Custom, Excise & Service Tax Tribunal
M/S. Adani Wilmar Limited vs Commissioner Of Customs, Jamnagar ... on 16 June, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : C/573,589,714/2006 (Arising out of OIO-02/COMMISSIONER/2006 dated 13.02.2006, passed by Commissioner of Customs, Jamnagar) M/s. Adani Wilmar Limited : Appellant (s) Shri Devan Mehta Shri Chetan R. Thakkar VERSUS Commissioner of Customs, Jamnagar (Prev.) : Respondent (s)
Represented by :
For Appellant (s) : Shri Hardik Modh & Shri Rahul Gajera, Advocates For Respondent (s) : Shri Alok Srivastava, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical) 1 Whether Press Reporter 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical) Date of Hearing / Decision : 16.06.2015 ORDER No. A/10796-10798/2015 Dated 16.06.2015 Per : Mr. P.K. Das;
These appeals are arising out of a common order and therefore, all are taken up together for disposal.
2. The relevant facts of the case, in brief, are that M/s. Adani Wilmar Limited (in short Importer) had imported a consignment of Crude Palm Oil (in short CPO) per vessel MT ERMAR at Gujarat Adani Port Limited, Mundra. They have cleared the goods on the basis of Telegraphic Release Advice (TRA), issued vide Customs House, Nhava Sheva, Mumbai and the Duty Entitlement Pass Book (DEPB) Licenses. The importer filed the bills of entry for clearance of 648.565 MTs of CPO, out of which 365.528 MTs were released on payment of duty in cash and the balance quantity of 283.037MTs of CPO was cleared by filing 12 DEPB license/ TRAs. The officers of Directorate of Revenue Intelligence (DRI), during investigation on 20.11.2004, found that the importer had utilised the excess credit of Rs. 44,67,714/-, in violation of the condition of DEPB License read with policy Circular No. 26 (RE-99) dated 09.8.1999 in respect of imported goods weighing 283.037 MTs lying in the Port, which was detained by the DRI officers. Subsequently the seized goods were released subject to 20% of the goods were detained for TRA verification.
3. A show cause notice dated 19.7.2005 was issued proposing demand of duty alongwith interest and to impose penalty on the importer and to impose penalty on the co-noticees. By the impugned order, the adjudicating authority denied the benefit of exemption Notification No. 45/2002-Cus dated 24.4.2002 and confirmed demand of duty of Rs. 44,67,714/- alongwith interest and imposed penalty of equal amount of duty on the importer. It has also confiscated goods and imposed redemption fine of Rs. 9 Lakhs. The amount deposited by the importer during the investigation has been appropriated. The adjudicating authority also imposed penalty of Rs. One lakh each on Shri Chetan R. Thakkar, Manager of M/s. NFPL, Gandhidham (CHA) and Shri Deven Mehta, Proprietor of Ami Impex, Mumbai, who sold the license to the importer.
4. Shri Hardik Modh and Shri Rahul Gajera, learned Advocates are appearing on behalf of the importer and Custom House Agent respectively. None appears on behalf of Shri Deven Mehta. There is no application for adjournment. Hence we proceed to decide all the appeals.
5. Shri Hardik Modh, learned Advocate on behalf of the importer submits that the appellant cleared the goods on the basis of 7 TRAs issued by the Customs House, Nhava Sheva, Mumbai where the condition of the DEPB license was not mentioned. It is submitted that the TRAs are at par with DEPB license. There is no restriction to use DEPB credit on the basis of TRAs and therefore, the demand of duty is not justified. The entire case was made out on the basis of use of excess DEPB credit on the basis of Hand Book of Procedure, which is not mentioned in the exemption notification and Policy. The demand of duty can not be sustained on the basis of Hand Book of Procedure and it cannot go beyond the Policy and Notification. TRAs are at par with DEPB license and relied upon the decision in the case of Tata Iron and Steel Company Limited vs. Commissioner of Customs, (Air Port), Kolkata 2003 (154) ELT 477 (Tri. Kolkata). Regarding Hand-book procedure cannot go beyond the Policy and exemption notification, he relied upon the following decisions:-
(a) Hemani Industries vs. Commissioner of Customs, Calcutta 1996 (83) ELT 617 (Tribunal).
(b) TIL Limited vs. Commissioner of Customs, Calcutta 2001 (132) ELT 445 (Tri. Kolkata).
6. The imposition of penalty on the Importer, the learned Advocate drew the attention of the Bench to the relevant portion of the findings of the adjudicating authority. He submits that the adjudicating authority had proceeded on the basis of statement of Shri Deven Mehta, Proprietor of M/s. Ami Impex. The appellant in his statement categorically stated that they were not aware of the condition of the DEPB scrip and he drew the attention of the Bench to Para 1.18.4 of the adjudication order. It is submitted that the findings of the adjudicating authority in respect of imposition of penalty on the importer, are contrary to the records. It is submitted that they have claimed exemption and it is the duty of the department to examine eligibility of exemption and there is no intention to evade payment of duty. He relied upon the decision of the Hon'ble Supreme Court in the case of Northern Plastics Limited vs. CCE 1998 (101) ELT 549 (SC). He also submits that penalty was imposed under Section 114A of the Customs Act and option to pay penalty 25% of the duty, was not given.
