Customs, Excise and Gold Tribunal - Ahmedabad
Swati Polyester And Ors. vs The Commissioner Of Central Excise on 31 January, 2007
Equivalent citations: 2007(117)ECC133, 2007ECR133(TRI.-AHMEDABAD)
ORDER Archana Wadhwa, Member (J)
1. All the appeals are being disposed off by a common order as they arise out of the same impugned order passed by the Commissioner of Central Excise, Surat, confirming demands of duty and imposing penalties upon them.
2. We heard Shri J.C. Patel & Shri Willingdon Christain, Ld. Advocates, appearing for the appellants and Shri K.J. Sanchis, Ld. DR appearing for the revenue.
3. As per facts on record, M/s. Shiva Exports and M/s. Vimla Fashion Pvt. Ltd., imported POY under DEEC Scheme and by availing exemption from payment of duty in terms of Notification No. 203/92/Cus & 204/94/Cus. The exemption in terms of the said Notification is available to POY imported into India for use in the finished final products to be exported. Inasmuch as the said POY was to be converted into texturised yarn, another Notification No. 34/94-CE dated 01/03/94 was issued, which exempted the texturised yarn, if manufactured from the POY imported duty free under DEEC Scheme subject to the condition that the same is either exported or used in the goods to be exported.
4. The POY imported by the above units was sent to other appellants for conversion into texturised yarn, on job work basis. The factory premises of the job workers were visited by the officers on 08/08/95 and 09/08/95, who conducted various checks and verifications. Statements of various persons were recorded. During the course of investigation, it was found that the goods were received by the said job workers from M/s. Shiva Exports and M/s. Vimla Fashion Pvt Ltd., under the cover of zerox copies of Bills of Entry and legal undertaking given by the said two importers. The goods after texturising were cleared by the said parties under cover of invoices from their units. However, officers found that the imported POY was received under zerox copies of the Bills of Entry and not under the original Bill of Entry and the legal undertakings given by the importers was not accepted by their jurisdictional Assistant Commissioner of Central Excise and the texturised yarn has not been exported by the said importers, the clearance of the yarn from the said job worker's factory was in violation of provisions of Notification No. 34/94. Accordingly, proceedings were initiated against them for confirmation of demand of duty and for imposition of penalty, which culminated into the impugned order passed by the Commissioner.
5. After carefully considering the submissions made by both sides, we find that Notification No. 34/94-CE dated 01/03/94 as amended, exempted Texturised Synthetics Filament Yarn falling within Chapter 54 of the schedule to the Central Excise Tariff Act, 1985, and manufactured out of filament yarn imported under the duty exemption scheme of the Export and Import Policy, from the whole of the duty of excise leviable thereon, which is specified in the said schedule. Proviso to the said Notification laid down that the exemption contained in the Notification shall be applicable only if it is proved to the satisfaction of the Assistant Commissioner of Central Excise that such texturised yarn is to be exported or used in the manufacture of any other goods, which are to be exported out of India.
6. Subsequent to the issue of the above Notification, Surat Commissionerate, vide its Trade Notice No. 78/94 dated 02/06/94 laid down a detailed procedure required to be followed by the texturisers for availing the benefit of Notification in question. In terms of the said procedure exporter merchant or manufacturer has to execute a bond, bank guarantee or legal undertaking equivalent to the duty amount exempted on account of texturised yarn. On receipt of the duty free POY under advance licence, exporter shall inform the Assistant Commissioner of Central Excise having jurisdiction over the exporter with the relevant copy of Bill of Entry, the exporter is expected to maintain a movement register for POY. Further, exporter is to inform his jurisdictional Assistant Commissioner as also the Assistant Commissioner having jurisdiction of the texturiser about the details of dispatch of POY to the texturisers on job work basis.
7. The said Trade Notice also prescribed a procedure to be followed by the texturiser, which included maintenance of a movement register showing receipt of POY along with particulars of the documents and dispatch of the texturised yarn along with particulars of the dispatch documents. The exporter, on receipt of the texturised yarn is required to export the same or send the same to the weaver for weaving after following the procedure as enumerated in the said Trade Notice.
8. It is not disputed that the texturisers in the present case received the POY from M/s. Shiva Exports & M/s. Vimla Fashion Pvt Ltd., under the cover of their letter along with a photocopy of Bill of Entry as also undertaking given by them to their jurisdictional Assistant Commissioner. A certificate giving the details of the advance licence and DEEC book, was also forwarded by the said importer. On the basis of the said documents, the appellants wrote to their jurisdictional Assistant Commissioner intimating him about the receipt of POY and availing of benefit of Notification No. 34/94 dated 01/03/94. They also forwarded all the documents received by them from the principal importer. A copy of the said intimation was also forwarded to their jurisdictional Central Excise Inspector. No objection was raised by the job worker's jurisdictional Central Excise Officers.
9. The texturised yarn produced by the job worker, was cleared by them under the Excise invoice and delivery challan. RT-12 returns were filed declaring therein that texturised yarn was produced from POY imported under DEEC Scheme and after texturising, the same was cleared on nil payment of duty to M/s. Shiva Exports & M/s. Vimla Fashion Pvt Ltd. As such, the appellants followed the procedure, as detailed in Surat Commissionerate Trade Notice.
