Custom, Excise & Service Tax Tribunal
-Kolkata(Port) vs Cschk-Soma Jv Hyderabad on 20 May, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Customs Appeal No.75600 of 2021
And
Customs Cross Objection No. 75247 of 2021
[Virtual Mode of Hearing]
(Arising out of Order-in-Original No.KOL/CUS/PR.COMMR/PORT/22/2021 dated
07.04.2021 passed by Principal Commissioner of Customs (Port), Kolkata.)
Pr. Commissioner of Customs (Port), Kolkata
(15/1, Strand Road, Custom House, Kolkata-700001.)
...Appellant
VERSUS
M/s. LIMAK-SOMA JV, Hyderabad
.....Respondent
(8-2-623/5/1/1/, Avenue 4, Road No.10, Banjara Hills, Hyderabad-500034.) WITH
(i) Customs Appeal No.75601 of 2021 And Customs Cross Objection No.75245 of 2021 (Pr. Commissioner of Customs (Port), Kolkata vs. M/s.CSCHK-SOMA JV, Hyderabad); (ii) Customs Appeal No.75602 of 2021 And Customs Cross Objection No.75246 of 2021 (Pr. Commissioner of Customs (Port), Kolkata vs. M/s.Soma Enterprise Limited, Hyderabad);
(iii) Customs Appeal No.75667 of 2021 And Customs Cross Objection No.75278 of 2021 (Pr. Commissioner of Customs (Port), Kolkata vs. M/s.CGGC-SOMA JV, Hyderabad);
(i) (Arising out of Order-in-Original No.KOL/CUS/PR.COMMR/PORT/21/2021 dated 01.04.2021 passed by Principal Commissioner of Customs (Port), Kolkata.)
(ii) (Arising out of Order-in-Original No.KOL/CUS/PR.COMMR/PORT/20/2021 dated 31.03.2021 passed by Principal Commissioner of Customs (Port), Kolkata.)
(iii) (Arising out of Order-in-Original No.KOL/CUS/PR.COMMR/PORT/23/2021 dated 17.05.2021 passed by Principal Commissioner of Customs (Port), Kolkata.) APPEARANCE Shri Fiaz Ahmed, Authorized Representative for the Revenue Shri T.Jagapathi Rao, Consultant for the Respondent (s) 2 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 CORAM: HON'BLE SHRI R. MURALIDHAR, MEMBER(JUDICIAL) HON'BLE SHRI RAJEEV TANDON, MEMBER(TECHNICAL) MISCELLANEOUS ORDER NO. 75380-75383/2025 FINAL ORDER NO. 76356-76359/2025 DATE OF HEARING : 03.04.2025 DATE OF DECISION : 20.05.2025 Per : RAJEEV TANDON :
The Revenue has filed the impugned appeals in response to which appellants have also filed Cross Objections in the matter. Vide Order Order-in-Original dated 07.04.2021, the Principal Commissioner of Customs (Port), Customs House, Kolkata confirmed collectively a differential duty amount of Rs.4,68,95,248/- along with interest in respect of imports effected by the appellant at Mumbai Air Cargo, Kolkata Port and Nava Seva Port. The ld.Commissioner also imposed penalty under section 112A on M/s. Limak-Soma Joint Venture, Hyderabad. He however did not confiscate the subject goods having assessable value of Rs.13,61,51,797/- despite holding them as liable to confiscation under section 111(o) of the Customs Act, 1962 1 , as the said goods were not available for confiscation and thus having not imposed redemption fine in the matter.
2. The Revenue being aggrieved by the fact of not confiscating the goods have filed four appeals against each of the appellants, - M/s.
Limak-Soma JV, Hyderabad, M/s CHCHK-Soma JV, Hyderabad, M/s. Soma Enterprise Limited, Hyderabad and M/s. CGGC-Soma JV. The 1 The Act 3 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 parties (respondents in the appeals filed) have also filed Cross Objections raising their contentions.
