Customs, Excise and Gold Tribunal - Bangalore
Kerala Hi-Tech Industries Ltd., vs Commissioner Of Central Excise & ... on 20 April, 2001
Equivalent citations: 2001(76)ECC519, 2001ECR109(TRI.-BANGALORE), 2001(132)ELT593(TRI-BANG)
ORDER
Shri S.S. Sekhon
1. This stay application had come against an order of Commissioner of Central Excise Cochin who vide the impugned order confirmed the duty demand of Rs. 1,90,339/- and Rs 32,62,118/- on imports made through Chennai Airport and Custom House Cochin and in three other SCNs where the imports were made from Trivandrum Airport. Vide impugned order the duties totaling to Rs 48,36,118/- were confirmed and were ordered to be paid immediately with interest and the importers request for allowing re-export of goods on payment of 10% of the CIF value of the imported goods was agreed, by the foreign supplier, was also ordered. No penalty was imposed considering the facts and circumstances of the case.
2. The appellants have filed the stay application against recovery and determination of duty of Rs. 48,836,16-/- and Misc. application for permission to re-export on payment of 10% and Misc application for permission to re-export on payment of 10% of the CIF value as determined and ordered by the learned Commissioner. Payment of duty amounting to this and further on the importers request that re-export on remittance of the 10% of the CIF value of all imported goods as agreed to by the foreign supplier was permitted and the importers were given the opportunity to claim draw-back on re-export of these goods. No penalty was imposed on the importers.
3. The matter came up for hearing today on the compliance of the stay order No. 139/2001 dated 15.2.2001 when the learned consultant for the appellants submitted that the permission for re-export may kindly be granted. Therefore, this appeal was taken for final decision with the consent of both sides.
4. We have heard the learned Consultant for the appellants and SDR for the Department and after considering the submissions and the material find:
(a) The Supreme Court in the case of UOI Vs Sampat Raj Dugar (1992 (58) ELT 163(SC) have held:
"But certainly he cannot be treated as the owner of the goods even in such a case. Holding otherwise would place the exporter in a very difficult position; he loses the goods without receiving the payment and his only remedy is to sue the importer for the price of goods and for such damage as he may have suffered. This would not be conducive to international trade. We can well imagine situations where for one or other reason, an importer chooses of fails to pay for and take delivery of the imported goods. He just abandons them. (We may reiterate that we are speaking of a case where the import is not contrary to law). It is only with such a situation that we are concerned in this case and our decision is also confined only to such a situation. Condition (ii) in sub-clause (3) of Clause 5 in our opinion, does not operate to deprive the exporter of his title to said goods in such a situation."
In the present case the goods are not imported contrary to any law. The only violation was, that the goods imported duty free, under provisions of the notification 32/97 dated 1.4.97 could not be processed under job work and re-exported as per the provisions of this notification. This notification provides the duty free import of goods specified against an export order on the importer by the supplier of goods for jobbing. The goods are required as such or after doing the job work, re-exported within six months from the date of clearance or within such extended period as the Assistant Commissioner of Customs may allow, along with a value addition of atleast 10% to the CIF value of the goods imported. The jobbing is to be undertaken in accordance with the procedure set out in the Customs (import of goods at concessional rate of duty for manufacture of excisable goods) Rules 1996. In the present case, the appellants imported as free supply, certain raw-material from USA to be converted into specified parts of a Commercial Air craft pursuant to an export order placed on them. They completed all the preparative engineering activities and were ready to start the manufacture of the parts. However, due to certain technical problems they could not do so. They applied to the concerned Assistant Commissioner for the extension of the time period as prescribed in the notification. No decision was taken on the same. While this application was pending, the orders placed on the importers by the foreign supplier in USA was cancelled. The owner of the imported goods in USA asked the importer in India to send back the goods after completing the work in process or and raw-material as it was.
(b) The learned Commissioner, confirmed the demands of duty not charged in terms of Notification 32/97 dt 1.4.97 and found as follows:
" M/s Kerala Hitech Industries Ltd., Trivandrum have imported 5 consignments of forgings and plates for job work to convert into specified parts of commercial aircraft in terms of Notification No 32/97 dated 1.4.97. The importers are required to import their raw material free of cost and also undertake jobbing in accordance with the procedure stated in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996. At the time of import the importers are required to produce evidence before the Customs authorities that the goods imported are for execution of an export order placed on the importer by the supplier of goods for jobbing and also have to undertake by executing a bond that they will observe all the provisions of the notifications and the aforesaid CIGCRDMEG Rules 1996. On breach or failure of any part of the above said conditions the bond shall be enforced and all dues as may be demandable on the imported goods will have to be paid to the Customs authorities unless the importers obtained necessary permission from the Customs authorities for extension of time limit. In the subject case, the importers had applied for extension of time in respect of 4 cases out of the 5 consignments mentioned above and for the remaining one case they did not apply for extension but requested for permission for re-export within the prescribed period of 6 months because of their inability to fulfill the export obligation due to cancellation of the export order placed on them by the foreign supplier. 10.2 In terms of para 7.12 of the Exim Policy 1997-2002, import of goods supplied free of cost are permitted for the purpose of jobbing provided all goods so imported, except the wastage, shall be re-exported subject to a value addition of not less than 10%. In this case the importers have availed of the above said facility on the basis of an export order received from their foreign supplier and they had imported in all, goods worth Rs 87,52,005/-. As it was apparent that the importers are not able to fulfill the export obligation within the stipulated time of 6 months or within any extended period, in view of the cancellation of the purchase order. They were asked to explain by issuing Show Cause Notices as to why the Customs duty leviable on the imported goods should not be recovered from them with interest under section 28 and 28 AA of Customs Act 1962. In the Show Cause Notice No. 20/98, penal action under Section 112 of Customs Act, 1962 was also proposed."
And thereafter concluded that the fact remains that the importer had effected the imports and cleared the goods on execution of a bond, binding themselves to fulfill the conditions mentioned therein and since the same were not fulfilled, for whatever reasons, bonafide or otherwise. Consequently full dues were required to be paid.
(c) We have considered these findings of the learned Commissioner and are unable to agree with the same. The work of jobbing would not involve transfer of ownership of the goods. The goods are still in the ownership of the supplier in USA and not returning the same to the supplier in USA would not be conducive to international trade and the export (SIC) of India. This notification, to our mind, has been provided to facilitate the development of job work for hi-tech Industries, as in this case, for aircraft parts. We should not strangulate the avowed purpose of the same, by burdening the job workers with duty liabilities and consequent draw-back claims to be filed, in case of bonafide failures. That would involve blockage of large amounts without any productive purposes. The benefit of draw-back, as ordered by the learned commissioner will not extend to more than 98% of the total dues which the importer may have to pay. Thus the importer will have to undergo a loss of 2% for no valid reasons. We do not find any challenge to bonafide nature (SIC) attempt on part of the importers to 20th jobwork. The goods are not banned for imports otherwise or and diverted for any other purpose. We note, the Collector has found the bonafides and not invoked the penalty clauses. We would therefore, following the law as laid down in the case of Sampat Raj Dugar (supra), would in this case, allow export, without insisting on payment of any duty.
(d) We are aware of the offer of the importer to re-export the goods on remittance on 10% of the CIF value of all imported goods which had been agreed to by the foreign supplier. This offer was made to us by the learned consultant in the court. We have no objection to the export being permitted in this case on the terms offered.
5. We would therefore in view of our findings, allow this appeal by directing the export to be permitted without demand of any duty.
(Pronounced in open court on 20.04.2001