Customs, Excise and Gold Tribunal - Bangalore
Suvarna Aqua Farm And Exports Ltd. vs Commissioner Of Cus. on 6 May, 2005
Equivalent citations: 2005(190)ELT284(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from OIO No. Cus. 6/2003, dated 4-7-2003 by which the imported goods valued at Rs. 42,11,1407-procured duty free under Notification No. 196/94-Cus., dated 8-12-1994 has been ordered to be confiscated. However, they have been redeemed on fine of Rs. 21 lakhs. Further, there is an order of confiscation of indigenous goods valued at Rs. 2,92,73,976/-and the same has been given redemption on payment of fine of Rs. 1.46 lakhs. Likewise, duty of Rs. 20,75,451/- has been ordered to be paid on the imported goods, which is valued at Rs. 42,11,140/-. Further duty of Rs. 53,39,567/-on indigenous goods of Rs. 2,92,73,9767- has been confirmed. There is a direction to pay interest @ 20% per annum on the amounts confirmed and penalty of Rs. 74,15,0187- has been imposed. The appellants are a 100% EOU approved by GOI. They set up their farm at Pakala Village of Prakasam District and processing plant at Singarayakonda village of Prakasam District for the manufacture of Prawn (referred to as goods/final products/finished products). They were permitted to produce 1000 MT of Prawn per year for a period of 10 years with a minimum value addition of 30.80% and permitted to import capital goods worth Rs. 553.61 lakhs. The allegation against the appellants is that they have imported duty free goods and also has procured indigenous goods without payment of C.E. Duty. As per the condition of Notification No. 196/94-Cus., dated 8-12-1994 and 10/95-C.E., dated 23-2-1995, they were required to fulfil the export obligation. Since there were no exports for the year 1997-1998 to 2000-2001, the proceedings were initiated against him. However they had exported from the year 1994 to 1997. But their contention is that they could not achieve export obligation due to (i) closing down of the unit since 1997 due to severe floods which had damaged the entire Processing Plant; (ii) Due to Hon'ble Supreme Court's ban on Aqua Culture unit, they could not continue the operation which affected their exports as projected earlier; (iii) they were declared sick unit by BIFR; and (iv) Since 1997, they could not restart their operations due to non-availability of working capital and pending finalisation of rehabilitation proposals.
2. They claimed relief with regard to depreciation on the imported goods till the date of payment of duty in terms of Board's Circular and judgments rendered by this Tribunal on the following cases:
(i) Taurus Novelties Ltd. v. CC, Bangalore -
(ii) Meirs Pharma (India) Pvt. Ltd. v. CC, Chennai -
(iii) Fal Industries Ltd. v. CC, Chennai -
(iv) Dyna Lamps & Glass Works Ltd. v. CC, Chennai -
(v) CCE, Vadodara v. Solitaire Machine Tools P. Ltd. -
They contend further that redemption fine and penalty is not imposable where in a circumstance, a Unit cannot function due to unavoidable circumstances and reasons not accountable to them, as laid down in the citations cited above.
3. The learned Counsel argued on the basis of the above statements to seek the relief claimed. He pointed out to the Supreme Court judgment rendered in the case of Indian Council for Enviro-Legal Action v. UOI and Ors. - and similar orders passed by the Apex Court banning the Aqua Culture of Prawns which resulted in the Units' being closed.
4. The learned JCDR pointed out that depreciation could be granted. However, it has to be from the date of the unit having been permitted to be debonded by the Development Commissioner in terms of the judgment rendered by the Apex Court in the case of Kesoram Rayon v. Collector of Customs, Calcutta. She submitted that penalty is leviable for default committed by them in not fulfilling the terms of the conditions of the Advance Licence as held by the Apex Court in the case of Sheshank Sea Foods Pvt. Ltd. v. UOI - ; (ii) Sriram Mills v. UOI - 2000 (123) E.L.T. 448 (A.P.); (iii) Yuil Measures India Ltd. v. CC, New Delhi - 2000 (123) E.L.T. 996 (Tribunal); & (iv) Nikhil Industries Pvt. Ltd. v. CCE, Jaipur - .
5. The learned Counsel distinguished these judgments and pointed out that the violations of Advance Licence for clearing goods are not due to any extenuating circumstances like closure of unit, ban of exports and other circumstances which requires the Court not to impose any penalty as held in the citations relied by him. He submitted that Kesoram Rayon case of the Apex Court is not applicable to the facts of this case as it pertains to the rate of duty to be charged on the de-bonding of goods while the present case pertains to depreciation to be granted till the date of claim as held in the judgment cited by him.
6. On a careful consideration of the submission, we notice that the only question required to be considered in this case is as to whether the appellants are entitled to depreciation on the goods imported and not fully used, for the purpose of calculating the duty and as to whether RF and penalty is imposable. This very issue was considered by the President's Bench in the case of CCE v. Solitaire Machine Tools P. Ltd. (supra) wherein, after due consideration, the Bench held that the depreciation has to be granted till the date of payment of duty in terms of Notifications. Again, the Tribunal, in the case of Khabros Steels (I) Ltd. v. CCE, Jaipur - on this very issue, held that the depreciation has to be granted till the date of payment of duty. The JCDR does not dispute the fact of grant of depreciation, but only submits that the depreciation has to be calculated only up to the date of de-bonding. On our consideration, we find that this was the question, which was before the Bench in the case of CCE v. Solitaire Machine Tools P. Ltd., wherein the Tribunal, on due consideration of this very point, held that the depreciation has to be given up to the date of payment of duty and not up to the date of de-bonding. The same finding was recorded also in Khabros Steel (I) Ltd. The learned JCDR relied on Kesoram Rayon case. The Kesoram Rayon case deals with the rate of duty to be fixed on the de-bonding and not on the aspect pertaining to depreciation. Hence, the reliance on the Kesoram Rayon's case by the JCDR is misplaced.
7. In so far as the appellant's contention that no penalty and RF is required to be imposed in circumstances where the units get closed, impossibility in performance of export due to reasons not accountable to the export like the order of the Supreme Court (in the present case) is well taken ground. This was the very point for consideration in the case of Taurus Novelties Ltd. v. CCE (supra), Meirs Pharma (India) Pvt. Ltd. v. CC (supra), Pal Industries Ltd. v. CC (supra), Dyna Lamps and Glass Works v. CC (supra). In all the above cases, the default in export obligations was not intentional, but due to the collapse of foreign market and non-fulfilment due to impossibility as noticed in each of those cases. Hence, it is noted that in circumstances, which are beyond the control of the appellants, the penalty and RF is not imposable. The appellants have not made any deliberate attempt to avail the benefit of the Notifications wrongly and their bona fides have not been doubted. Hence, the confiscation, fine and penalty has to be set aside. In the citations referred to by the learned JCDR, we find that in those cases there was deliberate attempt to misuse the Notification and avail the benefit with an intention to evade duty. Hence, those judgments are clearly distinguishable. Applying the ratio of the Tribunal's judgment cited by the learned Counsel, RF and penalty are set aside and the matter is remanded to the original authority to quantify the duty after granting them depreciation up to the point of payment of duty as held in the judgment cited by the learned Counsel. The appeal is allowed in the above terms.
(Pronounced in open Court on 6-5-2005)