Customs, Excise and Gold Tribunal - Delhi
Yuil Measures India Ltd. vs Cc on 18 June, 1999
Equivalent citations: 2000(88)ECR411(TRI.-DELHI), 2000(123)ELT996(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. The Commissioner in the impugned order confiscated capital goods valued at Rs. 3,63,62,019/- and raw materials valued at Rs. 36,84,288/- and gave the appellants an option to redeem the same on payment of fine of Rs. 40 lakhs. The Ld. Commissioner of Customs confirmed the demand of duty of Rs. 2,09,54,801/- and also imposed a penalty of Rs. 10,00,000/- on M/s. Yuil Measures India Ltd. and Rs. 1,00,000/- on Shri Sanjeev Kumar Gupta, Director of the appellant's firm.
2. The facts of the case briefly stated are that the appellant was approved for manufacture and export of thermometers. During the years 1991 to 1994, this unit imported various raw materials, consumables and capital goods free of duties of Customs availing the benefit of Notification Nos. 339/85-Cus dt. 25.11.1985 and 133/94-Cus dt. 22.6.1994. It was alleged that as per para I (vii) of the said Notification No. 339/85, the capital goods and raw materials were to be installed/used in the zone or re-exported within a period of one year from the date of importation; that the unit also procured capital goods from DTA free of Excise Duty availing the benefit of erstwhile Notification No. 5/86-CE dt. 28.1.1986; that under the provisions of the aforementioned notifications, the unit executed General Bonds separately for raw materials and capital goods binding it to use them as stipulated under the said notifications; that as against the export obligation of Rs. 1,150 lakhs for the first five years stipulated in the aforesaid letter of approval, the unit could effect exports worth Rs. 57 lakhs only; that the last export made was in the month of Nov. '94; that the unit failed to use the said imported raw materials for the purpose of export production within a period of one year from the date of import as stipulated under the aforesaid notification No. 339/85; that the raw material imported free of duty under the said Notification No. 133/94 was found unutilised by the unit for more than two years; that the capital goods imported as well as procured from DTA free of duties as mentioned in para I above were found unused by the unit for a long time i.e. 2 years. It was also alleged that the appellant could not use the said capital goods for the purpose for which they were imported/procured as is evident from the production performance of the unit which could export finished goods worth Rs. 57 lacs only as against export obligation of Rs. 1,150/- lakhs for the first five years as stipulated in the Letter of Approval. It was further alleged that the unit had imported/procured from the DTA the aforesaid goods free of duty availing the benefits of above mentioned notifications but failed to meet the conditions imposed in the said notifications and Rules and thereby contravening the provisions of Section 111(o) of the Customs Act, 1962 and Rule 173Q(d) of the Central Excise Rules, 1944. The appellants were directed by the Asstt. Commissioner on 7.6.1996 followed by reminder on 24.6.1996 to produce their books of accounts, so that duty could be worked out but they failed to do so. Demand was, therefore, worked out on the basis of records available with the Noida Export Processing Zone customs and the SCN was issued to the appellant asking them to explain as to why duty amounting to Rs. 7,42,42860/- should not be demanded or recovered from them, why goods should not be confiscated and why penalty should not be imposed. In reply to the SCN, the appellants submitted that the imported goods in question have already been installed/commissioned and used and are still lying within the Export Processing Zone which is Custom Bonded area as per provisions of Notification No. 339/85 as amended from time to time; that the appellant was a Limited Company and they entered into the technical collaboration with M/s. Yuil Measures Mfg. Co. of Korea; that they were approved by the Min. of Commerce to set up industrial unit in Noida Export Processing Zone for manufacture of 31.50 lacs thermometers per annum; that the appellant had 100% buy back arrangement with their collaborators for a period of 10 years; that they imported various capital goods and raw-materials and claimed the benefit of duty free clearance under Notification No. 339/85 (now 133/94) and 5/86-CE; that capital goods were installed in the zone by a team of Korean technician and the installation was completed by July, 1991; that commercial production was started in Oct. 1991; that the appellants were not given permanent electricity and LPG connections; that on this account there was delay in production; that various export orders had to be cancelled due to continued uncertainty and inordinate delays in procuring LPG connections; that on 19.6.1991, that Director of the noticee company was kidnapped; that this fact was widely reported in the media; that the foreign collaborators lost interest in the affair