Custom, Excise & Service Tax Tribunal
(I) M/S. Aluminium Industries Limited ... vs Commissioner Of Customs, Central ... on 25 June, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE COURT - I Customs Appeal No: C/601 & 602/2008 (Arising out of Order-in-Original No:8/2008 Adjn.-cus. (Denovo) dated 19.6.2008 passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad-II Commissionerate, Hyderabad.) Date of Hearing: 25.06.2012 Date of decision: 25.06.2012 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes (i) M/s. Aluminium Industries Limited (AIL) (ii) K. N. Liaquat Ali, Sr. Manager, AIL Appellant Vs. Commissioner of Customs, Central Excise & Service Tax Hyderabad-II Commissionerate Hyderabad. Respondent
Appearance For the appellants : Shri T. Jagpathi Rao, Advocate For the respondents : Shri Ganesh Havannur, Additional Commissioner (AR) CORAM SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL) SHRI M. VEERAIYAN, HONBLE MEMBER (TECHNICAL) FINAL ORDER Nos._______________________2012 [Order per: P. G. Chacko]. M/s. Aluminium Industries Limited (hereinafter referred to as assessee) had manufactured various items of machinery and exported the same against advance licences obtained from the Joint DGFT, Hyderabad on the basis of purchase orders placed with them by foreign companies. Such exports were made in proportion to imports and export proceeds were realized in foreign exchange. However, the shipping bills which were filed in connection with the exports were drawback shipping bills instead of DEEC shipping bills and the same did not contain any reference to the applications submitted by the assessee to the Joint DGFT for issue of advance licences. All the exports were made during 1992-94. Later on, the Commissioner of Customs issued show-cause notice dated 31.3.1997 to the assessee and their Senior Manager on the basis of the results of investigations conducted by the DRI, (a) proposing to deny the benefit of Notification No.204/92-Cus. dated 19.5.1992 in respect of the goods imported under the advance licences and demanding customs duty of Rs.49,81,485/- in respect of such goods, (b) demanding interest on duty and (c) proposing penalty under Section 112/Section 114A of the Customs Act. An amount of Rs.5/- lakhs already paid by the assessee was proposed to be appropriated towards the above demand of duty. Order-in-original No.16/97-Cus. dated 30.12.1997 passed by the Commissioner in adjudication of the show-cause notice came to be set aside by this Tribunal vide Final Order No.408 and 409/2007 dated 27.3.2007 whereby the assessee was directed to file all the relevant documents and citations with the Commissioner and the latter was directed to decide the case by observing the principles of natural justice. The Commissioners order presently under challenge has been passed in the remanded proceedings. The learned Commissioner has appropriated the aforesaid amount of Rs.5/- lakhs and demanded the balance amount of duty of Rs.44,81,485/- from the assessee and has imposed on them a penalty of Rs.10/- lakhs. He has also imposed a separate penalty of Rs.10/- lakhs on the Senior Manger of the assessee. Both the penalties are under Section 112(a) of the Customs Act. The first appeal is by the assessee and the second by the Senior Manager.
2. The learned counsel for the appellants submitted that they had discharged a major part of their export obligation under the DEEC scheme and that the shortfall was only to the extent of value of Rs.26,21,216/- involving proportionate duty liability of Rs.11,17,067/-. He submitted that, if the payment of Rs.5/- lakhs was adjusted towards this liability, only an amount of Rs.6,17,067/- remained to be paid as duty. He submitted that there was no dispute regarding the exports made by the assessee or the proceeds realized in foreign exchange. It was also not in dispute that any drawback was not sanctioned on the shipping bills. Merely because the shipping bills were inadvertently filed as drawback shipping bills, the customs authorities did not make necessary entries in the DEEC book and, consequently, the assessee could not obtain Export Obligation Discharge Certificates (EODCs) from the Joint DGFT who issued the advance licences. According to the learned counsel, where the bona fides of the action of the assessee were not doubted, the benefit of Notification No.204/92-Cus. should have been allowed to the extent the export obligation was discharged. In the same lines, the learned counsel also argued that no penalty should have been imposed on the appellants.
3. The learned Additional Commissioner (AR) reiterated the findings recorded in the impugned order. He submitted that, in spite of the direction issued by this Tribunal to the assessee, they could not produce EODCs before the adjudication authority. Therefore, the demand of duty raised on them could not be resisted. He therefore prayed for sustaining the Commissioners order.
4. After giving careful consideration to the submissions, we are of the view that complete justice was not rendered to the assessee by the adjudicating authority in this case. In the remand order dated 27.3.2007, passed by this Bench, it was clearly observed thus: The exports were done under the advance licence scheme and they have produced enormous evidence to show that the export obligations were completed and the department has got powers to consider the exports made under the advance licence scheme. On this basis, this Bench, for the ends of justice, remanded the case, enabling the party to produce all the documents and citations before the Commissioner and directing the latter to pass a speaking order after observing the principles of natural justice. In the remanded proceedings, however, the adjudicating authority appears to have placed the entire burden of proof on the assessee by overlooking the fact that they could not obtain EODCs from the Joint DGFT due to the inaction on the part of the customs authorities in making the necessary entries of exports in the DEEC book.
5. It is on record that, though the shipping bills were filed as drawback shipping bills, the assessee did not press any claim of drawback and no drawback was sanctioned either. Only their claim under DEEC scheme was pursued. Accordingly, the assessee exported their final products and realized proceeds in foreign exchange. It is not in dispute that they discharged a major part of their export obligation under the DEEC scheme. Unfortunately, they could not produce proof of this in the form of EODCs because the customs authorities did not make the necessary entries in the DEEC book citing technical reasons. It is not the case of the department that the assessee was fraudulently claiming DEEC benefit. On the other hand, the tenor of the show-cause notice and the impugned order would indicate that the assessee has endeavoured to meet the requirements of the scheme to justify duty-free clearance of the goods imported under the advance licences. The extent to which the export obligation was discharged by the assessee is a fact, by now, clearly known to the customs authorities. Appropriate copies of the relevant shipping bills must be available in the department. The only reason stated for demand of duty from the assessee is absence of proof of discharge of export obligation. We have already noted the circumstances in which the assessee could not produce EODCs. In these facts and circumstances, we are not inclined to order one more remand. At this length of time, the appropriate authority in the department should, in a fair play, give the assessee what is due to them on the basis of the available documents.
6. In the above view of the matter, we direct the learned Commissioner to re-quantify the demand of duty licencewise proportionate to shortfall of exports. The duty so re-quantified should be paid with interest by the assessee without unreasonable delay. In the facts and circumstances of this case, the penalties on the assessee and their Senior Manger cannot be sustained and the same are set aside.
7. Appeal No.C/602/2008 is allowed and appeal No.C/601/2008 is disposed of in the above terms.
(Operative portion of this Order was pronounced in open court on conclusion of hearing) (M. VEERAIYAN) Member (Technical) (P. G. CHACKO) Member (Judicial) rv ??
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