3. The facts of the case are that M/s. Limak-Soma JV, Hyderabad, M/s CHCHK-Soma JV, Hyderabad, M/s. Soma Enterprise Limited, Hyderabad and M/s. CGGC-Soma JV imported machinery and equipment during the period 2005, 2006 and 2007 under cover of fifteen Bills of Entry for execution of some specified projects aided by the Asian Development Bank and approved by the Govt. of India. The goods were thus cleared under Nil rate of duty vide Notification No.84/97-CUS2 dated 11.11.1997 as amended. It is not in dispute that the said imported goods were utilized for construction of a specified project, which work was completed. Vide Sl.No.6 of Notification No.13/2020-CUS(NT) C.A./(DRI) dated 03.02.2020 the impugned adjudication authority was appointed as common adjudication authority for adjudicating the show cause notice issued in the matter.
4. The Ld.Consultant for the respondents in the matter has pleaded that at the time of import of the goods there was no post import condition stipulated in the said Notification No.84/94-CUS dated 11.11.1997. They submitted that it was subsequently amended during the year 2008 and 2014 by issuance of Notification No.24/2008-CUS dated 01.03.2008 and 22/2014-CUS dated 11.07.2014 incorporating certain post-import conditions into the parent Notification, with retrospective effect, making it applicable for goods imported prior to March 2008. As can be seen from records, the Revenue based on the 2 The Notification 4 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 amended provisions with retrospective effect issued show cause notice in respect of the aforesaid goods cleared between 2005 and 2007. After following due process, the Principal Commissioner confirmed the duty amount leviable along with interest, besides imposing penalty as stated above.
5. As for the original exemption the Notification No.84/1997-CUS dated 11.11.1997, the goods imported by availing Customs duty exemption were required to be used for execution of the project. An explanation vide Notification No.24/2008-CUS dated 01.03.2008 was added to the said Notification, clarifying that the benefit under the said Notification in respect of goods supplied for projects financed by UN or international organizations is available when the goods brought into projects are not withdrawn by the supplier or contractor and the express goods are required for execution of projects shall be construed accordingly. Subsequently, another amendment was introduced vide Notification No.22/2014-CUS dated 11.07.2014, inter alia providing that the importer may transfer the goods imported prior to 01.03.2008 for which the said benefit was availed under original Notification, to a new project subject to certain conditions or re-export of the goods or payment of Customs duties at depreciated values.
6. It is therefore the case of the Revenue that in the instant matter upon completion of the project some of the goods which were imported were diverted another ADB/non ADB projects and utilized for utilization of the project while some of the goods imported in terms of the said concession extended under Notification No.84/1997-CUS dated 5 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 11.11.1997 were sold off. The Revenue therefore submits that the respondent did not seek any permission from appropriate authority at the time of diversion/transfer of the goods to other projects nor did they obtain any certificate from the competent authority that the goods were no longer required for the project. In short to say that the Revenue contends that the noticee having violated the condition of the said Notification would not be eligible for benefit of import of said goods at nil rate of duty.
7. Amongst the three issues raised at the time of adjudication, two of the issues regarding appropriateness of adjudicating authority and the stay granted by the hon'ble High Court of Judicature at Hyderabad, no longer survive. The only question therefore now remains is with regard to the admissibility of the imported goods to the benefit of duty in terms of Notification No.84/97-CUS dated 11.11.1997.
8. The respondents have contended before the lower authority that as the goods were imported between April and December 2005, the limitation prescribed in terms of section 28 expired in December 2010 whereas the notice has been issued for recovery of duties not levied only on 26.11.2019 i.e. after more than thirteen years from the date of clearance of the goods and that therefore there is no provision in the statute to issue recovery for duty after such prolong period. The ld.adjudicating authority has contended that in terms of Notifications post import condition there was continuous obligation on the part of the importer inasmuch as the goods imported under the said Notification were meant to be used in the stated project. He is therefore of the view 6 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 that diversion of goods from the stated project would amount to violation of the Notification conditions rendering inadmissibility of the said Notification and the respondent liable for payment of duty as applicable. In support of his contention the ld.adjudicating authority has relied upon the decision of the hon'ble apex court in the case of Mediwell Hospital and Health Care Pvt.Ltd. v. Union of India [1997 (89) ELT 425 (SC)] and Commissioner of Customs (Import), Mumbai v. Jagdish Cancer & Research Centre [2001 (132) ELT 257]. Accordingly, the lower authority has admitted at tiding over the limitation aspect.