of the project; that in 1993, China introduced very cheap thermometers in the international market; that this adversely affected the prices of thermometers all the worldwide; that the noticee company incurred huge losses and became sick; that they moved a reference application before BIFR for its rehabilitation which was still pending; that the goods are still lying in the zone; that the Department had misinterpreted the provisions of Section 61 of the Customs Act as the same is not applicable in the case of EPZ unit which are a separate category; that a SCN was issued prematurely since at the time of issue of the notice the appellant's unit had not completed five years; that it is only the Asstt. Commissioner of Customs who was competent to issue the SCN and not the Commissioner of customs; that Customs duty leviable has not been correctly calculated in as much as import value of capital goods and not its depreciation value was taken that the duty has been calculated at the rates prevailing at a time of import. The Commissioner after hearing the submissions decided the issue as indicated in the preceding paragraph.
3. Shri J.M. Sharma and Shri A.H. Khan, Consultants appeared for the appellants and submitted that the appellant is a Public Limited Company engaged in the manufacture of clinical thermometers in technical collaboration with M/s. Yuil Measures Mfg. Co., Korea; that the appellant had obtained necessary permission from Govt. of India and imported its approved requirement of capital goods, raw-materials and the consumables etc. under the relevant Customs and Excise Notifications during the period 1991 to June '94; that the said imported capital goods were then installed in July '91 and production started on 18.10.1991 and exported the first consignment on 12.11.1991; that the appellant company had difficulties in obtaining electricity and LPG connections that the price of Thermometers in the International market in the meantime changed to the disadvantage of the appellant; that the Hon'ble BIFR has declared the appellant company a sick company under the provisions of SICA.
4. It was argued by the Ld. Consultant that Notification No. 339/85 which has been pressed into service for demanding the duty and confiscation of the goods and imposition of penalty was rescinded by Notification No.133/94 dt. 22.6.1994; that Clause 5(2) of this Notification provides that 'notwithstanding such recession (sic), anything done or action taken under the notifications so rescinded shall be deemed to have been done or taken under the corresponding provisions of the Notification'. "Similarly Central Excise Notification No. 5/86 dt. 20.1.1986 was rescinded by Notification No. 126/94 dt. 2.9.1994 which in Clause 7(2) specifies that notwithstanding such rescission, anything done or action taken under the Notification so rescinded shall be deemed to have been done or taken under the corresponding provisions of this notification". It was pleaded by the Ld. Consultant that a plain reading of the above clauses of the Notification No. 133/94-Cus and 126/94-CE clearly stipulate that only such things done or action taken under the rescinded Notification shall be deemed to have been done or taken under the corresponding provision of Notification No. 133/94-Cus or 126/94-CE. It was pleaded that only such action taken under the old notification would survive as are supported by corresponding provisions in the new notification. It was submitted that there was no clause in the new Notification i.e. Notification No. 133/94-Cus corresponding to Clause VII of old Notification No. 339/85 specifying any time limit for utilization of goods within one year etc. It was submitted that Notification No. 133/94-Cus and 126/94-CE in force on the date of issue of SCN do not provide for payment of duty so long as goods remain within the zone and are utilised for the purposes other than the purposes specified in the Notifications. It was also submitted that there was no allegation in the SCN alleging any unauthorised use of goods or unauthorised removal of goods outside the zone. It was submitted that the admitted position was that the raw materials and capital goods were still lying in the factory of the appellant. It was further contended by the ld. Consultant that the ld. Commissioner has given a finding that "the violation of conditions of relevant notification of customs thus stands established". It was argued that the ld. Commissioner had not given any finding regarding the violation of conditions of Central Excise notification. It was contended that this finding of the Commissioner is not sustainable in-as-much as it was vague and non-speaking and was perhaps based on Notification No. 339/85-Cus which was rescinded on 22.6.1994 whereas the SCN was issued on 20.9.1996. It was submitted that whereas the Ld. Commissioner had given finding about the violation of condition of Notification No. 339/85; duty has been confirmed under Notification No. 133/94; that this notification has no provision of duty demand so long as goods are within the zone.
