Customs, Excise and Gold Tribunal - Tamil Nadu
Fal Industries Ltd. vs Cc on 20 September, 2002
Equivalent citations: 2003(86)ECC113, 2003(159)ELT215(TRI-CHENNAI)
JUDGMENT Jeet Ram Kait , Member (T)
1. This appeal is preferred by M/s FAL Industries Ltd. against the order in original No. 10/2000-CAU dated 23.2.2000 passed by the Commissioner of Customs, Madras whereby he has ordered confiscation of goods valued at Rs. 57,91,496 under Section 111 (o) of the Customs Act, 1962 (the act for short) with an option to redeem the same on payment of fine of Rs. 11,58,000 apart from demand of duty of Rs. 44,31,006 besides imposition of penalty of Rs. 1,16,000 under Section 112(a) of the Act. He has also demanded interest @ 24% per annum from the date of import of the consignment till the date of the payment of the duty demanded.
2. The brief facts of the case are that the appellants herein had obtained licence bearing No. P/CG/2100700/C/XX/25/11/EPCG dated 27.8.1992 for a CIF value of Rs. 64,27,044 under the EPCG scheme from the Chief Controller of Imports & Exports, New Delhi and had imported capital goods at a concessional rate of Customs duty of 15% in terms of Customs Notification No. 160/92 dated 20.4.92 as amended subject to the conditions envisaged therein. The appellants were to export Air Purifiers for a total FOB value of four times the CIF value of the imports under the said Licence within five years from the date of issue of the import licence in terms of para 38 of the EXIM policy 1992-97. On gathering information that the appellants had not fulfilled the export obligation, the DRI, Chennai visited their premises and recorded statement from Shri Dhruvan, Dy. General Manager on 16.8.99 under Section 108 of the Act. He stated that they could export only a negligible quantity of only 1 % of the export obligation and that the licence has been submitted to the DGFT, New Delhi seeking extension of time to fulfil the export obligation as provided for under Public Notice No. 5(RE-99)/1997-2002 dated 6.5.1999 alongwith Bank guarantee covering the liabilities. Some of the imported goods were found in the premises of the appellants' sub-contractor which has been explained by the appellants. Since it appeared that the appellants had not fulfilled the export obligation, show cause notice was issued to them proposing to demand differential duty, demand of interest and also confiscation of the goods apart from imposition of penalty. On consideration of the reply furnished by the appellants and after granting personal hearing to the appellants, the adjudicating authority passed the impugned order which is challenged before us on the following grounds:
(a) Appellants have already made a payment of duty of Rs. 44,31,006 as demanded by the original authority on account of failure to comply with the export obligation.
(b) Demand of interest is not sustainable as at the relevant time Notification No. 160/92 did not contain any such provision. The show cause notice demanded duty and hence the authority cannot traverse beyond the scope of show cause notice and demand interest. Payment of Customs duty and any interest thereon are governed by the provisions of the Customs Act and notifications issued thereunder and without any enabling provisions either in the related Act or in the Notification, the demand of interest is patently wrong.
(c) Confiscation of the goods and imposition of penalty were unwarranted as these are not backed by rules. In support of the plea they cited the judgment of the Hon'ble Apex Court in the case of Hindustan Steel Ltd. v. State of Orissa 1978 ELT J-159 and the decision of the Tribunal in the case of Philips (India) Ltd. v. CC, Mumbai 2001 (137) ELT697.
3. Shri S. Murugappan, learned Counsel for the appellants argued the matter on the above lines and sought for setting aside the impugned order and allowing their appeal.
4. Shri A. Jayachandran, learned DR on the other hand defended the impugned order and sought for rejection of the appeal.
5. We have carefully considered the submissions made by both the sides and gone through the case records. We now proceed to give our findings in respect of each of the demands:
A. Duty. Duty demanded to the tune of Rs. 44,31,006 has already been paid by the appellants and hence no order is required in this regard.
B. Confiscation of the goods and imposition of penalty. We observe that in this case the appellants have come clean before the authorities that it was beyond their control to fulfil the export obligations because of various reasons and they could export only a negligible quantity of 1%. Further, there is no allegation in the show cause that the appellants-importer wilfully sought to avail of the benefit of notification with a view to gain any benefit. It is not the case of the department that there was deliberate attempt to avail of the notification by making any misdeclaration. The extent of the failure to fulfil the export obligation does not matter in a situation, as seen from the records that in this case, in fact the appellants had filed bank guarantee and sought for extension of time to fulfil the export obligation. But in spite of their efforts, they could not succeed. We observe that identical case came up for consideration before the CEGAT, West Regional Bench, in the case of Philips India Ltd. v. CC, Mumbai 2001 (137) ELT 697 wherein the confiscation of the goods and imposition of penalty was set aside. In that case also the same Notification i.e. No. 160/92-Cus and Para 38 of the EXIM Policy was dealt with. We would also like to observe that the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa, has held that "penalty will not also be imposed merely because it is lawful to do so. Where penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances". Following the ratio of the above decisions, we set aside the confiscation of the goods and imposition of penalty on the appellants.
C. Demand of Interest. We observe that the Commissioner of Customs, Chennai vide order in original No. 194/2001-CAU dated 29.10.2001 in the appellants' own case in identical circumstances has held that interest cannot be demanded in the absence of any statutory provision in the Customs Act. The Commissioner held so by relying on the decision of the Settlement Commission in the case of M/s Rajshri Plastiwood Ltd. 2001 (130) ELT 295 and also the decision of the Tribunal in the case of Philips (India) Ltd. v. CC, Mumbai (supra) wherein the Tribunal has held that there was no provision in the Customs Act, 1962 or in the Notification to recover interest. We therefore, set aside the demand of interest @ 24% ordered under the impugned order.
6. In the result we uphold the impugned order only in regard to demand of duty and set aside the order so far as it relates to confiscation of the goods, imposition of penalty and demand of interest @ 24% are concerned. Thus the appeal is allowed partially. The appellants are entitled to consequential relief, if any according to law. Ordered accordingly.