9. We also find from record that the respondent had before the lower authority also raised the plea and relied upon sub-Section (2A) of section 25 of the Customs Act, 1962, to submit that any explanation inserted in Notification issued under sub-section (1) or sub-section (2) of section 25 of the Customs Act, 1962 after the statutory limit of one year is arbitrary and ultra vires of section 25 of the Customs Act, 1962. As the explanation was inserted with effect from 01.03.2008 by Notification No.24/2008-Cus.; dated 01.03.2008 in the Notification No.84/97-Cus,; dated 11.11.1997 issued under sub-section (1) of the section 25 of the Customs Act, 1962, i.e. after more than one year of the issue of the Notification No.84/97-Cus. They submit that the Explanation inserted in the Notification with effect from 01.03.2008 is therefore not applicable for the goods imported by them during April, 2005 to December 2005. Delving into the genesis, giving rise to the impugned Notification and its subsequent amendments the 7 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 ld.Commissioner has arrived at a finding that new additional conditions in respect of imports made prior to 01.03.2008 were imposed vide Notification No.22/2014-CUS and, as the respondent had transferred the goods to a new project without the request from the appropriate authority and as that the said goods were no longer required for the stated project. This according to the adjudicating authority was in contravention of the eligibility to said exemption Notification.
10. The ld.Consultant for the respondents have submitted before us that though the goods were cleared by them in terms of aforesaid Notification for use in the stated project and which position is not in dispute, the said goods were not cleared in terms of any bond, bank guarantee, having not been solicited by the department for extending to them the benefit of the said Notification. It is their case that the goods were cleared to them by the department on the basis of exemption certificates issued by Govt. of India and under bond/guarantees were executed at the time of clearance of the goods. The imported goods were used for the specified projects, which were since completed. As the impugned notification had no post import condition at the time of import, the respondent upon completion of the said project utilized the imported goods for executing some approved projects and other projects.
11. The fact that no bond/bank guarantee was obtained by the department from the respondent is a very material factual contention. We find that the revenue's reliance therefore on Mediwell Hospital and Health Care Pvt.Ltd. v. Union of India (supra) and Commissioner of 8 Customs Appeal Nos.75600, 75601, 75602 & 75667 of 2021 Customs (Import), Mumbai v. Jagdish Cancer & Research Centre (supra) would not arise for once. There are a plethora of orders of various judicial bodies to hold that when the goods are not available for confiscation, they cannot be directed to be confiscated. For the proposition we rely on the case law of Atul Kaushik v. Commissioner of Customs (Export), New Delhi [2015 (330) ELT 417 (T)] and Chinku Exports v. Commissioner of Customs, Calcutta [1999 (112) ELT 400 (T)]. Moreover, we also find sufficient merit in the contention of the ld.Consultant inviting our attention to sub-section 2A of Section 25 wherein the amendment was introduced to the to the parent Notification cannot be sustained in the present matter.
12. The fact that the goods were not cleared on execution of any bond/bank guarantee cannot bring about a continuous obligation for the violation of which the same can be enforced by way of a continuing obligation as held by the hon'ble apex court referred to supra.
13. In view of the foregoing discussions, we find no merit in the appeals filed by the Revenue. The same are therefore dismissed and the Cross Objections filed by the respondents also get disposed of in the aforesaid terms.
(Order pronounced in the open court on 20.05.2025.) Sd/ Sd/ (RAJEEV TANDON) (R. MURALIDHAR) MEMBER (TECHNICAL) MEMBER (JUDICIAL) sm