Customs, Excise and Gold Tribunal - Tamil Nadu
Wipro Infotech Software & Securities vs Commissioner Of Customs, Chennai on 9 October, 2001
Equivalent citations: 2002(139)ELT663(TRI-CHENNAI)
JUDGMENT
S.L. Peeran
1. The stay application and t he appeal arise from order-in-appeal No.C-Cus 355/2001 dated 30.5.2001. After hearing Sr. Counsel along with Shri Saravanan, Adv. for the appellants and Ld. SDR Shri Sree Kumar Menon for the Revenue, we find that the appellant have made out a strong prima facie case for grant of waiver and stay of recovery of the amount in terms of the impugned order and hence the stay application is allowed. As the issue lies in a short compass, the appeal itself is taken up for final consideration.
2. The appellants were operating under 100% EOU scheme. They had imported materials in terms of the scheme for the purpose of manufacture of computers, hardwares and peripherals and LAN systems and for the purpose of exporting to USSR. However, due to dissolution of USSR and due to adverse market conditions the appellants were unable to comply with the terms of export orders as those orders became unenforceable due to dissolution of USSR. Therefore, in terms of notification No. 133/94-Cus dated 22.6.94 and in terms of para 9.20 of EXIM policy they made an application to the Deputy Commissioner seeking for destruction of these imported parts which were lying more or less as scrap/waste/remnants in order to facilitate smoother de-bonding of the unit in terms of para 9.20 of EXIM policy which specifically provides that no duty shall be leviable on scrap/waste/remnant in case they are destructed with the terms of the Customs authority. The reason for this action contemplated by the appellants is change in technology due to lapse of time and entire imported material became useless and was required to be treated solely as waste and scrap. Hence they made the application through letter dated 24.12.98 followed by reminder dated 24.2.99 and 19.3.99. The Deputy Commissioner did not take any steps in terms of the application and the provisions of the policy and the notification. However, they received a communication dated 8.2.2000 from the Deputy Commissioner of Customs intimating them as:
"In the above mentioned letters you have asked for destruction of certain obsolete component as per the list enclosed by you.
Your request was carefully considered and based on the order of the Commissioner of Customs, Chennai Air it was decided that your request for destruction cannot be acceded for the following reasons:
1) Some of the items proposed to be destroyed like printers, key boards, mouse, populated boards, capacitors, I.Ds floppy and hard disc drives, are capable of being used notwithstanding the technology becoming obsolete./ Even if the items sought for destruction are considered obsolete by M/s. Wipro, they maybe used as spares by other concerns.
2) In terms of Notification 133/94, as amended by notification 65/99, M/s. Wipro has to fulfill the export obligation falling which duty is demandable along withe interest @20% on the items imported. You have not achieved export obligation as per the EOU given.
3) The request of M/s. Wipro is for destruction of the goods in the MEPZ. Abandonment of warehoused goods is not permissible by virtue of Section 23(2) of the Customs Act, 1962.
Meanwhile the Hon'ble High Court in the writ petition filed by your company as directed by the Commissioner of Customs to debond the unit within two weeks.
As your request for destruction of obsolete components etc., is not acceptable, you are requested to pay the duty foregone on the imported material amounting to Rs. 31,26,919 and the duty foregone amount of Rs. 20,44,729 on indigenously procured material under CE Notification No. 126/94 as amended from time to time along with interest at the rate of 20% from the date of procurement of this good. As you have not indicated the date of procurement of the goods in your list we are not able to quantify the interest amount payable by you.
Subject to the payment of duty and interest you are hereby permitted to debond and clear the components lying unutilised in your factory premises. You are already permitted to clear other non-dutiable goods. With these our action in this mater is complete. You have to pay the duty with interest and clear the goods."
