Custom, Excise & Service Tax Tribunal
M/S Age Of Enlightenment Publications vs Cc, (Air Cargo Export), New Delhi on 14 December, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing: 29.11.2016 Date of pronouncement: 14.`12.2016 Customs Appeal No. 58240 of 2013 (Arising out of order in original No. RT/ACE/19/2013 dated 25.03.2013 passed by the Commissioner of Customs, New Delhi). M/s Age of Enlightenment Publications Appellant Vs. CC, (Air Cargo Export), New Delhi Respondent
Appearance:
Sh. J. S. Sinha, Advocate for the appellant Shri Yogesh Agarwal, AR for the Respondent Coram:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Ashok K. Arya, Member (Technical) F. O. No. Per: Ashok Jindal:
The appellant is in appeal against the impugned order demanding duty and imposing redemption fine and penalty on the appellant for not discharging their export obligation.
2. The facts of the case are that the appellant is 100% EOU and imported one digital printing machine on 21.09.2000 from M/s Xeikon N.V. Belgium. The bill of entry was filed and goods were cleared on 20.12.2000 by paying concessional rate of 5% in pursuance to the EPCG Licence under Notification No. 49/2000-Cus. dated 27.3.2000. The appellant could not install the machine in their factory and could not discharge their export obligation. As appellant failed to discharge their export obligation, a show cause notice was issued on 18.02.2011 to demand duty on the said machine for non-fulfilment of export obligation under EPCG Scheme. Thereafter, the adjudication took place and the demand of duty was confirmed alongwith interest and redemption fine was imposed to the tune of Rs. 25 lakhs and penalty of Rs. 10 lakhs was also imposed. Aggrieved from the said order, the appellant is before us.
3. Ld. Counsel for the appellant submits that the supplier of the machine went to liquidation and could not fulfil its obligation to install and operate the said machine in India. Therefore, it was beyond the control of the appellant to install the machine in their factory premises. Consequently, they could not do any activity. As appellant was bonafide importer, therefore, the machine cannot be confiscated and no redemption fine and penalty are imposable in the light of the Tribunals decision in the case of Taurus Novelties Ltd. vs. CC, Bangalore 2004 (173) 100 (Tri. Bang.) and Premier Granites Ltd. vs. CC &CE- 2007 (210) ELT 200 (Tri.) He further submits that there is no basis or any reason or justification, and as such Revenue has seriously erred in confirming the duty demand without jurisdiction and authority of law and without taking into account the depreciated value of the imported printing machine in question as of today, and levied wrongly the interest under Section 28AB of the Customs Act, 1962 and imposed redemption fine and penalty. The non-fulfilment of the export obligation has been due to the reason beyond the control of the appellant and there is no malafide or deliberate intention on the part of the appellant to mis-use the benefit of concessional rate of duty . He relied upon the decision of Honble Tribunal decision in Natural Stone Exports Ltd. vs. CC (Appeals) Bangalore 2006 (198) ELT 440 (Tri. Bangalore). He also contended that the depreciated value of the machine is to be taken for quantification of duty and not the value shown in the bill of entry. To support this, he relied on the decision in the case of Suvarna Aqua Farm & Exports Ltd. vs. CC, Guntur 2005 (190) ELT 284 (Tri. Bang.); Nava Bharat Enterprises Ltd., vs. CCE, Guntur 2010 (256) ELT 602 (Tri. Bangalore); Pudumjee Plant Laboratories Ltd. vs. CCE- Pune 2013 (295) ELT 593 (Tri. Mum.).
4. On the other hand, ld. AR submits that as the appellant has failed to discharge their export obligation duty is to be demanded.