7. Shri Rahul Gajera, learned Advocate appearing on behalf of Shri Chetan R. Thakkar, employee of CHA submits that the penalty was imposed for violation of CHA Regulation, for not being advising the importer to comply with the provisions, which is not correct under Section 112(a) of the Customs Act. It is submitted that there is no material available that the appellant is involved in alleged irregularity. He relied upon the decision of the Tribunal in the case of World Cargo Movers vs. Commissioner of Customs, New Delhi 2002 (139) ELT 408 (Tri. Del.) and Prime Forwarders vs. Commissioner of Customs, Kandla 2008 (222) ELT 137 (Tri. Ahmd.).
8. The Learned Authorised Representative on behalf of the Revenue submits that there is no conflict between the Hand Book, Policy and exemption notification. He drew attention of the Bench to Para 4.3 of the Policy. It is submitted that the Hand Book has expressly stipulated the restriction, which is within the Policy and Notification. He submits that the importer was well aware of the restrictions of DEPB credit and the conditions in exemption notification. Hence the demand of duty is justified. It is also submitted that TRA contained the FOB Value and therefore submission of the learned Advocate that they were not aware, cannot be sustained. He submits that all the appellants were directly involved for availing irregular DEPB credit and the penalties were rightly imposed.
9. After hearing both the sides and on perusal of the records, we find that Para 4.3 of the Policy provides, the objective of DEPB is to neutralise the incidence of customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product. The Notification No. 45/2002-Cus allowed exemption to imports made under DEPB from Customs duty, Additional duty and Special Additional Duty, subject to fulfilment of the conditions contained therein. The learned Advocate on behalf of the appellant drew attention of the Bench to Clause -6 of Para -3 of the Notification which provides that where benefit of exemption from duty is claimed by a person, who is not a DEPB holder, such benefit shall be permissible only against specific amount of credit transferred by a DEPB holder to such person. The main contention of the learned Advocate is that the appellant purchased the DEPB from open market and the Customs authorities issued TRAs on the basis of DEPB license and there is no indication of restriction of DEPB credit. In this context, Hand Book of Procedures, Part-II (2002-2007), Para 4.46 of Chapter 4 provides as under:-
4.46. Restriction on use of DEPB Credit.
The CIF value of imports affected under the DEPB shall not exceed the FOB value against which the DEPB has been issued. The licensing authorities shall incorporate an endorsement to this effect on the DEPB and shall also mention the FOB value in (Indian rupees) on the DEPB. If we read Para 4.3 of the Policy and the Hand Book harmoniously, it is clear that the purpose to grant duty credit against export product is to allow neutralise the incidence of Customs duty on the import content of the export product. To sum-up, the CIF Value of import would not exceed the FOB value against the export. So, we agree with the submissions of the learned Authorised Representative for the Revenue that the restriction to use of DEPB credit is not beyond the Policy and notification. Hence, there is no need to discuss the case laws relied upon by the learned Advocate. The demand of duty alongwith interest on the importer is sustainable.
10. We find from the adjudication order that all the DEPB licenses have an endorsement that CIF value of imports effected under this DEPB shall not exceed the FOB value against which the DEPB has been issued. It is clearly evident that the restriction on use of DEPB credit already mentioned in the DEPB license. So, we do not find any force in the submissions of the learned Advocate that the appellant was not aware of restriction of use of DEPB credit. There is no dispute on the fact that the appellant purchased this DEPB from the open market and restriction of use was categorically mentioned therein. The lapse on the part of the Customs authorities to mention the same on TRAs, would not waive the penal consequences on the importer. Hence, imposition of penalty on the importer is warranted. Learned Advocate strongly relied upon the decision of the Hon'ble Supreme Court in the case of Northern Plastics Limited (supra). In that case, it has been observed that where the appellant was entitled to get the benefit of exemption under the notification, was a matter of belief of the appellant and not a matter of any other particular with respect to the goods. In the present case, there is no dispute on the interpretation of the exemption notification and restriction on use of DEPB credit as per Hand Bbook was mentioned in the DEPB license. Hence the case law relied upon the appellant is not applicable in the present case.
11. Regarding imposition of penalty on CHA, we find force in the submission of the learned Advocate. There is no evidence available on record that Custom House Agents was aware of the alleged irregularity. The adjudicating authority observed that the appellant has breached the conditions of CHA Regulation, 2004. In our considered view, the same would be adjudicated under provisions of Regulation 2004. Hence, the imposition of penalty on the CHA is not warranted. The imposition of penalty on Shri Deven Mehta, learned Authorised Representative for the Revenue submits that he had sold license to the importer. Learned Authorised Representative submits that he had convinced the appellant to do such irregularity. We are not impressed with the submission of the learned Authorised Representative. As there is no material available on record against him, the imposition of penalty on Shri Devan Mehta is not justified.
12. In view of the above discussion, we upheld the demand of duty alongwith interest and penalty on the importer M/s. Adani Wilmar Limited. We direct that the appellant would be given option to pay penalty 25% of the duty, subject to payment of entire amount of duty alongwith interest and the penalty within 30 days from the date of communication of this order. The penalty imposed on Shri Devan Mehta and Shri Chetan R. Thakkar are set-aside and both the appeals are allowed. The appeal of M/s. Adani Wilmer Limited is rejected. Miscellaneous application for extension of stay is dismissed as infructuous.
(Dictated and pronounced in the Court)
(P.M. Saleem) (P.K. Das)
Member (Technical) Member (Judicial)
..KL
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