Custom, Excise & Service Tax Tribunal
Nuance Group (India) Pvt. Ltd vs Cce&St, Hyderabad-Ii on 10 July, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Single Member Bench Court I Appeal No. C/20207/2014 (Arising out of Order-in-Appeal No. 57/2013(H-II)Cus, dated 20.09.2013 passed by Commissioner (Appeals), CCE&ST, Hyderabad-II) Nuance Group (India) Pvt. Ltd. ..Appellant(s) Vs. CCE&ST, Hyderabad-II ..Respondent(s)
Appearance Shri Japa Bajpeyi, Manager for the Appellant.
Shri Arun Kumar, Dy. Commissioner/AR for the Respondent.
Coram:
Honble Mr. M.V. Ravindran, Member(Judicial) Date of Hearing : 07.06.2017 Date of decision: 10.07.2017 FINAL ORDER No. 31055/2017 [Order per: Mr. M.V. Ravindran]
1. This appeal is directed against Order-in-Appeal No. 57/2013(H-II)Cus, dt. 20.09.2013.
2. The relevant facts that arise for consideration are that the appellant herein are holding Customs Private Bonded Warehouse Licence for the purpose of storage of liquor, tobacco/cigarettes, fashion apparels, fashion accessories, food & confectioneries, perfumes & cosmetics, technology and electronics, without payment of customs duty. The validity of the licence was renewed with the condition that they shall remain in force till further orders. The appellant offered for extension of bonding in respect of the items in bond. It was also informed by the appellant that there was some variation in stock position and that they would reconcile the same and also undertook to pay the differential duty if such reconciliation is not possible. Demand notice was issued for payment of Customs duty involving shortage/excess which was discharged by the appellant. The lower authorities, after following due process of law, confiscated the goods and allowed to be released on payment of redemption fine and imposed penalties under section 114 and 112 of Customs Act, 1962.
3. The appellant is represented by Shri Japa Bajpeyi, Manager. He reiterated the grounds of appeal, which are summarised as under:
(i) Appellate authority failed to appreciate the explanation of appellant that excesses and shortages had occurred on account of system deficiency of SAP system.
(ii) Appellate authority failed to appreciate that while confiscating the duty paid seized goods, Revenue proceeded on presumption that in respect of excess stock at the DFS sale, vouchers were already prepared and issued and they had not appreciated the fact that there was no investigation by Customs in this case and there is no evidence in support of presumption, hence the proceedings have been dropped.
(iii) Appellate Authority failed to appreciate that in the absence of evidence that the seized goods found were cleared for export therefore Section 113(k) of Customs Act, 1962 will not apply as they were not brought into customs area for export purpose.
(iv) Appellate authority failed to appreciate that the goods found in excess in the Warehouse was as a result of manipulation of records by showing clearances to DFS, without actually affecting the clearance of duty to the duty free shop, is also devoid of evidence. The findings of lower authorities are therefore incorrect and provision of Section 111 (j) was not attracted as the goods were never removed from the Warehouse.
(v) Lower authorities have not appreciated the fact that goods kept in bonded warehouse cannot be said to have crossed Customs frontiers and hence no duty liability arises.
4. Ld. DR reiterates the findings of the lower authorities.
5. On careful consideration of the submissions made by both sides, it is noticed that appellant has not been able to justify the defence taken by him against imposition of penalties and also confiscation of the goods. It is undisputed that there was some excess stock in the Warehouse and also shortages of the duty free goods brought in for clearances. The said excess and shortage was communicated by the appellant himself to the lower authorities which indicates that there is definitely an error on the part of the appellant to not to reconcile the stocks regularly. Be it as it may be, I find that the first appellate authority has in para 7 of the impugned order has recorded factual findings, which is reproduced here:
I find that in the instant case, the excess and shortage of goods at DFS and Customs Bonded Warehouse had been seized by the Customs officers of RGI airport on 28.06.2011. The appellant paid the Customs duty on the said goods on 10.09.2010. A show cause notice dated 23.12.2011 was issued to the appellant for proposing confiscation of the goods under Section 113 (k) and 111(j) of the Customs Act, 1962 and imposing of penalty under Section 114 and 112 (a) of the Customs Act, 1962. The lower authority vide impugned order confiscated the excess stock of goods at DFS and Customs Boded Warehouse and imposed penalty under section 114 and 112 of the Customs Act, 1962. The appellant submitted that the department has seized duty paid goods under section 113(k) of the Customs Act, 1962 which is not correct as per their view since the goods are duty paid and kept in their premises for the last 10 months. Further, the lower authority has wrongly applied Section 111(j) which is not relevant at all. I observed that in respect of excess stock at DFS, sale vouchers were already prepared and issued; it means that the goods were cleared for export i.e. the goods which are sold to international passengers amounts to export of goods; but in the instant case goods were not cleared for export and were lying in the DFS. Therefore, as rightly commented by lower authority and referred to at paras 5.6 of above section 113 (k) of the Customs Act, 1962 is applicable. With regard to excess stock of goods at Customs Bonded Warehouse that, the manipulation of records by the appellant showing the clearance to DFS without actually affecting the clearance to DFS, establishing their intention for clandestine removal subsequently, which is contrary to terms and conditions attracting provisions of Section 111(j) of the Customs Act, 1962.
6. I do not find any infirmity in the above reproduced findings of the order of first appellate authority and in view of this, the findings of the lower authorities are upheld. At the same time, considering the fact that the value of confiscated goods found the redemption fine of Rs. 1,50,000/-, seems to be excessive. In my considered view, in order to meet the ends of justice, the redemption fine imposed needs to be reduced, which in my view if fixed at Rs.75,000/- (Rupees seventy five thousand only) from Rs. 1,50,000/- will be proportionate.
7. As regards the penalties imposed, I find that the penalty under section 114 of Customs Act, 1962 is Rs. 50,000/-, which, in my considered view, is correct and no interference is called for and I also find that the first appellate authority reduced the penalty imposed under section 112 of Customs Act, 1962 from Rs. 1,00,000/- to Rs.50,000/- which also I find is correct. Accordingly, I do not find any reason to interfere in the orders of the lower authorities in respect of the penalties imposed.
8. In view of the foregoing, the appeal is disposed of by modification as mentioned herein above in respect of redemption fine.
(Order pronounced in open court on ....................................) (M.V. RAVINDRAN) MEMBER(JUDICIAL) VRG Appeal No. C/20207/2014 (6) Appeal No. C/20207/2014 (1)