Madras High Court
Commissioner Of Customs (Exports) vs M/S.Stumpp on 5 December, 2014
Bench: R.Sudhakar, R.Karuppiah
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 05.12.2014 CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKAR AND THE HONOURABLE MR. JUSTICE R.KARUPPIAH C.M.A. NOS. 1822 & 1823 OF 2006 Commissioner of Customs (Exports) Chennai. .. Appellant - Vs - M/s.Stumpp, Schuele & Somappa Ltd. .. Respondent Appeal filed under Section 130 of the Customs Act against the order dated 30.08.05 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, made in Final Order No.1264/2005. For Appellant : Mr. T.Chandrasekaran, SCGSC For Respondent : Mr. Arvind P.Datar for J.Shankarraman JUDGMENT
(DELIVERED BY R.SUDHAKAR, J.) Aggrieved by the order of the Appellate Tribunal in dismissing the appeal filed by it, the Revenue is before this Court challenging the said order by filing the present appeal. This Court, vide order dated 25.8.06, framed the following substantial questions of law for consideration :-
1) Whether the appellate tribunal is correct in holding that the demands are clearly barred by limitation when the import of goods took place on 8.5.98 and the show cause notice demanding duty was issued on 23.1.03 within five years as per the proviso to Section 28 (1) of the Customs Act?
2) Whether the appellate tribunal is correct in allowing the appeal when the respondent had imported materials duty free under DEEC scheme which have not been used in the manufacture of resultant products covered by the advance licenses?
2. The respondent is a manufacturer of helical springs. During the period 1996-2000, they obtained 24 advance licences and imported raw material, viz., spring steel wires, to be used in the manufacture of resultant products, which have already been exempted under the said scheme. The DRI, based on investigation, issued a show cause notice invoking the extended period, alleging suppression. The allegation of the DRI is that the raw material imported under the advance licenses as replenishment, were different from the raw material used in the manufacture of exported goods in terms of character, thickness, etc. The respondent imported spring steel wires by seeking the benefit of Customs Notification Nos.149/1995-Customs dated 19.9.95, 30/1997-Customs dated 1.4.97, 31/1997-Customs dated 1.4.97 and 51/2000-Customs dated 27.4.00. The notifications provide for 'Nil' rate of duty on raw materials, components, intermediate products, samples and parts required for the manufacture of resultant products. Those notifications are a sequel to Customs Notification No.204/1992-Customs dated 19.5.92.
3. Before the Tribunal, the respondent contended that there is no suppression of fact and that licenses and documents were furnished at the time of export and at the time of import of raw materials for replenishment. The preliminary plea made by the respondent is that the licenses and DEEC passport and other documents were scrutinized by the Director General of Foreign Trade and the Customs authorities and, therefore, there is no case of suppression. On merits, it was contended that the interpretation on the notifications as sought for by the DRI is not correct and goes contrary to the decision of the Apex Court in Oblum Electrical Industries Pvt. Ltd. - Vs Collector of Customs, Bombay (1997 (94) ELT 449 (SC)), which has been consistently followed by the Tribunal in several cases including Sha Harakchand Dharmaji Vs CC, Madras (1996 (88) ELT 764 (T)) and Jay Engineering Works Ltd. - Vs CC (2003 (162) ELT 680 (T)).
4. The Tribunal, on consideration of the matter, on the issue of benefit of notifications, relied on the decision of the Supreme Court in Oblum Electrical case (supra) and came to hold that the actual user condition cannot be imposed in these notifications in the light of the decision in Oblum Electrical's case (supra) and various other decisions of the Tribunal referred to in the order, which have attained finality.
5. On the question of limitation, the Tribunal held as follows :-
11. ...... The further case of the assessee that the demands are barred by time is a well taken ground for the reason that all the details and particulars have been mentioned in the records and on our perusal of the entire records, including the licence and the documents furnished at the time of export and at the time of import of the raw materials for replenishment, we find that the details had been furnished. Licence, DEEC passbook and other documents had been scrutinized by the DGFT and the Customs Authorities and there was no details which had not been declared was discovered by the DRI in the investigation. There was no suppression or mis-declaration of facts. Therefore, in the light of the judgment cited by the counsel the demands are clearly barred by time. The appellants succeed on both grounds and the appeals are allowed with consequential relief, if any. Aggrieved by the above order passed by the Tribunal, the Revenue has filed the present appeal.
