Customs, Excise and Gold Tribunal - Bangalore
Femco Filters (P) Ltd. And Shri P.M. ... vs The Commissioner Of Customs on 16 May, 2006
Equivalent citations: 2006(111)ECC353, 2006ECR353(TRI.-BANGALORE), 2006(203)ELT494(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. These appeals have been filed against Order-in-Appeal No: 405/20Q3-CUS dated 12.11.2003 passed by the Commissioner of Customs (Appeals), Bangalore.
2. The brief facts are as follows:
The appellants imported an item called Particle Counter and Accessories under the EPCG Scheme vide Customs Notification No. 160/92 dated 20.4.92 and paid concessional rate of duty at 15%. At the time of import they executed a Bank Guarantee to the extent of Rs. 2,80,000/-. The appellant could not fulfill the export obligations. Hence, Revenue proceeded against the appellants for recovery of differential duty. The Adjudicating Authority held that the impugned items are liable for confiscation and imposed a redemption fine of Rs. 2,50,000/-. He demanded differential duty amounting to Rs. 5,72,477/-. Interest at 24% was also demanded. A penalty of Rs. 1,00,000/- was imposed. A penalty of Rs. 50,000/- was imposed on Shri P.M. Zainful Abdeen, Director of the appellant company. The appellant approached the Commissioner (A). The Commissioner (A) upheld the order of the Original Authority. The appellants strongly challenge the impugned order.
3. Shri K.S. Ravi Shankar, learned advocate appeared for the appellants and Shri Ganesh Havanur, learned SDR appeared for the Revenue.
4. The learned advocate urged the following points.
(i) The differential duty is only Rs. 2,73,120/- according to the Bank Guarantee, which was extended from time to time but not Rs. 5,72,477/-.
(ii) The differential duty has been based on a wrong classification resorted to by the authorities as CTH 9029.10 instead of 9026.80. The appellants relied on HSN.
(iii) The JDGFT took into account the duty payment demanded by them and paid by the appellants on 13.2.2004 at Rs. 2,73,120/- and closed their case. The above duty is what has been worked out at the time of executing Bank Guarantee.
(iv) During the relevant period there was no provision for payment of interest in Notification No. 160/92 Cus. The appellant relies on the decision of the Tribunal in Philips India Limited v. CC reported in 2001 (137) ELT 697 (T) Paras 9, 11 & 12.
(v) The HSN classification is binding on the Revenue as per the Apex Court's decision in the case of Woodcraft Products Ltd. ; Fenner India Ltd. and Bakelite Hylam Ltd. - .
(vi) Reliance was placed on the definition of "Particle Counter as given in McGraw Hill Dictionary of Scientific and Technical and Terms.
(vii) In the case of FAL Industries Ltd. v. CC 2003 (159) ELT 215 (T), it was held that when there was non-fulfillment of EPCG obligation and duty was paid, there was no deliberate attempt to violate Notification No. 160/92. Hence, no confiscation or penalty would be sustained. Hence penalty under Section 112 is not sustainable on the Company or on the Director.
5. The learned SDR reiterated the impugned order.
6. We have gone through the records of the case carefully. At the time of import of the equipment under the EPCG license, the appellants have executed Bank Guarantee with DGFT. The idea of giving Bank Guarantee is that in case of non-fulfillment of the condition of the Notification, the importer will be liable to pay the differential duty. The differential duty shown along with the Bank Guarantee is Rs. 2,73,120/-. When the appellants failed to fulfill the export obligations under the EPCG scheme, they were liable to pay the differential duty in terms of the Bank Guarantee executed by them. They paid this amount. This fact is not disputed. The point of dispute is the amount of differential duty. According to the Revenue, the differential duty is Rs. 5,72,477/- but the appellants contends that it is Rs. 2,73,120/-. This is on the account of the fact that the Department has classified the goods under CTH 9029.10 of the Customs Tariff whereas according to the appellant, the correct classification is CTH 9026.80. The contention of the appellant is that the goods should be classified under CTH 9026.80 has not been accepted by the lower authority in view of the fact that in the Bill of Entry the classification shown was CTH 9029.10. The Original Authority has not examined the issue of classification properly.
7. The appellate authority in the impugned order has given the tariff description under 9026 and 9029 and comes to the conclusion that the impugned goods will be classified only under 9029. He has not given any other reason. CTH 90.26 covers instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases, whereas CTH 90.29 covers various types of counters such as revolution counters, production counters, taxi meters, milometers, hydrometers and alike. The Particle Counter, which is the impugned goods, are different from the Counters covered by 90.29. Heading 90.29 counts the events. For example the revolution counter counts the number of revolutions per minute. Similarly, the other counters covered by 90.29. Whereas the impugned goods actually determine the number of particles in the gas. Hence, in our view the impugned goods are more appropriately classified under 90.26 and there is a lot of force in the contention of the appellant. If this view is taken, the differential duty would be Rs. 2,73,120/- and not Rs. 5,72,477/- as demanded. Further, we find that during the relevant period, there was no provision under Notification No. 160/92 for demand of interest. Therefore, the demand of interest is not sustainable. As regards the confiscation, we find there was no deliberate violation of the conditions of the Notification. The appellant could not fulfill the export obligations due to circumstances, which were beyond his control. In such a case, imposing penalty and confiscating the impugned goods cannot be sustained. Therefore, we set aside the confiscation of the impugned goods. When the confiscation is set aside, no penalty can be levied. In view of the above observations, we set aside the impugned order and allow the appeals with consequential relief.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)