Custom, Excise & Service Tax Tribunal
6. Avb Reddy, Managing Director Of M/S. ... vs The Commissioner Of Customs on 1 November, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 26903-26908 / 2013 Application(s) Involved: C/Stay/27921 - 27926/2013 in C/27565 - 27570/2013-DB Appeal(s) Involved: C/27565-27570/2013-DB [Arising out of Order in Original No.10/2013 dt. 27/05/2013 passed by Commissioner of CUSTOMS , BANGALORE-CUS] 1. M/s. Varman Aviation Private Limited Aviation Complex, 16-17, Road No.7, EPIP, Whitefield, BANGALORE - 560066 KARNATAKA 2. Dr. CR Ramanujachar, Chairman of M/s. Varman Aviation Pvt. Ltd. Aviation Complex, 16-17, Road No.7, EPIP, Whitefield, BANGALORE - 560066 KARNATAKA 3. Sanjeev Varman, Director of M/s. Varman Aviation Pvt. Ltd. Aviation Complex, 16-17, Road No.7, EPIP, Whitefield, BANGALORE - 560066 KARNATAKA 4. M M Varman, President and Director, M/s. Varman Aviation Private Limited, Aviation Complex, 16-17, Road No.7, EPIP, Whitefield, BANGALORE - 560066 KARNATAKA 5. Latha Srinivasan, Senior Marketing Executive, M/s. Varman Aviation Private Limited, Aviation Complex, 16-17, Road No.7, EPIP, Whitefield, BANGALORE - 560066 KARNATAKA 6. AVB Reddy, Managing Director of M/s. Varman Aviation Pvt. Ltd. Aviation Complex, 16-17, Road No.7, EPIP, Whitefield, BANGALORE - 560066 KARNATAKA Appellant(s) Versus The Commissioner of Customs Central Revenue Building P.B. No.5400, Queens Building, BANGALORE- 560 001. Respondent(s)
Appearance:
Mr. ARJ Nayak, Advocate RAVI SHANKAR & CHANDER KUMAR, ADVOCATES 504, 4TH FLOOR, OXFORD TOWERS, 139, OLD AIRPORT ROAD, KODIHALLI, BANGALORE - 560 017.
KARNATAKA For the Appellant Mr. Ganesh Havannur, Addl. Commissioner (AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI ANIL CHOUDHARY, JUDICIAL MEMBER Date of Hearing: 01/11/2013 Date of Decision: 01/11/2013 Order Per : B.S.V.MURTHY The appellant is engaged in the overhauling of air craft engines for which they are required to import aircraft spare parts, consumables, chemicals, components, etc. during the period from January 2007 to September 2010, the appellants had imported these items claiming exemption under Notification No.21/2002-Cus. dt. 1.3.2002 under Sl. No.347-C read with condition No.105. The exemption is available in respect of inputs made for overhauling the engine of flying clubs.
2. During the course of investigations undertaken by DRI, it was found that the appellant had claimed exemption on the basis of certificates issued by flying clubs and when enquired, the flying clubs replied that they have not issued such certificates at all. Therefore, it was found that the certificates were fabricated by the appellants. On the ground that the appellant was not eligible for the exemption, proceedings were initiated which has culminated in confirmation of demand of duty of more than Rs.1.1 crores with interest; penalty under Section 28 of Customs Act, 1962; penalty under Section 114A of Customs Act and penalties on various officers and employees of the appellant-company.
3. During the stay application, the learned counsel submits that appellants took up the activity of repair/maintenance of aircraft engines and found that trying to find out how they can import it without payment of duty since the items imported were not to be used in the aircraft engines which are exported. Since all the parts used are going to be exported, the appellants felt that they should not be paying the customs duty on the same and tried to find out how it can be exported legally. They approached JDGFT who advised them to take the route of advance licence and subsequently it was found that was not feasible since that was permissible only for manufacture of new engines and not for maintenance or repair of old engines. Thereafter according to the learned counsel, the appellants approached the Commissioner (Customs) who advised them to take the route of 100% EOU and subsequently, it was found that this was also not feasible. Meanwhile, they were trying to import their requirements without payment of customs duty and admittedly to do this, they had produced bogus purchase certificates.