10. The appellant's grievance in the present proceedings is that confirmation of demand of duty against them is not justified, inasmuch as they had duly followed the procedure prescribed by the Surat Commissionerate and have fulfilled the conditions of the Notification. If the importers i.e. M/s. Shiva Exports and M/s. Vimla Fashion Pvt Ltd., have not exported the goods, the duty has to be directed against them for violation of the conditions of Customs Notification under which POY was imported by them free of duty. For the above proposition, reliance has been placed upon number of judgments of the Tribunal.
11. After considering the submissions made by both sides and after going through the impugned order, we find that undisputed factual position is that the job workers received the goods i.e. imported POY from M/s. Shiva Exports and M/s. Vimla Fashion Pvt Ltd., under the cover of Bill of Entry and legal undertaking given by the importers, intimated their jurisdictional Central Excise authorities about the receipt of the said POY, maintained all the statutory records and cleared the goods under statutory documents. As such, all the requisite procedures as detailed in the Surat Commissionerate Trade Notice stands duly followed by them. It is the importer of POY, who has given the legal undertaking to their jurisdictional Assistant Commissioner for discharge of duty in case the goods are not used for the purpose of export. Though the Commissioner has observed that the said legal undertaking given by the importer was not accepted by the Assistant Commissioner, but the fact remains that such legal undertaking was given by them. A copy of the same was forwarded to the texturising unit and the same was submitted by them to their jurisdictional Assistant Commissioner. The job workers were neither informed by their Assistant Commissioner nor by the Assistant Commissioner of the importer as regards the non-acceptance of legal undertaking. The Commissioner has also not disclosed the reason for non-acceptance of the said undertaking. As such, we are of the view that the appellants having satisfied all the procedural requirements, for the purposes of availing the benefit of the Notification, are entitled to exemption and no duty can be directed against them in case the texturised yarn has not been exported by M/s. Shiva Exports and M/s. Vimla Fashion Pvt Ltd.
12. At this stage, we may refer to the Tribunal's decision in the case of Shree Vithal SSK Ltd., v. CCE laying down that where bond for export is filed by the exporter and not by the manufacturer, demand with regard to quantity not exported is to be raised against exporter and not against the manufacturer. Similarly, in the case of Kishaore Pumps Ltd. CCE, Pune , it was held that commitment to complete export having been given by the merchant exporter, department required to recover duty from merchant exporter in terms of bond executed and not from the manufacturer. To the same effect is another decision of the Tribunal in the case of Tejal Paper Mills Pvt Ltd. v. CCE, Ahmedabad . The said decision took note of the Board's Circular No. 87/87/94-CX dated 26/12/94 clarifying the at where merchant exporter has executed a bond, liability to pay duty will be of the merchant exporter. Similarly, in the case of CCE v. Godrej and Boyce Mfg. Co. Order No. E/99/1996B dated 11/03/1996, the Tribunal held that where plot holders in the Santa Cruz Electronics Export Processing Zone have executed a bond for fulfillment of the condition and on being satisfied with the bond executed by them, the officer-in-charge of the security has issued a certificate and based upon that certificate, respondents have supplied the goods to the respective plot holders, demand with regard to the quantity not exported is required to be raised only against the exporter and not against the manufacturer.
13. Applying the ratio of the above decision to the fact of the instant case, we find that there is no dispute about the observance of the procedure by the job workers. In fact the Commissioner has observed in the impugned order that all the appellants were maintaining movement register. It is also on record that their jurisdictional Assistant Commissioner as also the inspector and the Superintendent were duly informed about the receipt of the POY and clearance of texturised yarn under delivery challan and Central Excise invoices. In these circumstances, it can be safely concluded that the appellant had fulfilled all the requirements of the Notification, thus making them eligible for the benefit of the same. Actual export of the Yarn subsequent to the clearance of the same from the appellant's factory is not the criteria for availing the benefit of the Notification. We note that the proviso to the Notification is to the effect that such texturised yarn is to be exported or used in the manufacture of any other goods, which are to be exported out of India. As such, as long as the yarn is meant to be exported, the benefit would be available irrespective of the fact that whether the same is ultimately exported or not.
14. There also seems to be some dispute about the receipt of the texturised yarn by M/s. Shiva Exports and M/s. Vimla Fashion Pvt Ltd. The representative of the said importers, in their statements recorded during investigation, have deposed that the texturised yarn has not been received by them from the said job workers. However, we find that the texturised yarn was cleared from the factory of the job workers under the cover of Central Excise invoices as also delivery challans. Such documents were filed with the revenue along with RT-12 returns and are issued in the name of the merchant exporter. As against the above documentary evidence, there are statements of the merchant exporter only. Further, it has not been shown to us that the merchant exporter, who has sent POY worth crores of rupees to the said job workers, have initiated any action against them for non supply of the texturised yarn. Considering the entire evidence on record, it has to be held that the goods were cleared by the said job workers. Failure of the merchant exporter to export the same in terms of the Customs Notification, may result in denial of duty free imports to them, the said issue is not before us. As such, no observation are being made on the same.
15. In view of our foregoing discussion, we hold that the confirmation of demand of duty against the texturised units or confiscation of goods or imposition of penalty upon them is neither justified nor warranted, the same is accordingly set aside. As regards imposition of penalty on the importers of POY or their representatives imposed under Rule 209A, we find that having set aside the duty liability against the job workers and confiscability of the yarn, the said rule cannot be invoked. As such penalty on them is also set aside.
16. In a nutshell, all the appeals are allowed with consequential relief to the appellants.
(Pronounced in Court on 31/1/07)