5. On this question Shri M.M. Dubey, Ld. DR appearing for the respondent Commissioner submits that the Notification is to be read in the light of the provisions of the policy. He submits that para 117 of Chapter IX of the Import & Export Policy for Export Oriented Units and Units in Export Processing Zones provides:
Subject to the approval of BOA, EOU/EPZ units may be debonded on their inability to achieve export obligation, value addition or other requirements. Such debonding shall be subject to such penalty as may be imposed and payment of duty of Customs and Excise applicable at the time of debonding.
Ld. DR submitted that since the applicants had not met the export obligation cast on them, therefore, debonding of their unit was justifiable. He submitted that the goods were imported when Notification No. 339/85 was in force and therefore, the terms of the Notification were necessary for invoking a demand. Ho submitted that it was built in Notification No. 133/94 on the customs side and Notification 126/94 on the Central Excise side that in case the export obligation was not fulfilled, duty shall be demandable and confiscation of the goods was liable and penalty was imposable. Ld. DR submitted that the entire scheme is to be taken together and a view was to be taken. He submits that in the instant case commercial production started in 1991. A SCN was issued in 1996 and thus a sufficiently long time was given to the appellants to meet their export obligation so as to justify their duty free import of capital goods, raw materials and consumable. He reiterated the findings of the Ld. Commissioner.
6. We have carefully considered the submissions of both the sides. The first issue that has been raised is that SCN in the instant case was issued on 26.9.1996 and that on 26.9.1996 Notification No. 339/85 was not in existence as the same was rescinded and that Notification No. 133/94 dt. 22.6.1994 replaced Notification No. 339/85. It was argued for the appellants that in Notification No. 133/94, there was no provision corresponding to provision (vii) of Notification No. 339/85.
7. We have perused Notification Nos. 339/85 and 133/94. Under Clause 5 of exemption notification No. 133/94, it has been inter alia stipulated:
5. The importer satisfies the Development Commissioner of the Zone that the goods so imported have been used for the purposes specified in Clauses (a) to (d) or for any other purposes specified in Export-Import Policy and in this notification.
We further note that Clause (a) of Notification No. 133/94 provide that the goods shall be exempted when imported into India
a) for the production or manufacture of articles for export out of India.
Thus, it is very clear that exemption on imported capital goods and raw materials would not be available if the goods have not been used for production or manufacture of articles for export out of India. We find from the Order No. 3/52/95-96/ECA.II/137 dt. 15.5.1997 on pages 4 & 5 last paragraph reading as:
I have gone through the facts of the case. I find from the report of the Development Commissioner, Noida Export Processing Zone, UP that the export obligation with the prescribed value addition has not been fulfilled by the party. Since the firm have also not submitted written reply in response to this SCN alleging that they have failed to fulfil their export obligation and they have also not appeared before me in person to explain their case, it leads me to the conclusion that the noticee firm had nothing to state in defence of their case. I, therefore, hold the noticee firm guilty of contravening the provisions of Section 4(1) of the Imports & Exports (Control) Act, 1947 and Clause 8(1) of the Imports (Control) Order, 1955 read with Section 20(2) of the Foreign Trade (Development & Regulation) Act, 1992. Accordingly, in exercise of the powers vested in me under Section 4K of the Imports & Exports (Control) Act, 1947 read with Section 20(2) of the Foreign Trade (Development & Regulation) Act, 1992, I hereby impose a fiscal penalty of Rs. 25,00,000/- only on the firm and also debar them from importing any goods, receiving import licence, customs clearance permits and allotment of goods through STC/MMTC or any other similar agency under Clause 8(1) of the Imports (Control) Order, 1955, from the date of issue of this order up to 31.3.2000.