4. It was their submission that in this case not all the imports were based on bogus purchase orders. There was some work done for flying club also. He also submitted that appellants could not participate in the adjudication process at all and except for one employee who replied, others did not reply. Learned counsel before the Commissioner for personal hearing submitted that he had asked for some more time to enable the appellants to go before Settlement Commission and pay the admitted liability. However, sufficient time was not given to them for going to the Settlement Commission. Further, he also submits that in the absence of several documents which were still with DRI, they could not prepare the proper reply. He draws our attention to the letters written to the DRI which have not been replied to them till now.
5. The learned AR would submit that appellant did not participate in the adjudication process and no explanation is forthcoming. Appellants have admitted that they had imported the goods through bogus purchase orders and claimed exemption which was not admissible. All the relied upon documents mentioned in the annexures to the show-cause notice have been supplied and no grievance was made before the Commissioner. He draws our attention to the relevant paragraph in the adjudication order wherein the Commissioner has clearly observed that all the relied upon documents have been provided to the appellants.
6. We have considered the submissions made by both the sides. After going through the annexures to the show-cause notice, we find that in the annexures, the bills of entry have not been relied upon and the statement prepared based on the bills of entry has been relied upon. List of false/fake purchase orders is shown as annexures but copies of fake orders is not found as an annexure to the show-cause notice. However, learned counsel admitted that they have received the fake purchase orders. The show-cause notice as well as order-in-original relied on the statement which was prepared by the employee of the appellant and therefore it is the submission of the learned AR that there was no need for copies of bills of entry. We also find that the correspondence with DRI started after adjudication process was over. There is no evidence to show that the appellant had asked for documents from DRI before the order-in-original was passed. Further, the appellants have also not replied to the show-cause notice. When we consider all these aspects of the matter, the obvious conclusion would be that the appellant should be put to terms and as requested by the learned counsel, the matter may be remanded for fresh adjudication. Further, the learned counsel submitted that the persons concerned are all ex-HAL employees and after giving resignation to HAL they have started this firm and they do not have sufficient expertise with regard to other work other than engineering related items and therefore they have committed lot of mistakes and there are omissions on their part. Therefore, he submits that a lenient treatment may be given as a special case. Further, he also submits that the entire amount may not be payable since there are several cases where work has been done in respect of engines supplied by flying clubs. Further, he also submits that they would like to verify the statutory provisions and notification, etc., to find out whether they can claim exemption in respect of parts used for exports. He submits that the contribution of the appellants to the export efforts to the country has to be taken into account and the parts have been really exported. The appellant should get an opportunity to study and find out whether there is any method by which they can claim exemption from customs duty. Having regard to all the submissions and taking note of the fact that copies of the bills of entry and seized documents should have been supplied to the appellants even before the order-in-original or at least copies when they requested, we consider it proper that the matter has to be remanded and such remand cannot be done without requiring the appellant to deposit at least a portion of the amount demanded. After considering all the submissions and records, we consider that if the appellant deposits an amount of Rs.25, 00,000/- (Rupees Twenty-five Lakhs Only) in addition to the amount already deposited by them, this can be done. Such deposit should be made within eight weeks from today and compliance reported to Commissioner who shall adjudicate the matter afresh after noting the compliance. We make it clear that this is a consent order and the learned advocate agreed to abide by the terms for remanding the matter and therefore this order is being passed. The learned counsel also assures that the appellant shall give full cooperation. The Revenue is also directed to provide copies of all the documents which appellants require for preparing their defence and after giving them the documents, appellants may be given two months time to submit their reply.
7. As regards the stay applications by other appellants, in view of the fact that they have admitted the production of bogus purchase orders, we find that in their cases also the matter cannot be remanded without any terms. Accordingly, Mr. M.M. Varman, President and Director is directed to deposit Rs.2,00,000/- (Rupees Two Lakhs Only); Mr. Sanjeev Varman, Director is directed to deposit Rs.1,00,000/- (Rupees One Lakh Only) and Dr. C.R. Ramanjuachar, Chairman and Mr. AVB Reddy, Managing Director are directed to deposit Rs.50,000/- (Rupees Fifty Thousand Only) each. Since Ms. Latha Srinivasan is said to be only an employee, we consider that at this stage she need not deposit any amount.
(Order dictated and pronounced in open court) ANIL CHOUDHARY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER rv 5