Custom, Excise & Service Tax Tribunal
Commissioner Of Customs vs M/S. Hotline Cpt. Ltd on 25 September, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. I
Customs Appeal No. 945 of 2005
[Arising out of Order-in-Appeal No. IND-I/292/2005 dated 31.8.05 passed by Commissioner of Customs & Central Excise(Appeals II), Indore ]
For approval and signature:
Hon'ble Mr. Justice S.N. Jha, President
Hon'ble Mr. M. Veeraiyan, Member (Technical)
1. Whether Press Reporters may be allowed to see :
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 of the Order?
4. Whether Order is to be circulated to the :
Departmental authorities?
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Commissioner of Customs Appellant
Indore
Vs.
M/s. Hotline CPT. Ltd. Respondent
Appearance: Mr. L.B.Yadav, DR for the Appellant
Mr. Atul Gupta, Company Secretary for the Respondent
CORAM: Hon'ble Mr. Justice S.N. Jha, President
Hon'ble Mr. M. Veeraiyan, Member (Technical)
Date of Hearing : 25.9.2008
ORDER NO . ________________________
Per M. Veeraiyan (for the Bench):
This is an appeal by the department against the order of the Commissioner (Appeals) dated 31.8.05.
2. Heard both sides.
3. Relevant facts in brief, are as follows:-
(a) The respondent was registered as a unit in EHTP and imported capital goods, raw materials, components, spares availing total exemption as provided under Notification No. 52/2002 dated 31.3.03 and 23/03 dated 31.3.03. The respondents were required to manufacture cathode ray tubes and export them.
(b) Due to unforeseen circumstances, they could not utilise the capital goods and other inputs imported and wanted to exit out of EHTP Scheme. The STPI authorities gave in principle debonding permission vide letter dated 15.1.04 and based on which the Customs authorities were required to club the Customs duty on the goods to be debonded and intimate the payment of duty to the STPI authorities so that final exit order from the scheme will be granted.
(c) The original authority held that since the final exit order was yet to be issued, the question of granting benefit of any exemption notifications which are subject to end-use and which requires following procedure under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rules, 1996. Accordingly, confirmed the duty disallowing the benefits of Notification No. 25/99-Cus dated 28.2.99 and Notification No. 25/2002 Cus. dated 1.3.2002 and assessed the duty at tariff rate.
(d) Commissioner (Appeals) held that even though technically the unit is under EHTP scheme on the date of assessment, payment of duty arises only because of their debonding from the scheme, but for debonding from the customs bond, the notification benefits otherwise available have to be extended. Accordingly, he set aside the demand.
4. Learned DR submits that as long as the unit continues to be a EHTP unit, the question of extending concession available in respect of any other scheme does not arise. These are not cases of clearance of imported goods at the time of import, the case relates to clearance of goods from EHTP unit subsequent to in principle approval of debonding and assessment have taken place actually before the final exit order. Therefore, the Notification No. 52/2003 also provides debonding on payment of duty.
5.1 Learned advocate for the respondents submits that due to unforeseen circumstances, they had to exit from the EHTP scheme; they are allowed to pay duty under 52/2003 at the time of debonding and when the goods are removed from the bond the rate of duty should be at as is prevalent at the time of clearance of bond that should be included, extending the benefit of notification which were available. The unit has converted from EHTP unit to DTA unit and the same does not involve change of any terms. The formalities under the Customs Act and subsequently formalities under the Central Excise Act are within the jurisdiction of the same Range Superintendent namely, Range I, Malanpur. The formalities of taking registration certificate under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods), Rules, 1996 was also taken from the same officer. There can be no doubt about the end-use conditions having been fulfilled in this case.
5.2 He relies on the decision of the Honble Supreme Court in the case of Thermax Private Ltd. vs. Collector of Customs [1992 (61) ELT 352 (SC) ] where in it has been held that the condition of not following Chapter X procedure while extending the benefit of CVD exemption so claimed deeming the goods as having been manufactured. He also relied on the decision of the Tribunal in the case of Commissioner of Customs, Amritsar vs. Malwa Industries Ltd. [2008 (229) ELT 233 (Tri-Del) ] wherein the following decision in the case of Thermax Private Ltd., decision was taken that use within the factory of production would mean that the goods in question should not be used in any other factory i.e. anywhere other than the factory for the purpose of manufacture of textile and textile articles. He submits that in both the case, the decision emphasises on substantive compliance of the conditions rather than on the procedure.
6. We have carefully considered the submissions from both the sides. The goods were imported at nil rate of duty as per the Notification available to such imports by EHTP unit. For the same reason, they were not able to produce and export and therefore, sought to exit from the scheme and the permission has been granted to do so by the competent authorities. We find as a unit in EHTP, they were treated as to have warehousing in the Customs Act and held to be operating under section 65 of the Customs Act as manufacturer under Customs bond.
7. The exit order from the scheme will be given only on payment of dues as stipulated under condition of Notification No. 52/2003. If view is taken that unless exit order is given by the STPI authorities, the concession otherwise available cannot be extended then, it would lead to a situation where they will never be able to exit. This cannot be the intention of the policy. The procedure should work as in by the policy and no other way of doubt. The Commissioner was correct in holding that the duty was being demanded only in pursuance of the decision taken to exit from EHTP scheme. It is not the case where the assessee from the zero rated scheme is moving to another scheme with a concessional rate of duty to hold that in such a situation they shall not be eligible for benefit of any notification which are available only at the time of import will be contrary to the understanding and practice in respect of clearance from warehouses. The procedural violations, if any, is only of technical in nature and there can be, in the given facts and circumstances of the case, no allegation of any possible diversion. In fact, there is no such allegation or finding. He also noted the unit continued to come under same range of same division.
8. In view of the above, we do not find any justification to interfere with the order of the Commissioner (Appeals).
9. Appeal filed by the department is rejected.
(Dictated & pronounced in the open Court) ( Justice S.N. Jha ) President ( M. Veeraiyan ) Member(Technical) ss