Customs, Excise and Gold Tribunal - Tamil Nadu
U-Foam Pvt. Ltd. vs Commissioner Of Customs on 24 April, 2001
Equivalent citations: 2001(75)ECC874
ORDER S.L. Peeran, Member (J)
1. By this applications, the applicants are seeking waiver of pre-deposit of duty of Rs. 10,29,481/- and an equal amount of penalty on the company and a further penalty of Rs. 1 lakh on the Managing Director of the appellants Company. Appellants were working under the Advance license scheme and imported raw materials for manufacture of final product and exporting the same. They have imported TDI duty free and utilized the same in the factory for manufacture of the final product, but they had sold the same in the domestic market on payment of duty. The department initiated proceedings against the appellants on the ground that they have violated the provisions of Notification No. 304/97-Cus. by diverting the same in to the domestic market after manufacturing the final product and there has been violation of the provisions of the Notification. It was pointed out to the Commissioner that Customs themselves have referred the matter to the DGFT about their manufacturing and sales in the domestic market vide their letter dated 25-2-94 and the DGFT after due consideration of the representation of the Customs and also the party's prayer granted extension of time to export the final product in terms of the advance licensing scheme which they have complied with in terms of the circular issued and not violated the TDI imported and utilized the raw material for manufacture of the final product and sold the same in the domestic market. The Commissioner has made an observation that the order of the CEGAT Madras in Dolphin Drugs (P) Ltd. Case vide Order No. 73/98, dated 1-5-1998 cited by the appellants is not applicable to the facts and circumstances of this case. In para 21 of his order he has further observed that in Dolphin Drugs case, CEGAT order observed that DGFT had allowed extension in spite of being aware of the fact that some resultant product was cleared into the domestic market even before export obligation was fully met implying that the contravention of clearing into domestic market was regularised. In the present case the appellants according to the Commissioner, made false declaration before DGFT that the imported duty free raw materials were available with them which meant that there was no contravention of the provisions of Notification No. 204/92-Cus. He has observed that the appellants did not make any mention about the clearance of the resultant product into the domestic market in their application for extension made to the DGFT. The learned Counsel pointed out that this observation of the learned Commissioner is totally incorrect and uncalled for. He drew our attention to the above judgment of the Tribunal to show that the Tribunal had not laid down any such ratio about the implication of the Dolphin Drugs case having brought to the notice of the DGFT about diversion of the goods in the domestic market. He pointed out that in the present case in fact the department had initially written to the DGFT about this fact and the Commissioner therefore was not justified in his observation and drawing observation against the judgment of the Tribunal contrary to the law laid down and hence the order of the Commissioner is totally bad in law. He submitted that the ratio of Dolphin Drugs case (supra) is binding and the issue is covered and since there is no Revenue implication the appeal itself may be disposed of in their favour in terms of the ratio laid down by the Tribunal.
2. Shri S. Arumugam, learned DR pointed out that at this prima facie stage it cannot be said that the appellants had informed the DGFT about the diversion of the goods in the domestic market. He submits that in order to safe guard the Revenue interest, the appellants may be put to terms.
3. On consideration of the submissions, we are not in a position to agree with the learned DR's contention. The Commissioner was not justified in drawing inference from the Dolphin Drugs case judgment rendered by the Tribunal. The ratio has to be applied in to to and in entirety without drawing any inference and presumption and assumption as has been done in the impugned order. Be that as it may, a serious error has been committed by the Commissioner in his order. In the present case, he has concluded that the appellants did not inform the DGFT and they have made false declaration. On what basis the Commissioner has come to this conclusion is not on record. Therefore, it is mere assumption and presumption, more particularly because the appellants have pointed out that the Commissioner's office itself had referred the matter to the DGFT vide their letter dated 25-2-94 which is on record. DGFT had taken due consideration of the representation and granted extension of time to fulfil the export obligation. If this be the factual position, the conclusion arrived at by the Commissioner is incorrect. Therefore, by accepting the learned Counsel's submission and in the light of the Tribunal judgment, we are of the considered view that waiver of pre-deposit is required to be granted and the recovery stayed.
4. As the issue lies in a short compass, we are of the considered view that the impugned order is required to be set aside and the matter remanded to the Commissioner for de novo consideration. He should pass a fresh order without making any observation contrary to the conclusion arrived at in the Tribunal's order in the case of Dolphin Drugs (supra). If the evidence on record shows that that the Customs Department has referred the matter to the DGFT and the DGFT has granted extension of time to fulfil the export obligations, we do not find any merit in the Commissioner's finding that the export obligation has not been fulfilled. If there is fulfilment of the export obligation and the DGFT has granted extension of time the Commissioner has no power to challenge the said decision of the DGFT because the reference was made by the Commissioner himself. In this view of the matter, the impugned order is set aside and the matter remanded for de novo consideration after providing opportunity of hearing to the appellants, in accordance with law and decide the matter afresh.