Custom, Excise & Service Tax Tribunal
National Steel & Agro Industries Ltd vs Commissioner Of Customs (Export ... on 19 May, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.C/584/08 (Arising out of Order-in-Original No.CAO No.29/2008/CAC/CC/KAP dated 31/01/2008 passed by Commissioner of Customs (Export Promotion), Mumbai) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. P.R. Chandrasekharan, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should 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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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National Steel & Agro Industries Ltd., Appellant
Vs.
Commissioner of Customs (Export Promotion)
Mumbai Respondent
Appearance:
Shri.V. Sridharan, Advocate for appellant
Shri.A.K.Prasad, Jt. CDR, for respondent
CORAM:
Honble Mr. S. S. Kang, Vice President
Honble Mr. P.R.Chandrasekharan, Member (Technical)
Date of Hearing : 19/05/2011
Date of Decision : 19/05/2011
ORDER NO
Per: P.R. Chandrasekharan
1. This appeal is directed against the order-in-original No.29/2008/CAC/CC/KAP dated 31/01/2008 passed by the Commissioner of Customs (Export promotion), New Customs House, Mumbai-1.
2. Vide the said order, the Commissioner confiscated HR Coils weighing 1795.014 MTs valued at Rs.2,25,01,527.69 and CR Coils weighing 10350.450MTs valued at Rs.2,73,38,443/- under the provisions of Section 111 (o) of the Customs Act, 1962 and in lieu of confiscation he imposed a fine of Rs.1.00 crore on the appellant under Section 125 (1) of the Customs Ac, 1962. The Commissioner also confirmed a duty demand of Rs.7,79,11,501.79 on the appellant in terms of Customs Notification No.51/2000 dated 27/04/2000 and 43/2002 dated 19/04/2002 along with interest thereon. The Commissioner also imposed a penalty of Rs.25 lakhs on the appellants under Section 112 of the Customs Ac, 1962.
3. The Ld. Counsel appearing for the appellant submits that in the show-cause notice dated 09/07/2007 relating to the aforesaid order the ground alleged to say that the appellant had diverted 10350.450 MTs of CR Coils imported under five advance licences availing duty exemption under Notification Nos.51/2000 dated 27/04/2000 and 43/2002 dated 19/04/2002 and the appellants/importer had diverted 1795.014 MTs of HR Coils imported duty free under the advance licences by availing duty exemption under the aforesaid notifications. The diversion was done by unauthorisedly selling the duty free imported material by simply cutting the Coils into sheets or even as it is and hence violated the condition of the advance licences. The resultant product as per advance licences were CR galvanized sheets/coils in respect of both type of imported raw materials viz., HR Coils and CR Coils and the importer had no facility to manufacture CR sheets or galvanize the same in their unit at Taloja as only cutting facility is available there. On this basis the show-cause notice demanding duty and proposing other penal consequences were issued. However, the impugned order has been passed on a totally different ground, which is evident from para 19 of the impugned order, which is reproduced below:-
The present proceedings involve a claim for the benefit of an exemption notification and in which case it is for the person who claims the benefit to prove satisfactorily that he/she is eligible for the same. In the present case, as seen from the documents filed during the course of hearing, the importer had also cleared the HR/CR coils as such during the relevant period. For instance, the ER-1 forms for the different period state that they had cleared HR coils/CR coils (imported). While these entries are to be found regularly during the various months, some specific instances can be cited. In the DR-1 forms for the period from November 2004 to March 2005 and in the ER-1 form for the month of May 2005, the documents merely stated that input has been cleared as such. The importers claim is that during the material period, they had imported duty paid HR/CR coils for much larger quantities than that is covered in the SCN and therefore, it has tobe presumed that only duty paid imported materials were sold as such. Such a presumption is not possible in interpreting a fiscal enactment. In other words, the documents filed by the importer himself reveals that they had cleared the imported material as such but at the same time these documents do not show that what were sold were only the duty paid imported material. To put it otherwise, the importer has failed to adduce evidence to claim the benefit of an exemption notification. Hence, it has to be presumed that all the allegations to this effect in the show cause notice are correct. Besides any company if not for Customs or Excise purposes, even otherwise would have maintained some sort of accounts/clear documents showing the utilization of the duty free/duty paid material. Having held so, it is immaterial to dwell upon the argument whether the cutting and slitting of coils amount to manufacture or not and the extent to which the Boards circular will apply in this case. The application or otherwise of this circular will arise only when it is conceded that the imported materials have been satisfactorily accounted as having been utilized in the manufacture of steel coils and sheets. In the absence of such a conclusion, examining the concept of manufacture and its consequences thereof does not arise.
