Custom, Excise & Service Tax Tribunal
Khanna Paper Mills Ltd vs Cc, Amritsar on 5 January, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court -1
C/Stay/54000/2014 in appeal No.
C/53573/2014
Date of Hearing: 05/01/2015
(Arising out of OIO NO.04-06/CUS/ASR/2014 dt.31.3.2014 passed by the C.C. Amritsar)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
Khanna Paper Mills Ltd. Appellant
Vs.
CC, Amritsar Respondent
Present for the Appellant: Shri A.R. Madhav Rao, Advocate Present for the Respondent: Shri Govind Dixit, DR Coram: Honble Mr. Justice G. Raghuram, President Honble Mr.R.K.Singh, Member (Technical) FINAL ORDER NO. 50188/2015 PER: R.K.SINGH Stay application alongwith appeal has been filed against order-in-Original No.04-06/CUS/ASR/2014 dated 31.3.2014 in terms of which a customs duty demand of Rs.5,03,30,930/- along with interest was confirmed and the impugned imported waste paper collectively valued at Rs.4,23,23,896/- was order to be confiscated and as the goods were not available for confiscation redemption fine of Rs.4,23,23,896/- was imposed under Section 125 of Customs Act, 1962.
2. The facts, briefly stated are as under.
The appellants had imported waste paper at concessional rate of duty under Notification No. 21/2002-CUS dated 01/3/2002 as amended. The condition of the exemption was that the waste paper was to be used in the manufacture of the paper/paperboards/newsprint.
3. The appellants had pleaded that the impugned goods were destroyed in fire in their factory and therefore the said goods could not be used for the intended purpose and as the circumstances were beyond their control, they should not be visited with the impugned liability. The adjudicating authority did not accept their pleading and so the impugned demand was confirmed alongwith the redemption fine as above.
4. During the hearing the appellants essentially stated that I. As the impugned goods were destroyed in fire in their factory, it was impossible for them to use them for the intended purpose.
II. That the destruction happened in fire is not in doubt as is evident even from the impugned order which has not imposed any penalty on them.
III. The extended period is not invokable in their case as there has been no willful mis-statement or suppression of facts.
IV. As the goods are not available for confiscation, the redemption fine can not be imposed.
V. The appellants cited the following judgments in there favour:
(i) Vamsahara Paper Mills Vs. CC, Visakhapatnam, 2009 (247) ELT 751 (Tri.-Bang.),
(ii) Sami Labs Ltd. Vs. CC. Bangalore, 2007 (216) ELT 59 (Tri-Bang.),
(iii) CC, Bangalore Vs. Sami Labs Ltd., 2012 (278) ETL 601 (Kar.)
(iv) Indian Seamless Steel and Alloys Ltd. Vs. Union of India 2003 (156) ELT 945 (Bom.)
(v) Commissioner of Customs, Trichy-I Vs. Frontier Aban Drilling (India) Ltd. 2010 (254) E.L.T. 63 (Mad.)
(vi) Union of India Vs. Customs & Excise Settlement Commission Kolkata -2010 (254) ELT 647 (Bom.)
4.(1) The Ld. AR on the other hand contended that there is no equity in taxation laws and as the condition of the notification has clearly not been fulfilled in as much as the impugned goods have not been used for the intended purpose, the condition of exemption is not satisfied and hence the impugned duty and fine are clearly chargeable. He cited the following judgments to stress the proposition that exemption notifications are to be construed strictly and that there is no time limit for demanding duty on goods cleared under a bond.
(a) Mediwell Hospital And Health Care Pvt. Ltd. Vs. Union of India 1997 (89) E.L.T. 425 (S.C.),
(b) Bombay Hospital Trust Vs. Commissioner of Customs, Sahar, Mumbai 2005 (188) E.L.T. 374 (Tri.-LB),
(c) Sarabhai M. Chemicals Vs. Commissioner of Central Excise, Vododara- 2005 (179) E.L.T. 3 (S.C.)
4. (2) The ld AR also cited the judgment in the case of Western Tobacco Ltd. Vs. Commissioner of Central. Excise, Bhopal 2011 (263) E.L.T. 578 (Tri.-Del.) where-in CESTAT held that when the notification specifically requires utilization of goods for discharge of export obligation, the appellants failure to discharge export obligation on the ground that goods were destroyed and therefore could not have been so utilized is not a valid ground for non recovery of the differentially duty.