3. The appellants were aggrieved with this order and filed an appeal before the Commissioner (Appeals), who held that the appeal was not maintainable before him. However, while so holding he dismissed under Section 129(E) of the Customs Act for non-compliance of the terms of the said order in pre-depositing the amounts. Therefore, they filed before the Tribunal Appeal No. C/17/2001. The Tribunal at the time of hearing of the stay application No. C/Stay/11/01 remanded the matter for de novo consideration to the Commissioner by final order No. 322/01 and stay order No. 85/01 dated 28.2.2001 with clear direction that the Commissioner (Appeals) had erred in dismissing the appeal under Section 129(E) and holding that the proceedings before him were not maintainable. The Commissioner(Appeals) was directed to hear and pass an order on the aspect of the jurisdiction. The impugned order has been passed on the aspect of the jurisdiction. The impugned order has been passed on the aspect of the jurisdiction after giving an opportunity of hearing to the appellants. The findings recorded by him as reproduced:
"I have gone through the records of the case and the submissions of the appellant carefully.
The Hon'ble Tribunal has remanded the case with a direction to decided as to whether Commissioner (Appeals) has powers to entertain the appeal and to pass an interim order on that aspect. The appellant was also heard on he issue of maintainability of the appeal. Prima facie, it is seen that the appeal has been field against the letter dated 8.2.2000 issued by the Deputy Commissioner of Customs to M/s. Wipro Info Tech Ltd. the appellant. A perusal of this letter would clearly show that the appellant's request to the Commissioner of Customs, Chennai Air for destruction of certain obsolete components was not acceded to for the reasons mentioned in the letter. The Deputy Commissioner has only conveyed the non-acceding of the appellants's request for destruction by the Commission and he has consequently requested the appellant to pay the duty foregone and debond the components lying unutilised. As such, this is not an order passed by an officer below the rank to he Commissioner of Customs. The Deputy Commissioner has, if fact, conveyed the decision taken by the Commissioner of Customs to whom the appellant has requested for permission for destruction. While there is no dispute regarding the fact that what has been conveyed is an order/decision passed under the Customs Act, it is not an order passed by an officer below the rank of Commissioner but by the Commissioner and conveyed by an officer subordinate to him. As such, this decision/order passed by Commissioner of Customs, Chennai Air is not appealable with the Commissioner of Customs (Appeals), Chennai as per Section 128 of the Customs Act, 1962. On of the other hand, an appeal may have to be filed as per 129 A of the Customs Act, 1962. As such, the present appeal before me is not maintainable under Section 128 of the Customs Act, 1962. The decisions cited by the appellant are therefore not relevant to the instant case.
Accordingly, the appeal is rejected. In view of the decision, the issue regarding the stay application viz. waiver of pre-deposit under Section 129E of the Customs Act, 1962 is not taken up for decision, as it become redundant."
4. Arguing for the appellants Ld. Sr. Counsel pointed out that initial proceedings were conducted by the Deputy Commissioner in terms of the para 9.20 of EXIM policy read with notification No. 133/94-Cus dated 26.2.94 read with notification No. 126-CE dated 2.7.94. It is his submission that the original authority cannot issue a letter as extract supra stating that the proceedings were dealt with by the Commissioner and he has been asked to communicate about the rejection of the request in their letters for destruction of imported and indigenous material and to treat the said imported material as scrap/waste.
5. Ld. Sr. Counsel submits that as the original authority the Deputy Commissioner was bound to have issue notice giving reasons as to why their request cannot be complied with and after following the principles of natural justice ought to have adjudicated and that the same not having being, done the entire letter issued by the Deputy Commissioner is non-set and are not as per law. Therefore, the appeal filed by them before the Commissioner(Appeals) challenging his action was sustainable and the Commissioner (Appeals) was not justified in holding that the proceedings has been initiated by the Commissioner of Customs and therefore the order of the Deputy Commissioner is required to be treated as the order passed by the Commissioner of Customs. He contends that the impugned order is not sustainable and the findings recorded that the Commissioner (Appeals) has no jurisdiction is bad in law. He contends that the Ld. Commissioner(Appeals) ought to have remanded the matter to the Deputy Commissioner to follow the procedure in terms of law by initiating proper proceedings and to act as an adjudicating authority and in the alternative, proceeding could have been taken up by the Commissioner of Customs by issuing notice and order should have been passed by the Commissioner of Customs alone after due adjudication in terms of law. Therefore, he submits that the Commissioner (Appeals) had clear jurisdiction to entertain their appeal. As it was no done there was a clear violation of principles of natural justice. He contends that in the circumstances, the appeal is required to be allowed by remanding the matter to the original authority and directions them to initiate proceedings in terms of law of their application filed for destruction of the imported and indigenous material which was treated as scrap/waste. He contends that the Apex Court in the case of Sheela Foam (P) Ltd. v. Uol as reported in 1997 (95) ELT 453 (SC) have clearly laid down that where an order was requirted to been passed by the Assistant Collector in pursuance of directions given by the order of the Collector of Central Excise and Customs it would be appealable before the Collector of Customs & Central Excise and not before the Tribunal in terms of Section 35(B) of the Central Excise Act. The Apex Court judgement is extracted herein:
Order
1. Special leave granted.
2. Heard counsel for the parties. The Collector, Customs and Central Excise, Meerut by his order of 31-12-1990 directed the Assistant Collector to take into consideration the various submissions and calculations submitted by the parties and the observations made by him and work out the correct demand amount after giving full opportunity to the parties and to enforce the realisation of short levy under Section 11A of the Central Excise and Salt Act, 1944. Pursuant to this order the Assistant Collector by his order of 20-3-1992 adjudicated the mater afresh. However, when the appellant preferred an appal against it to the Collector (Appeals), the Collector (Appeals) rejected it on the ground that since the Assistant Collector's order of 20-3-1992 had been passed pursuant to the directions contained in the order of the Collector, the appeal lay to the Tribunal and not to him. When the appellant thereafter approached the Tribunal, the Tribunal dismissed the appeal on the ground that it was delayed.
3. Therefore the appellant approached the High Court and the High Court directed the appellant to approach this Court.
4. It is, therefore, obvious that the Collector (Appeals), was wrong in asking the appellant to approach the Tribunal against the order of the Assistant Collector passed on 20-3-1992. It is not disputed before us that the appeal lay before the Collector (Appeals) against the said order of the Assistant Collector and the Collector (Appeals) had wrongly directed the appellant to approach the Tribunal agist the said order. We, therefore set aside the impugned order of the Collector (Appeals) dated 31-3-1993 and consequently the orders of Tribunal and the High Court and remand the matter to the Collector (Appeals) and direct him to hear the appeal against the order of the Assistant Collector dated 20-3-1992 according to law. The appeal is allowed accordingly with no order as to costs.
6. He also submits that the order communicated by the Deputy Commissioner as having been the decision of the Commissioner in terms of Section 3A of the Central Excise Act, was held to be violative of principles of natural justice by this Bench in the case of Triveni Alloys Ltd. v. CCE, Chenai by Final Order No. 2316/99 dated 10.9.99 and the Tribunal remanded the case with a clear observations that proceedings should have to be done by the Commissioner alone. In this connection the earlier decision of the Tribunal rendered in the case of Stag Steel Ltd. v. CCE as reported in 1998 (101) ELT 229; Amar Wollen Mills v. CC as reported in 1992 (61) ELT 745 and Chamundi Steel (India) Ltd. v. CCE as reported in 1999(108) ELT 578(T) was referred and another remanded with a direction that the proceedings should be conducted only by the Commissioner and communication made by the Deputy Commissioner through his letter is not an order at all. He contend that these rulings apply to the facts of the case and therefore the mater is required to be remanded back to the original authority for foll owing the procedure as per law and the conduct the proceedings in terms of the request in their application. He submits that the situation being same, these judgment will have direct applicability and seeks for proper orders and directions for de novo proceedings in the matter. Ld. Sr. Counsel points out that as an abandonment caution he has filed another appeal No. 279/2001 against the order of the Deputy Commissioner along with stay application and application for COD seeking condonation of delay of 392 days in the peculiar fact and circumstances of this case.
7. Heard Ld. SDR Shri Sree Kumar Menon, who reiterates the finding given by the Commissioner (Appeals). He contends that the Deputy Commissioner had communicated the order of the Commissioner although there was no order specifically passed by the Commissioner of Customs yet the order of the Deputy Commissioner is required to be considered as passed by the Commissioner of Customs and hence Commissioner (Appeals) had no jurisdiction to entertain the appellant's appeal. He points out that appeal No. C278/2000 is not maintainable and appeal No. 279/2001 is hopelessly barred by time and therefore both the appeals are required to be dismissed.