4. The Ld. Counsel for the appellant submits that the ground alleged in the show-cause notice is totally different from the ground on which the demand has been confirmed in the impugned order and, therefore, the impugned order is no sustainable in law. The Ld. Counsel would further submit that they had maintained detailed accounts of the receipt, consumption and sale of the goods imported under the advance licences in the format prescribed under the advance licence scheme and the corresponding notifications, which would clearly shows that whatever material has been imported and utilized for the purposes for which they were brought in as permitted by the advance license scheme. In addition to the imports under the advance license as mentioned above, the appellant had also imported similar products under DFRC scheme on payment of appropriate countervailing duty and they had cleared the materials under DFRC scheme as such by payment of appropriate duty by reversing the Cenvat credit taken. These clearances were also indicted in the monthly ER-1 returns, the Commissioner while passing the order mistook these clearances and came to the conclusion that the materials imported duty free under the DEEC scheme has been cleared as such and they have evidences by way of records, which clearly shows that whatever has been imported under the advance licensing (DEEC) scheme has been utilized in the month of CR Coils, which are galvanized and also CR/HR sheets by slitting the coils and these sheets have been cleared on payment of appropriate Central Excise duty as cutting and slitting of the said coils were held to be manufactured by the Central Board of Excise & Customs, who had issued a Circular to that effect in 2001 vide Circular dated 07/09/2001. In the said Circular it was clarified by the Central Board of Excise & Customs that cutting of HR/CR coils of iron or non-alloy steel into sheets or slitting thereof will amount to manufacture. The said circular was modified in the year 2005 when the said circular was withdrawn. Therefore, it is the appellants contention that they have not cleared the imported materials as such into the market but the same have been cleared after undertaking various manufacturing processes and, therefore, they have not violated any of the terms and conditions of the notifications. However, they submit that they have not produced the books of accounts before the Commissioner at the time of adjudication as the show-cause notice was issued on the ground that the slitting and cutting did not amount to manufacture and, therefore, the clearances of the imported material after slitting and cutting and converting them into sheets did not amount to manufacture and, therefore, they have violated the conditions of the impugned notifications.
5. The Ld. Jt. CDR on the other hand would submit that the licences were issued in the appellants name in respect of their Indore unit and the goods have been transferred to Taloja unit for undertaking the various processes. In terms of condition No.VII prescribed notification No.43/2002 the said licences and the materials shall not be transferred or sold inasmuch as they have transferred the material to their own unit at Taloja. They have violated the terms and conditions of the notification and, accordingly, they are not eligible for the benefit under the said notification.
6. The Ld. Jt. CDR also submits that as early as 2003, the Delhi High Court had struck down the Boards Circular stating that cutting and slitting of coils into sheets would amount to manufacture and, therefore that was the law prevailing at that point of time and the said judgement of the Delhi High Court was known to everyone including the appellant and, therefore, they cannot take the plea that they were under the impression that cutting and slitting of coils into sheets would amount to manufacture. In view of the above, the Ld. Jt. CDR would argue that the order of the Commissioner is legally sustainable.
7. We have carefully considered the submissions made by both sides.
8. From the show-cause notice it is evident that the ground on which duty has been demanded is that the cutting and slitting of coils into sheets does not amount to manufacture and, therefore, the imported materials have been diverted as such albeit they have been subjected to the process of cutting and slitting and, therefore, the appellant is not entitled for the benefit of duty exemption under the various Customs notifications applicable to goods imported under the advance licensing scheme. However, while passing the order, the Ld. Commissioner has confirmed the demand on a totally different ground saying that as per the ER-1 return submitted by the assessee they had cleared the imported materials as such and the documents should not show that what they were sold only the duty paid imported materials. Thus, we find that there is an anomaly in the ground alleged in the show-cause notice and the grounds on which the demands were confirmed in the adjudication order. The appellant has submitted that they have maintained a detailed records, which would clearly reveal that whatever has been imported by them under the advance licensing scheme has been subjected to various process amounting to manufacture as clarified by the Board in the Circular dated 07/09/2001. Since the Commissioner has not had the occasion to examine these documents and satisfy himself that the imported materials under the advance licensing scheme has been correctly utilized as per the terms and conditions of the said scheme read with relevant notifications, the matter has to be go back to the adjudicating authority for denovo consideration in the light of the additional ground and evidences submitted by the appellants.
9. In view of the above, we are remanding the matter for a fresh consideration by the adjudicating authority. Needless to say that the appellant would be granted reasonable opportunity to submit their defence along with the evidences they rely upon. Accordingly, the order No. 29/2008/CAC/CC/KAP dated 31/01/2008 is set aside and the matter is remanded for denovo consideration. Thus, the appeal is allowed by way of remand.
(Pronounced in Court) (S.S. Kang) Vice President (P.R. Chandrasekharan) Member (Technical) pj 1 2