5. We have considered the contentions of both sides. We find that the exemption under Sl. No. 152 of notification No. 21/2002-CUS was available subject to the following conditions (a) the importer furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, that such imported goods will be used for the purpose specified and in the event of his failure to comply with this condition, he shall be liable to pay, in respect of such quantity of the said goods as is not proved to have been so used, an amount equal to the difference between the duty leviable on such quantity but for the exemption under this notification and that already paid at the time of importation: and
(b) the importer produces to the said Deputy Commissioner or Assistant Commissioner as the case may be, within six months or such extended period, as that Deputy Commissioner or Assistant Commissioner may allow, a certificate issued by the Deputy Commissioner of central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction the said good have been used in such unit, that the said goods have been so used. In the CESTAT Judgement in the case of Western Tobacco Ltd. (supra) which has been cited by the Respondents, the condition of exemption is notification No. 32/97-Cus was that the goods are utilized only for the discharge of the export obligation and no part thereof shall be sold, loaned, transferred or otherwise used or disposed of. CESTAT in that judgement had noted the difference in the wording of the condition of exemption in as much as the word only is conspicuously absent in the condition under Notification No. 21/2002-Cus. Thus the CESTAT judgment in the case of Western Tobacco Ltd. (supra) is distinguishable.
6. The ld. DR referred to the Judgement of Bombay Hospital Trust (supra) to advance the proposition that there is no time limit applicable for the purpose of recovery of duty when the goods have been cleared under a bond and that the Customs authorities have jurisdiction for demand in duty for violation of post importation condition. He also cited several judgments to the effect that the conditions of the exemption notifications and the language thereof have to be strictly construed to advance the proposition that once the exemption condition is not fulfilled the duty becomes recoverable. That the exemption notifications are to be strictly construed is an accepted position in law. We also do not have to quarrel with the proposition that when the goods are cleared provisionally under a bond, the duty can be demanded in terms of that bond and therefore the time limitation of section 28 of Customs Act is not applicable. In the present case also the condition of the notification is being strictly construed. The only point to be decided in the present case is whether when the fulfillment of the condition of the exemption notification becomes an impossibility because of circumstances beyond the importers control, the duty can be demanded. We find that in the case of Vamsahara Paper Mills Ltd. Vs. CCE, Visakhapatnam (supra), in similar, nay, identical circumstances, CESTAT held that when goods intended for use under relevant notification were destroyed in fire accident, demand was not sustainable.
In the case of Sami Labs Ltd. (supra) CESTAT Bangalore observed that accident is an act of God and therefore it is not correct to demand the duty foregone. This judgement of CESTAT was upheld by Karnataka High Court in the case of CCE Bangalore Vs. SAMI Labs Ltd. - 2012 (278) ELT 601 (Kar.). Bombay High Court in the case of Indian Seamless Steel and Alloys Ltd. Vs. Union of India also upheld the maxim lex non cogit ad impossibilia law cannot compel a person to do impossible..Unforeseen circumstances beyond the control of the assessee resulting is non payment of duty would not mean that there was failure to pay the duty by the due date. In the case of Union of India Vs. Customs & Central Excise Settlement Commission, Kolkata (supra), Bombay High Court observed that Settlement Commission has no power to grant immunity for payment of interest but at the same time it also had no power to enforce contract already frustrated or which does not exist in the eye of law. The Bombay High Court went on to add that the law of frustration of contract is well settled. Section 56 of Indian Contract Act deals with the contract. It lays down that the contract becomes void upon the act being (I) unlawful or (II) impossible and that the contract is discharged where its performance becomes impossible. CESTAT Bengalore in the case of Lanco Kondapalli Power Pvt. Ltd. Vs. CC Vishakhapatnam [2002 (149) ELT 941] held that when goods were not used elsewhere in India, and were destroyed in such conditions there is no additional liability for differential duty.
7. In the present case we find that the Adjudicating authority has not expressed any doubt that is was an accidental fire beyond the control of the appellants. Indeed the Commissioner has clearly held that it is not in dispute that the impugned goods were imported and after their receipts in the factory and entry in the appellants records, got destroyed in a fire accident on 12.6.2012. This destruction of the impugned goods by fire was an act God on which the noticee had no control. Having thus observed, the Adjudicating authority held that it would not be fair to penalize the noticee. This clearly shows that the bonafides of the appellants are not in doubt. Thus we find that not only the jurisprudence cited on the issue but also the Judgment of CESTAT in case of Vamsadhara Paper Mills Ltd. (supra) fully support the appellants case. Therefore we waive the requirement of pre-deposit and allow the appeal.
(Justice G. Raghuram) President (R.K. Singh) Member (Technical) K. Gupta 8