6. The first question of law raised by the appellant is that the finding of the Tribunal that the demands are barred by limitation is erroneous. However, on the second question of law, a preliminary objection is raised by Mr.Arvind Datar, learned senior counsel for the respondent stating that if the interpretation of the notification is the issue raised by the Department, then it will have a bearing in relation to the rate of duty and, therefore, the appeal will not lie. Learned senior counsel, however, submitted that if the first question of law is answered in favour of the respondent/importer, concurring with the view of the Tribunal, then there is no necessity to go into the second question of law.
7. Heard Mr. Chandrasekaran, learned senior Central Government standing counsel appearing for the appellant and Mr. Arvind P.Datar, learned senior counsel appearing for the respondent.
8. This Court, on a careful consideration of the rival submissions, is in agreement with the contention raised by Mr.Arvind Datar, learned senior counsel on the scope of the appeal, more so, with regard to certain findings of the original authority as recorded by the Tribunal.
9. Para 35 of the order of the original authority, which has been extracted by the Tribunal, clearly goes to hold that the description of the item imported was strictly in accordance with the SION and what has been exported tally with the description in the licence. For better clarity, the relevant portion of the order is extracted hereinbelow :-
35. No doubt the description of the items imported are strictly in accordance with the SION. It is also correct that what has been imported and what has been exported tally with the description in the licence. It is also true that exempt materials have not been sold or transferred or disposed of. But none of these aspects are questioned by the DRI in the SCN. The main point on the basis of which the case has been built has been dealt with in para 19 of the SCN wherein the material size of the finished product and the material size of the raw-material have been described as specimens to show how the material imported could not have been used in the finished product that has been exported. This aspect has not been disputed. It is true that the notification speaks of materials required for the manufacture. But it is not deniable that the goods have been imported on the basis of actual user condition. The very fact that the actual user is required to give the technical specifications, characteristics and details in his declaration itself. So it is not sufficient, if the description alone tallies with SION. If that was the case, there was no need for SSS to give declaration in detail, why detail, no declaration would have been required at all since SION is in public domain. Unfortunately, both the DGFT & Customs Deptt., have accepted incomplete technical specifications and details and also have failed to compare the export product with the raw material that has been imported. Hence, the investigation by DRI & the case.
10. In the light of this finding, the Tribunal, on a perusal of the records, has held that the licences and documents were furnished at the time of export and also at the time of import of the raw materials for replenishment and such details were furnished to the licencing authority, which includes, DEEC passbook and other export documents. The said documents have been scrutinized by the DGFT and customs authorities and, thereafter, the goods were allowed clearance by an order passed by the appropriate officer. If that be the case, this issue ought to have been agitated by the Department within the period prescribed. The question of suppression does not arise in the light of the finding of the Commissioner himself, which clearly shows that goods imported and exported tally as per licence.
11. In the light of the above finding of the Commissioner, as extracted by the Tribunal, this Court is of the considered view that the Tribunal was justified in coming to the conclusion that there was no case of suppression. As a result, the entire cause of action for issuance of show cause notice does not survive. This Court is in entire agreement with the findings recorded by the Tribunal and is of the considered view that it warrants no interference. Accordingly, the first question of law answered against the Revenue and in favour of the respondent. In view of the answer to the first question of law in favour of the respondent, consequently, the 2nd question of law becomes academic and is not being dealt with.
12. Insofar as penalty is concerned, the Tribunal has held in favour of the respondent. Since this Court has sustained the order of the Tribunal insofar as the charge of suppression in favour of the respondent and against the Revenue, the question of penalty does not arise and that portion of the order of the Tribunal is also affirmed.
13. In the result, finding no merits warranting interference with the order of the Tribunal, the appeal is dismissed. However, there shall be no order as to costs.
(R.S.J.) (R.K.J.)
05.12.2014
Index : Yes/No
Internet : Yes/No
GLN
To
1. Commissioner of Customs (Exports)
Chennai.
2. The Customs, Excise & Service
Tax Appellate Tribunal
Shastri Bhavan Annexe, 1st Floor
No.26, Haddows Road, Chennai 600 006.
R.SUDHAKAR, J.
AND
R.KARUPPIAH, J.
GLN
C.M.A. NO. 1822 & 1823 OF 2006
05.12.2014