This order has been passed by the Addl. Director General of Foreign Trade in the Min. of Commerce. This order is to be read along with the Import & Export Policy in para 117 of this policy. It has been stated that subject to the approval of BOA, EOU/EPZ units may be debonded on their inability to achieve export obligation, value addition or other requirements. Such debonding shall be subject to such penalty as may be imposed and payment of duty of customs and excise applicable at the time of debonding. Reading the provision of the policy with the order of the Addl. Director General of Foreign Trade on the recommendation of the Development Commissioner, Noida Export Processing Zone, we note that in terms of Clause 5 of Notification No. 133/94 on the recommendation of the Development Commissioner of the Zone that the unit had not fulfilled the export obligation with the prescribed value addition duty on the imported goods becomes payable and therefore, the contention of the appellant that there is no corresponding provision in Notification No. 133/94 for demand of duty is not correct. Similar position arises when we examine Notification 126/94. In Clause (6) of Notification 126/94 it has been provided:
6. The user industry satisfies the Development Commissioner of the zone that the said goods have been used for the purposes specified in Clauses (a) to (d) or for any other purposes specified in the Export-Import Policy and in this notification.
Reading Clause 6 along with the order of the Additional Director of Foreign Trade and the policy provision in para 117. We hold that in Notification No. 126/94, there is a provision for demanding duty in the circumstances stated above and therefore, the demand of duty in terms of Notification No. 133/94 for Customs Duty and 126/94 for Central Excise Duty is there and the duty demand is, therefore, sustainable in law.
8. We also note that the contention of the appellant is that there has been no violation of even Notification No. 339/85 because the goods were duly installed/used in the Export Processing Zone Unit of the appellants within stipulated period of one year. We have examined this contention of the appellant. We note that during the material period, the appellants have submitted that Notification No. 339/85 was not in force and therefore, their contention that they were entitled to certain concessions under this Notification is not tenable.
9. In regard to the use of the word obligation of Rs. 1150 lacs do not appear in the Letter of Approval. We have seen the Approval Letter we find that the colms. in that letter are Year, Import (capital goods, raw materials) Export. Under the col. Year, 5 years are indicated and under export Rs. 1149.56 have been shown. In para 117 of the Import Export Policy for Export Processing Zones, it has been stated that subject to the approval of the Board of Approval, Export Processing Zone Units may be debonded on their inability to achieve export obligation value addition or other requirements. Thus, the word export obligation is to be read in terms of the policy for the relevant period. It is perhaps the approximation of the figure from Rs. 1149,5 lakhs to Rs. 1150 lacs. This is further to be read in terms of the Order of Additional Director General of Foreign Trade who on page 4 of his order records:
I find from the report of the Development Commissioner, Noida Export Processing Zone, UP that the export obligation with the prescribed value addition has not been fulfilled by the party.
Thus, the export obligation is not a new term either to the policy or to the Development Commissioner whose satisfaction is necessary in terms of Notification No. 133/94 and 126/94.
10. Ld. Consultant also submitted that the demand relates to the period from 1991 to 1994 that the import was made by the appellant on 22.6.1994 and the SCN was issued on 29.6.1996 which was beyond a period of six months. Demands of duty in the present case are made in terms of the Bonds executed. Exports in this case were up to the year 1994, the Development Commissioner recommended that the unit had not fulfilled the export obligation with the prescribed value addition. Thus, the demand in such cases is to be examined in respect of the requirements of the policy as also in respect of the provisions of the Notification. In notification 133/94, we note that under Clause 5 of Notification 133/94, the stipulation reads:
The importer satisfies the Development Commissioner of the Zone that the goods so imported have been used for the purposes specified in Clauses (a) to (d) or for any other purposes specified in Export Import Policy and in this notification.
