under ITC (HS) EXIM code and the exemption provided under Notfn 92/2002-Cus. Is not applicable for use of SFIS scrip for adjustment of customs duty on import of the said restricted goods.
20. Further, we also find from the statement of S.Sundara Raman G.M. (Planning),dt. 21.11.07, statement of Rajesh Bhandari, G.M. (Finance) dt. 21.11.07, Shri Ajit Dubey, Executive Director (Finance) statement dt. 22.11.2007 in charge of import operations of appellant-company wherein they clearly admitted the fact that they inadvertently utilized the said SFIS scrips for payment of Customs duty towards import of Radars, and other equipments which are restricted items under policy. The Executive Director in his statement clearly admitted before the Department that they agreed to pay the entire customs duty and they paid the entire customs duty voluntarily under various TR challans. These facts are on record and the same cannot be brushed aside or ignored as there are voluntary statements from responsible senior executives persons in charge of Finance & Planning including the Executive Director Finance and are fully aware of the legal provisions of FTP and Customs exemptions notifications. Therefore, the adjudicating authority rightly denied the exemption under Notfn 92/2004.
21. In view of the above facts and reasons, we are of the considered view that the exemption of customs duty under 92/2004-Cus. dt. 10.9.94 not applicable for Radars, Navigational Equipments & VHF & DME equipments, restricted goods for adjustment of customs duty against SFIS scrips. The customs duty of Rs.10,81,10,330/- confirmed by the adjudicating authority under Section 28 of Customs Act and appropriation of entire customs duty already paid by the appellants is liable to be upheld with interest.
22. As regards the imposition of redemption fine on the goods confiscated and imposition of penalty on the appellants under Section 113 of the Customs Act, the appellants pleaded that when the goods are not seized nor any Bond executed and the goods are not available for confiscation the Redemption Fine cannot be imposed and no penalty can be imposed and relied various Tribunal and High Court decisions in support of their contention.
23. In this regard, the Honble High Court of P&H in the case of CC Vs Raja Impex Pvt. Ld. (supra) and the Honble High Court of Bombay in the case of CC Mumbai Vs Finesse Creations Inc., (supra) and Honble High Court of Karnataka in the case of CC Bangalore Vs G.M. Exports (supra) clearly held that imposition of redemption fine arises only when the goods are available for confiscation and held that RF not imposable when goods are not available for confiscation and upheld the Tribunal orders. The relevant paragraph of Honble High Court of Karnataka in the case of CCE Vs GM Exports (supra) in reproduced as under :-
"4.?In order to levy redemption fine, two condition are to be satisfied : (i) the goods should have been seized, (ii) the goods should be liable for confiscation. Admittedly, 19520.36 sq. mts. of vitrified tiles were not seized, much less released to the assessee provisionally. Only an extent of 11094.60 sq. mts of vitrified tiles were seized, it was confiscated and on payment of redemption fine, it was provisionally released. When the remaining 8425.76 Sq. Mts was not at all available and it was not seized, the question of imposition of redemption fine on such goods did not arise. When the authorities imposed redemption fine on the ground that the said goods are liable for confiscation without verifying as to the existence of the goods and the seizure of the goods, the imposition of redemption fine was illegal. Therefore the Tribunal was justified in passing the impugned order which is strictly in accordance with law.
5.?Accordingly, the substantial questions of law framed in this case are answered in favour of the assessee and against the Revenue. No merit. Dismissed.
The ratio of the Honble Karnataka High Court decision is squarely applicable to the present appeal as in the present case, the department has not effected any seizure of goods and the goods were already cleared and only based on intelligence and investigation which led to issue of SCN for demand of Customs duty under proviso to Section 28 of Customs Act. When the goods are not available for confiscation, by respectfully following the ratio of the Honble High Court decisions referred above, we hold that the appellants are not liable for redemption fine. The total Redemption Fine of Rs.3,42,30,000/- imposed on the goods imported through Chennai, Mumbai and New Delhi in lieu of confiscation is liable to be set aside.
24. As regards the imposition of penalty on the appellant of Rs.50 lakhs, Rs.70 lakhs and Rs.5000/- in respect of imports made through Chennai, Mumbai and Delhi under section 112 of Customs Act considering the overall circumstances of the case and also considering the fact that appellant paid entire customs duty during investigation itself and before issue of SCN reduction in penalty is warranted in respect of imports made through Chennai and Mumbai. Minimum penalty of Rs.5000/- imposed against import through Delhi by the adjudicating authority same is upheld. Accordingly, we reduce the penalty in respect of imports made through Chennai and Mumbai from Rs.50,00,000/- to Rs.5,00,000/- from Rs.7,00,000/- to Rs.70,000/- respectively.
25. In view of foregoing discussions and findings ,
(i) the impugned order to the extent of confirming the demand and interest is upheld
(ii) the order on imposition of redemption fine is set aside The impugned order to the extent of imposition of penalty is modified to the extent as indicated above. Accordingly, the appeal is partly allowed in the above terms.
(Pronounced in open court on 25.9.2015)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
gs
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