Custom, Excise & Service Tax Tribunal
M/S. Sandur Micro Circuit Ltd vs The Commissioner Of Central Excise & ... on 30 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: C/450/2005 (Arising out of Order-in-Appeal No: 203/2005-CE dated 28.09.2005 passed by the Commissioner of Central Excise (Appeals), Mangalore) 1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Sandur Micro Circuit Ltd. Appellant Vs. The Commissioner of Central Excise & Customs Mangalore Respondent
Appearance Shri B. Venugopal, Advocate, for the Appellant Smt. Sudha Koka, Authorised Representative (SDR), for the Respondent CORAM DR. S.L. PEERAN, HONBLE MEMBER (JUDICIAL) SHRI T. K. JAYARAMAN, HONBLE MEMBER (TECHNICAL) Date of Hearing:30.01.2008 Date of decision:08.02.2008 FINAL ORDER No._______________________2008 Per Shri T.K. Jayaraman This appeal has been filed against the Order-in-Appeal No. 203/2005-CE dated 28.09.2005 passed by the Commissioner of Central Excise (Appeals), Mangalore.
2. The appellants are a 100% EOU. They imported Capital Goods, raw materials and consumables under the scheme. As the goods were imported free of duty and also as some of the goods were procured indigenously free of duty under the Scheme, both Customs and Central Excise Duty were foregone by the Revenue. The goods were imported under the 100% EOU Scheme. Therefore, the appellants were required to discharge the export obligation. As the appellants could not fulfill the export obligation under the scheme, they had violated the provisions of Foreign Trade Policy and also the Customs Act and the Notifications. Hence, Revenue proceeded against them. The Original Authority, in his adjudication order, confirmed the duty foregone to the tune of Rs. 7,61,40,370/- being the Customs Duty and also Rs. 74,441/- being the Central Excise duty on the indigenous goods procured under the relevant statutory provisions. Further, he imposed a penalty of Rs. 7,62,14,811/- on the appellant under Section 112 of the Customs Act. He ordered recovery of interest also. The appellants were aggrieved over the decision of the Original Authority and approached the Commissioner (Appeals). The Commissioner (Appeals) has upheld the order of the Original Authority. Hence, the appellants have come before this Tribunal for relief.
3. Shri B. Venugopal, the learned Advocate, appeared on behalf of the appellant and Smt. Sudha Koka, the learned SDR, for the Revenue.
4. We heard both sides. On behalf of the appellants, it was submitted that it is not correct to say that the appellants had not fulfilled the entire export obligation. The appellants had partially fulfilled the export obligation and it was urged that no benefit has been given on account of the partial fulfillment of the export obligation. It was stated that for the period 1994-1995, the appellants exported goods worth Rs. 364.22 lakhs and for the year 1995-1996, the value of exports indicated by the appellants is Rs. 120 lakhs. For the year 1996-1997, goods worth Rs. 119 lakhs were exported. Therefore, the learned Advocate said that proportionate abatement from duty liability should be given and he said that the lower authorities have not considered this plea. He relied on the following decisions of the Tribunal:-
(i) Super Tex Labels Vs. CC, Bangalore 2005 (191) ELT 766(Tri-Bang.)
(ii) Sidhartha Metal Coating Ltd. Vs. CC, Bangalore 2005 (192) ELT 192(Tri.-Bang.) 4.1. The learned advocate submitted that due to change in technology, there was sudden slump in the demand of the product manufactured by the appellant and, therefore, they lost their export market. Hence, they were not in a position to fulfill the export obligation. He stated that the recovery of interest in terms of Section 72 of the Customs Act read with exemption Notification under the impugned order is not sustainable. During the material period, the Notification Nos. 13/81-Cus dated 09.02.1981 and 53/97-Cus dated 03.06.1997 did not contain any provision for demanding interest. On this aspect, the learned Advocate relied on the following case-laws:-
(i) CC Vs. Stelfast Pvt. Ltd. 2007 (207) ELT 46(Kar.)
(ii) Femco Filters (P) Ltd. Vs. CC, Bangalore 2006 (203) ELT 494(Tri.- Bang.)
(iii) In Re: Rajshri Plastiwood Ltd. 2001 (130) ELT 295(Sett.Comm.)
(iv)Super Tex Labels Vs. CC, Bangalore 2005 (191) ELT 766(Tri-Bang.)
(v) Meirs Pharma (India) Pvt. Ltd. Vs. CC, Chennai 2004 (167) ELT 53(Tri.-Chennai)
(vi)Fal Industries Ltd. Vs. CC, Chennai 2003 (159) ELT 215(Tri.-Chennai)
(vii)Dyna Lamps & Glass Works Ltd. Vs. CC, Chennai 2003 (157) ELT 73(Tri.-Chennai) 4.2. He also stated that the Notification No. 67/95-Cus(N.T.) dated 01.11.1995 provides for exemption from payment of interest in respect of the goods which are warehoused. He also urged that in the facts and circumstances of the case, there is no warrant for imposing any penalty. The demands for their products in the International Market came down because of global recession. The overseas buyer who was to purchase the entire production of the appellant did not honour the commitment which forced the appellants to shut down their manufacturing operations. Many of the revival plans implemented by the appellant to revive the fortunes of the appellant unit did not result in any success. Therefore, the appellant company was referred to BIFR for revival on 26.11.1998. Hence, the failure to fulfill the export obligation was not intentional and deliberate, but was due to certain factors, which were beyond their control. The learned Advocate relied on the following decisions, which hold that in such circumstances, no penalty can be imposed and interest demanded.
(i) Taurus Novelties Ltd. Vs. CC, Bangalore 2004 (173) ELT 100(Tri.-Bang.)
(ii) Meirs Pharma (India) Pvt. Ltd. Vs. CC, Chennai 2004 (167) ELT 53(Tri.-Chennai)
(iii) Suvarna Aqua Farm & Exports Ltd. Vs. CC, Guntur 2005 (190) ELT 284(Tri.-Bang.)
5. The learned SDR pointed out that the appellant failed to fulfill the conditions of Notification and, therefore, they are liable to pay the duty demanded and the impugned orders are legal and proper. Hence, she requested the Tribunal to uphold the impugned order.
6. On a very careful consideration of the issue, we find that even though the appellants have not completely fulfilled the export obligation, they have put to use all the Capital Goods/raw materials imported and indigenously procured from the manufacturer of the goods. They have also shown export performance in three years. In view of this, it is not proper to demand the entire duty liability without taking into account the export performance. Therefore, in our view, the duty liability is to be re-quantified taking into account the partial fulfillment of export obligations. In the facts and circumstances of the case, there is no warrant for imposition of any penalty. Further, the relevant Notifications at that time did not provide for demand of any interest. Therefore, the demand of interest also cannot be sustained. Hence, we have no other option but to remand the matter to the original authority for re-computation of the duty liability in the light of our above observation. Further, before re-computing the duty liability, a personal hearing should be given to the appellants. The appellants are free to urge all the legal and factual points to the Original Authority so that a proper re-computation can be done. The Original Authority shall dispose of the appeal within a period of four months from the date of receipt of this order. The appeal is allowed by way of remand to the Original Authority.
(Operative portion of this Order was pronounced in open court on conclusion of hearing on 30.01.2008) (T.K. JAYARAMAN) Member (T) (S.L.PEERAN) Member (J) /pr/