Thus, the demand arises only when the Development Commissioner of the Zone makes recommendation and therefore, the demand shall have to be raised in terms of this. It can also be said about the notification issued on the Central Excise side which is Notification No. 126/94. This demand has been confirmed in terms of the Notification. The assessments or clearances in these cases were governed by the specific provision of the Notifications. The notifications relied upon the satisfaction of the Development Commissioner in regard to condition (a) to condition (d).
11. The Ld. Consultants raised arguments on the jurisdiction of the Commissioner who adjudicated the case. It was submitted that in terms of Notification No. 25/92 dt. 9.10.1992, the Central Board of Excise & Customs empowered Collectors for purposes of investigation and adjudication by assigning certain cases. They submitted that no order had been placed on record authorising Customs Commissioner, Delhi to decide the case of M/s. Yuil Measures (India) Ltd. It was submitted that in the absence of such authorisation by the Central Board of Customs & Excise, the Commissioner of Customs had no jurisdiction over Noida Export Processing Zone to investigate and adjudicate the case. It was further argued that the Collector of Customs had no jurisdiction to decide cases pertaining to Central Excise. In reply ld. DR drew our attention to the letter No. 305/4/95- FTT Circular No. 126/95 dt. 12.12.1995 wherein it has been stated that:
To All Chief Commissioner of Customs, All Chief Commissioner of Central Excise, All Commissioner of Customs, All Commissioners of Central Excise Sub: Administrative control over the 100% Oriented Units (EOU) - Instructions regarding.
Sir, I am directed to say that the Board has examined various representations from the Association of officers both from customs and Central Excise side of the Department regarding the administrative control over the 100% EOUs/EPZs, set up under export promotion schemes.
The Board has examined the matter in detail and observed that with the passage of time the 100% EOU/EPZs have come up in the interiors of the country far removed from the port areas which have traditionally been the areas of customs operation. At the same time the nature of work in the 100% EOU/EPZs involves both Customs/Central Excise Laws and procedure. Therefore, having regard to the totality of operations of the 100% EOU/EPZs Units and keeping in mind the necessity that in the long run any work whether customs or of Central Excise should be handled by jurisdictional Commissionerate, and facilitation the administration of these units at present, the matter of jurisdiction has been decided as follows:
a) normally the work of 100% EOU/EPZ Units will be handled by the staff of the jurisdictional Commissioner of Customs or Commissioner of Central Excise, as the case may be.
b) in the port towns, where there is overlapping jurisdiction of the Commissioner of Customs and the Commissioner of Central Excise, the work of 100% EOU/EPZ unit will be handled by the staff of Commissioner of Customs including the Central Excise work of the Units. This will be done by dutiable delegation of power. The proposal for the same may be referred to Board, if necessary.
c) notwithstanding the aforesaid decisions, where the Board has already assigned the work in an identified EPZ such as FALTA, NOIDA to Commissioner of Customs keeping in mind physical proximity of the facility to a particular customs Commissionerate or any other consideration such orders would not be disturbed immediately and the existing arrangement would continue.
d) in the case of facilities under the jurisdictional control of a particular Commissioner where both customs and central excise cadres are working under the same Commissioner, for example Vizag Goad the work of 100% EOUS/EPZS would be handled as per the instructions contained in (a) above.
e) where the jurisdiction of the Commissioners of Customs (P) is concerned, as the jurisdiction would be concurrent with some Central Excise Commissionerate, the control may be exercised by the Central Excise Commissionerate. This is mainly to allow Commissioner of Customs (P) to concurrence on Customs Preventive work. If the existing arrangements of control is with CC (P) the change over may be made w.e.f. 1.1.1996. The Chief Commissioner may after standing the staffing pattern issue suitable orders for readjustment of staff between the officers of CC (P) and Commissioner of Central Excise.
3. As regards the administrative/technical control on the existing EPZs, the Board is of the view that the present arrangement would continue. Accordingly, the Commissioner of Customs, Delhi will continue to exercise control over the Noida EPZ while Commissioner of Customs, Calcutta would continue to exercise control over the FALTA and so on.
