Customs, Excise and Gold Tribunal - Bangalore
Ramco Granites Ltd. vs Commissioner Of Customs on 3 February, 2005
Equivalent citations: 2005(186)ELT315(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. The appellant is a 100% E.O.U. Due to certain circumstances they have not fulfilled the export obligation after availing duty free procurement of capital goods and other raw materials. Moreover, they cleared the goods manufactured by them to the Domestic Tariff Area (DTA) without payment of duty. The Revenue proceeded against the appellants. The adjudicating authority demanded the duty of Rs. 8,61,280/- on the goods removed to DTA under proviso to Section 3(1) of the Central Excise Act, 1944. He held that the capital goods valued at Rs. 32,49,350/- procured under CT-3 under Notification No. 123/91-Central Excise dated 2-6-81 are liable for confiscation. Therefore, he imposed a penalty of Rs. 3,00,000/- under Rule 209A of the Central Excise Rules, 1944. He demanded the duty of Rs. 47,040/- on the same goods against CT-3 under proviso to Section 11A of the Central Excise Act, 1944. He ordered confiscation of the unaccounted granite slabs under Rule 209A of the Central Excise Rules, 1944. He gave an option to the appellants to redeem the goods on payment of fine of Rs. 10,000/-. The appellants admitted that they were not in a position to fulfil the export obligations. Hence, he confirmed the duty liability of the capital goods in view of the non-fulfilment of the conditions of Notification No. 123/91-C.E. dated 2-6-81. The appellants are aggrieved over the following decisions :
(i) Since they had not used any imported machinery and raw material and bonafidely cleared the goods to the Domestic Tariff Area (DTA), the duty on the cleared goods should be calculated as provided in Section 3(1) and not as per proviso to Section 3(1). In terms of proviso to Section 3(1), the aggregate of the customs duty is leviable. As per the main section, duty as per Central Excise Tariff only is leviable.
(ii) The imposition of penalty of Rs. 3,00,000/- under Rule 209A of the Central Excise Rules and imposition of fine on the unaccounted goods are also challenged as the capital goods would be cleared on payment of appropriate duty and they have not been removed from the premises of E.O.U. The unaccounted granite slabs were also within the premises of E.O.U. Hence the confiscation and imposition of fine and penalty are unwarranted.
3. Shri M.G. Varadarajan, learned Advocate appeared for the party and Shri L. Narasimha Murthy, learned SDR appeared for the Revenue.
4. The learned Advocate submitted that the appellants were not in a position to fulfil the export obligation in view of the various problems faced by them. The capital goods were obtained indigenously under CT-3 form without payment of duty. Once they are found that they would not be able to operate under the scheme, they applied to Government of India for withdrawal and the Govt. of India, vide order dated 4-4-96 permitted for withdrawal from the E.O.U. scheme. Moreover, they bonafidely believed that the import policy permitted them 25% of the export to DTA. It was pleaded that they are ready to pay the duty on the goods cleared in terms of Section 3(1) of the Central Excise Act. They also requested the cum-duty benefit in terms of the Apex Court decision in the case of Maruti Udyog Ltd. . Further, it was urged that the penalty under Central Excise Rules is not applicable for E.O.U. clearance as held in the following cases :
(i) SIV Industries - (ii) T. Gayathri Reddy - .
Further he relied on the following case laws holding that the goods cleared to DTA without permission from the Development Commissioner are chargeable to duty under Section 3(1) of the Central Excise Act :
(i) Treasure Tech Electronics Ltd. v. CCE -
(ii) Bhagat Exports v. C. Cus. - .
4. Shri L. Narasimha Murthy, learned SDR reiterated the findings recorded in the impugned Order-in-Original.
5. On a careful consideration of the entire issue, we feel that the appellants could not fulfil the export obligations. Due to certain difficulties, the capital goods have not been removed from the premises. They had also obtained permission from the Govt. for withdrawing from the E.O.U. scheme. Since the capital goods are available for the bonded premises the confiscation and consequent levy of penalty of Rs. 3,00,000/- is set aside. The appellants, however, would pay the appropriate duty on de-bonding. Similarly, the unaccounted goods which are within the factory premises have been confiscated. We set aside the confiscation and consequent redemption fine. As regards the duty demand on the goods cleared to DTA without permission of the Development Commissioner in view of the decided case laws on the subject we hold that the duty should be charged under Section 3(1) of the Central Excise Act, 1944. In other words, the duty applicable is as in the Central Excise Tariff and not the aggregate of customs duties. In respect of the consumables procured, the duty demand is upheld. With these observations, we partially allow the appeal in the above terms.
(Operative portion of the order has been pronounced in the Court on completion of hearing on 3-2-2005)