5. Heard the parties and carefully considered the submissions.
6. On careful consideration of the fact that the reasons for non-installation of machine was beyond the control of the appellant, in the light of the decision of Taurus Novelties Ltd. (supra) the redemption fine and penalty on the appellant are not imposable. This Tribunal in the said case observed as under:
3.?On a careful consideration of the submissions, we notice that the appellants had imported capital goods under concessional rate of duty under EPCG Notification No. 110/95, dated 5-6-1995. But, they could not set up the industry to fulfil the export obligation due to total collapse of Korean economy and hence could not procure the order for manufacture and export of ceramic goods. The value of Korean company fell drastically and affected the appellants project. As they could not get the support from the Korean collaboration for buy back of production and due to stiff competition from Chinese competitors, the factory could not be established for commercial production and export of goods. The appellants, due to these factors, approached the Commissioner and requested him to permit them to encash the Bank Guarantee and deposit these amounts due to the department. The same was granted and the amounts were deposited by TR-6 Challan on 30-11-2000. The same has been appropriated in the impugned order. The Show Cause Notice alleging violation of the Notification under Section 124 of Customs Act was issued on 15-1-2001. In terms of the adjudication order, the machineries were confiscated and granted redemption under fine of Rs. 20,00,000/- besides a penalty on the Company of Rs. 20,00,000/- and penalty of Rs. 5,00,000/- each on the Managing Director and the Executive Director. The question in this appeal is as to whether the goods can be confiscated and redemption fine imposed besides penalties and interest. In a like situation, the Tribunal, in the citations referred to by the Counsel, has held that confiscation cannot be ordered in a circumstance when the export obligation became an impossibility. Further it has been held that when the Bank Guarantee has been realized before the issue of Show Cause Notice, then in such a circumstance, the redemption fine, penalty and interest is not imposable. We have perused these judgments and find that the appellants prayer for setting aside the redemption fine, penalty and interest, in terms of these judgments, is justified. The ratio of the judgments clearly applies to the facts and circumstances of this case. Respectfully following the same, the impugned order, confiscating the machinery and imposing redemption fine and penalty on the Company and the Directors including the levy of interest, is set aside by allowing the appeal.
Further, we find that in the Premier Granites Ltd. (supra) again this Tribunal has observed as under:
6. We have gone through the records of the case carefully. In the present case, duty foregone has been demanded by the Adjudicating Authority on the ground that the appellants had not fulfilled the export obligations completely in terms of both the Customs and Central Excise Notifications. It is not the case of the Revenue that the appellants imported goods duty free and did not use them at all. Since the appellants have put the goods imported to use and have partially fulfilled the export obligations, it is not proper to deny the benefit due to partial fulfilment of export obligations and demand the entire duty. This view has been taken by this Bench in the case of Natural Stone Exports Ltd. (cited supra), in Para 5 of the Order. In our view, the appellant is entitled for the benefit on account of the partial fulfilment. Secondly, the duty has been demanded without taking into account the depreciated value. This is not correct. In the present case, the capital goods have been put to use by the appellants. Therefore, at the time of de-bonding, duty can be demanded only on the depreciated value. The depreciation will be till the date of payment of duty as decided in Suvarna Aqua Farm & Exports Ltd. (cited supra), as decided by this Bench. We do not agree that the above benefits cannot be given to the Units as Notification No. 52/2003 and 22/2003 both dated 31-3-2003 are only having prospective effect in view of the various judicial decisions of the Tribunal. Further, the non-fulfilment of export obligation is on account of the business conditions prevailing at that time and not on account of any mala fide act. In such circumstances, imposition of penalties is not justified. Therefore, we set aside the impugned order and remand the matter to the original authority for re-computing the duty liability after giving the benefit on account of partial fulfilment of export obligation in the light of our decision in Natural Stone Exports Ltd. and also the benefit of depreciation. The appeal is allowed by way of remand. The original authority shall pass a speaking order within period four months, after giving an opportunity of hearing to the appellant. The appellants shall furnish all the documentary evidences in support of their claim of partial fulfilment of export obligations.
Therefore, we hold that the redemption fine and penalty are imposable.
7. Ld. Counsel for the appellant contended that the duty is to be demanded on the depreciated value of the machine, we are not in agreement with the contention of the appellant as in this case the machine has been imported by the appellant and brought in their factory not warehoused. He relied on the decision of the Natural Stone Exports Ltd. (supra); the facts of this case are not similar to that case. As in that case the capital goods were warehoused from day one, therefore, the said decision is not applicable to the facts of the present case. Further, we find that in the case of Suvarna Aqua Farm & Exports (supra) the capital goods were installed & utilised and export obligation were positively discharged but export obligation could not be completed. But in this case, no production took place in the factory. In such circumstances, the depreciated value of the machine cannot be taken as the basis for charging the duty of customs. Further, in the case of Nava Bharat Enterprises Ltd. (supra) export obligation was partially fulfilled by the appellant and that is not the case in hand.
8. We find that the duties of customs are payable at the time of importation of the goods. Admittedly, the capital goods were imported by the appellant on 28.12.2000 and the same has been in the custody of the appellant; therefore, the appellant is liable to pay duty chargeable as on 20.12.2000. Consequently, the plea of the appellant that depreciated value of the machine is to be taken as basis for the duty is not acceptable.
9. In view of the above observations, the following order is passed:
(a) Duties are payable on the value of the machine as on 20.12.2000.
(b) Redemption fine and penalty imposed on the appellant are set-aside.
10. The appeal is disposed off in the above terms.
(Pronounced on 14.12.16).
(Ashok Jindal) Member (Judicial) (Ashok K. Arya) Member (Technical) Pant Customs Appeal No. 58240 of 2013 6