Custom, Excise & Service Tax Tribunal
Hico Enterprises vs Commissioner Of Customs, Mumbai on 16 February, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No.E/1345/02 (Arising out of Order-in-Original No. 201/2002/CAC/CC/M.C.T dated 01.05.2002 passed by Commissioner of Customs (Import), Mumbai.) For approval and signature: Honble Mr P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Hico Enterprises Appellant (Represented by: Shri Akhil Sheerazi, Advocate) Vs Commissioner of Customs, Mumbai Respondent (Represented by: Dr. T. Tiju, S.D.R) CORAM:
Honble Mr P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member (Technical) Date of Hearing : 16.02.2010 Date of Decision: 16.02.2010 ORDER NO..
Per: Mr P.G. Chacko
1. This appeal comes up before us for final disposal, in the light of the decision taken by the Larger Bench in Hico Enterprises vs Commissioner of Customs, Mumbai 2005 (189) ELT 135 (Tri-LB) on the issues referred to it by the regular Bench which heard the appeal in the first instance. Contextually, we also note that a rectification-of-mistake application filed by the Commissioner against the decision of the Larger Bench was rejected by that Bench and also that the Civil Appeal filed by the Commissioner against the Larger Bench decision on the referred issues was dismissed by the Honble Supreme Court vide Commissioner of Customs vs Hico Enterprises 2008 (228) ELT 161 (SC).
2. The appellant in this appeal had imported polypropylene and filed a Bill of Entry on 30.03.1994 for its duty-free clearance under Notification No. 203/92-Cus dated 19.5.92 on the strength of an advance licence, which had earlier been transferred to them by M/s Amar Taran Exports. After investigation, the department found that, in respect of the finished goods exported by the original licensee in discharge of their export obligation under DEEC Scheme, input stage credit had been availed. It was further found that condition No. V of Notification No. 203/92-Cus had not been complied with and, therefore, the benefit of duty-free clearance of the goods imported by M/s Hico Enterprises (appellant) was not available to them. On this and allied grounds, show-cause notices were issued to both the parties. Against M/s Amar Taran Exports, proposal for confiscation of the export goods under Section 113 of the Customs Act was raised and an allied proposal for imposition of penalty was also made. Against the present appellant, the goods imported by them were proposed to be confiscated under Section 111 of the Act and the party was proposed to be penalised under Section 112 of the Act. The appellant was also asked to pay duty on the imported raw materials on the ground of violation of Condition V of Notification No. 203/92-Cus. In adjudication of the show-cause notices, the learned Commissioner of Customs demanded duty of Rs 16,74,702/- with interest thereon @ 24% p.a. from M/s Amar Taran Exports and M/s Hico Enterprises (appellant), who were held to be jointly and severally liable to pay the said duty with interest. The imported goods were held liable to be confiscated under Section 111 (o) of the Act on the ground of non-compliance with Condition V of the notification. Penalties were imposed on both the parties under Section 112 (a) of the Act, the penalty on the appellant amounting to Rs 1.00 lakh. There is no appeal of M/s Amar Taran Exports before us. We have to deal with the appeal of Hico Enterprises only and, that too, in the light of the Larger Bench decision on the referred issues.
3. The Larger Bench was considering the following issues:
(a) Whether the benefit of legal maxim LEX NON COGIT AD IMPOSSIBILIA would be available to a valid recognized transferee to avail the benefit of the DEEC exemption Notification? Or
(b) Whether the original licencee is to satisfy the condition of the Notification or the transferee of the licence?
4. Both the above questions were answered in the affirmative, in favour of the appellant. Consequently, the benefit of the aforementioned legal maxim is available to the appellant, being the transferee of the advance licence and they cannot be called upon to fulfill Condition V (a) of Notification No 203/92-Cus. The Larger Bench has clearly held that it was for the original licensee M/s Amar Taran Export to satisfy the said condition.
5. Duty was demanded from the appellant on the ground of breach of Condition V (a) of Notification No. 203/92-Cus. As per that condition, any input stage credit should not have been availed under Rule 56A or Rule 57A of the erstwhile Central Excise Rules, 1944 in respect of finished goods exported in discharge of export obligation under DEEC Scheme. It appears from the impugned order that the exportation of finished goods was done by M/s Amar Taran exports, who claimed to be a merchant-exporter. That party contended that, being a merchant-exporter, there was no question of their availing any input stage credit. There is nothing in the Commissioners order to indicate that any evidence was found of input stage credit having been availed by M/s Amar Taran Exports or by any supporting manufacturer in relation to the export goods. At any rate, the appellant contended that it was impossible for them to have availed input stage credit and, therefore, they should not be held to have committed breach of the aforesaid condition of the notification. In other words, they claimed the benefit of the aforementioned legal maxim. This benefit stands allowed to the appellant vide the judgment of the Larger Bench and the judgment of the apex court in the Civil Appeal filed against the Larger Benchs decision. It would follow that neither any duty can be demanded from the appellant on the ground of breach of Condition No. V (a) ibid, nor any penalty could be imposed on them on the same ground. The penalty of Rs 1.00 lakh was imposed on the appellant on the ground that, by committing breach of the above condition of the notification, they rendered the goods liable to confiscation under Section 111 (o) of the Customs Act. This decision of the Commissioner cannot be sustained inasmuch as the benefit of the aforesaid legal maxim is available to them and consequently it was impossible for them to violate the condition by availing any input stage credit. The liabilities referable to the above condition would only be fixed on the exporter of finished goods as per the decision of the Larger Bench, as affirmed by the apex court.
6. In the result, we have got to set aside the order of the Commissioner to the extent it is adverse to this appellant. It is ordered accordingly. The appeal stands allowed.
( M. Veeraiyan) Member (Technical) (P.G. Chacko) Member (Judicial) rk 2