8. On a careful consideration of the submission, we are of the considered opinion that there is a lot of force and merit in the submission made by the Ld. Sr. Counsel. The Commissioner of Customs ought to have adjudicated the proceedings in terms of para 9.20 of EXIM policy read with notifications relied herein and should have dealt with the application filed by the appellant by initiating proper proceedings in terms of law. However, the Commissioner's view was communicated by Deputy Commissioner which cannot be considered as a proper order in terms of law. The proceedings of the Deputy Commissioner is not being in terms of law and in the light of the Apex Court judgment rendered in the case of Sheela Foam (P) Ltd. v. UoI (supra), the appeal of the appellant before the Commissioner (Appeals) was maintainable. Therefore, the Commissioner (Appeals) finding that the appeal against the letter of the Deputy Commissioner being not maintainable is not correct in the light of the Apex Court judgment.
9. We have considered the plea that as the entire proceedings of the Deputy Commissioner itself is non-est and not maintainable and therefore the issue is required to be remanded to the original authority for de novo proceedings in terms of law. In this regard the judgement rendered in the case of Triveni Alloys Ltd. v. CCE by final order No. 2316/99 dated 10.9.99 is directly applicable to the facts of this case. The findings recorded in para 4 to 7 are reproduced:
4. We have carefully considered the rival submissions and records of the case. We have perused the decision of the Tribunal in the case of CC v. UNION CARBIDE (I) Ltd.(supra) and final that the facts considered in that case stand distinguished from the facts of this case, inasmuch as that there though an adjudication order by the Appellant Collector had been passed, the same had not been received by the Executive Collector, who was also waiting the decisions of the Tribunal on a similar issue. In the present case, presently no speaking order has yet been passed and secondly no one was awaiting any decision of the Tribunal. The appellants in their affidavit have clearly submitted that they chanced to see the decision of the Tribunal which is quite different from awaiting knowingly of the decision of the Tribunal on a pending issue. Therefore, the said decision needs to be distinguished on facts with respect to the present case under consideration.
5. As against,this, we find that in the case of AMAR WOOLLEN MILLS (supra) it had been held that the limitation for filing of appeal shall commence only from the date of communication of an order in an adjudication proceedings. The learned advocate has submitted that for the reasons mentioned above, the letter in question was no an adjudication order and no such order had been received as yet despite request for the same. Hence we find substantial force in his argument as in fact, there is no delay which requires condonation. In view of the peculiar circumstances of the case, we, therefore, hold that the application for condonation of delay is infructuous and since the matter lies on a short compass, we proceed to consider the appeal itself. In this connection, we have perused the decision of the Tribunal in the case of STAG STEEL LTD. (supra) which has also given rise to the said appeal before us, as averred in the appellants affidavits. In this case, the Commissioner had re-determined the annual capacity without giving any opportunity of hearing or without disclosing any material on whose basis the said re-determination has been done.The Tribunal had thought it fit to remand the matter for de novo consideration after following the proper principles of natural justice to the extent that the present letter against which (the letter of Assistant Commissioner) the appellant has grievanced was also issued without giving any basis to the appellants as to why and on what grounds their claim for capacity being 7 M.T.s was rejected and instead much higher capacity of 18 M.T.Ss was fixed and further because there was no response from the Revenue on the request for a speaking order, therefore, to this extent the facts are similar. However we find that this very issue had been considered by this Tribunal in the case of CHAMUNDI STEEL CASTINGS (INDIA) LTD. v. CCe as reported in 1999 (108) ELT 578(T). A perusal of the said decision shows that the facts of the case are on all fours with the facts of the present case for the following reasons:-
(a) the letter/order by which the assessee was aggrieved was not signed by the Commissioner, who alone is the prescribed authority to pass such an order under Section 3A(2) of the Act; and
(b) there was no discussion regarding the assessee's contention for fixing lower capacity.
We find that in the present case, both these facts are exactly identical. We had in our decision in the case of CHAMUNDI STEEL CASTINGS (I) LTD. (supra) held that such an order was a non-speaking order and had therefore, remanded the matter to the original authority namely the concerned Commissioner for de novo consideration, after hearing the assessee. One of the main considerations in remanding the matter was that the learned Commissioner would re-consider the matter to the extent that the appellants had already conceded their capacity to be 8.53 MTs. whereas the Revenue had fixed it at 9.5 MTs. In the present case, the gap between the assessee's claim and the quantum fixed by the Revenue is even larger.
6. In view of the aforesaid analysis and applying the ratio of our own decision in the case of CHAMUNDI STEEL CASTINGS (I) LTD., we set aside the order impugned and remand the matter for do novo consideration to the jurisdictional. Commissioner of Central Excise. It is brought to the notice of the learned Commissioner that under Section 3A(2), it is only the Commissioner who is entitled to consider the issue and pass an order fixing the annual capacity. Since we are not aware of any legal delegations of the said powers to a subordinate authority, therefore, the matter is being remanded back for re-consideration as per law.
7. The appeal succeeds by way of remand accordingly.
10. We further notice that in a similar situation the Delhi Bench in the case of Sonia Prints Pvt. v. CCE, New Delhi as reported in 1999 (34) RLT 323 (CEGAT) did not accept the proceedings initiated without show cause notice and held it to be violative of principles of natural justice and remanded the case to the original authority for de novo consideration. The findings recorded by the Delhi Bench is extracted:
P.C. Jain
1. Learned Advocate, Shri Y.K. Kumar submits that the impugned order fixes the capacity of stenter for processing of fabrics on the basis of certain verification report behind the back of the applicants/appellants. Further while opposing the impugned order, no show cause notice was issued to the appellant and no opportunity of personal hearing was given to the appellants for fixing the capacity as has been done in the impugned order. On a query fro, the Bench, he submits that the Commissioner appears to have gone on some circular of the Board which envisages addition of galleries with the chambers for determining the capacity of the stenter. He submits that this circular of the Board is totally unjustified but they have not been given any opportunity to rebut the conclusion given in the circular on which the Commissioner has relied upon. He therefore, submits that the impugned order suffers from gross violation of principles of natural justice. Consequently, he prays for setting aside the same and remanding back matter to the adjudicating authority and directing him to issue an appropriate show cause notice as to why the galleries be not added along with the chambers and then an adjudication order be passed by him after considering the reply of the appellants.
2. Opposing the contentions, learned Senior Departmental Representative, Shri Satnam Singh submits that it is merely a question of verification of certain parameters and technical data. There is no dispute about the technical data verified by the officers. In these circumstances, there is no justification for giving any personal hearing or any show cause notice to be issued because it is merely a verification of technical data.
3. We have considered pleas advanced by both the sides. We are not inclined to agree with the submissions of the learned Senior Department Representative.We observe that the appellant herein are contesting the addition of galleries for the purpose of fixing production capacity of stenter even though there is a circular of the Board for addition of the galleries. But the assessee has a right to contest against the circular and they have a right to be heard on the pleas made by them. Consequently, we agree with the submission of the learned Advocate for the applicants/appellants that the impugned order has been passed in violation of the principles of natural justice. Consequently we set aside the same and direct the adjudicating authority to readjudicate after giving a show notice to the appellants as to why the galleries be not added for determining the production capacity and after giving an opportunity to reply to the show cause notice and also for hearing. Then only, the adjudication order should be passed while dealing with all the pleas in a speaking manner. Impugned order is, therefore, set aside. Appeal is thus allowed by remand in terms of the aforesaid direction.
4. Since the appeal itself has been allowed, stay petition gets disposed of.
(Pronounced and dictated in the open court).
11. In view of the above findings and judgement cited we set aside the impugned order of the Commissioner(Appeals) and remand the matter back to the original authority to proceed in terms of law and deal with appellant's application for de-bonding and destruction of their imported and indigenous item and to treat the same as waste/scrap. The authority shall deal with their request and proceedings be initiated de novo by following principles of natural justice.
12. We notice that since the appeal No. C/278/00 has been allowed by way of remand therefore, we are of the considered opinion that the appeal No. 279/01 is not maintainable and therefore appeal No. 279/01 along with stay application and COD is rejected as not maintainable. Ordered accordingly.
(Pronounced & Dictated in Open Court)