4. I am directed to say that the Board's aforesaid decision has been taken after examining the issue of administrative control over the EOU/EPZ is totally keeping in mind the requirement of law and the facilities to the trade. It is expected that with the decision, as above, the representations of various service associations will be set at rest.
5. It is requested that necessary action may be taken by all concerned officers to implement the subject decision of the Board.
Receipt of this letter may please be acknowledged.
Yours faithfully, sd/-
(Ranjana Jha) Under Secretary to the Govt. of India
12. We have examined the contentions of both the sides on the issue of jurisdiction. We note that under Notification No. MF (DR) 28/88, the Noida Export Processing Zone shall comprise of the places bearing the survey numbers and enclosed by boundaries as are specified in paragraph 4 of the Notification of the Govt. of India, Min. of Finance (Deptt. of Revenue) No. 339/85-Cus dt. 21.11.1985 issued under Sub-section 1 Section 25 of the Customs Act, 1962 (52/62). We also note that under Notification No. 27/97-Cus (NT) dt. 7.7.1997 as amended by Notification No. 40/97-Cus(NT) dt. 10.9.1997 and Notification No. 6/98-Cus (NT) dt. 3.2.1998 against S.No. 7 about appointment of Commissioners, Dy. Commissioners of the Customs for the areas under col. area The Union Territory of Delhi, the whole of the State of Haryana and the Noida Export Processing Zone in the state of U.P. Under the column designation of the officer "Commissioner of Customs, Delhi" has been indicated. This clearly shows that the Commissioner of Customs, Delhi is Commissioner for investigation and adjudication of cases in the jurisdiction of Noida Export Processing Zone. This shows that there was no lack of jurisdiction in the instant case so far as Customs cases are concerned. In so far as Central Excise cases are concerned, the Ministry's letter dt. 12.12.1995 reproduced above is relevant wherein it has been specifically authorized that "normally, the work of 100% EOU/EPZ Units will be handled by the staff of the jurisdictional Commissioner of Customs or Commissioner of Central Excise as the case may be". Further it has been set out in this letter that the Board has examined the matter in detail and observed that with the passage of time the 100% EOU/EPZ have come up in the interiors of the country far removed from the port areas which have traditionally been the areas of Customs operation. At the same time the nature of work in the 100% EOU/EPZs involves both Customs/Central Excise Laws and procedure. Therefore, having regard to the totality of operations of the 100% EOUs/EPZs Units and keeping in mind the necessity that in the long run any work whether Customs or Central Excise should be handled by jurisdiction commissionerate and facilitating the administration of these units at present, the matter of jurisdiction has been decided as follows:
a) normally, the work of 100% EOU/EPZ units will be handled by the staff of the jurisdictional Commissioner of Customs or Commissioner of Central Excise as the case may be.
The above position makes it clear that the Commissioner of Customs to exercise powers under the Central Excise Law in view of the above Circular No. 126/95.
13. It was also contended before us that goods have been confiscated under Section 111(o) of the Customs Act, 1962 and Rule 173Q of the Central Excise Rules, 1944 and penalties have been imposed without indicating the Section of the Customs Act, 1962 and specific provision of Central Excise Law. It was contended that though the Commissioner of Customs, Delhi had jurisdiction over Noida Export Processing Zone, similar jurisdiction has not been given to the Commissioner of Central Excise, Delhi. We have examined this issue in the preceding paragraph. We find that jurisdiction in the Central Excise matters also has been vested on Commissioner of Customs who had jurisdiction over Noida Export Processing Zone in terms of Circular No. 126/95 dt. 12.12.1995. In so far as combined redemption fine is concerned since the goods are governed by two enactments for levy of duty and since the goods have been confiscated separate, redemption fine should have been shown. No arguments were adduced before us against confiscation of the goods. We, therefore, have nothing to say excepting the confiscation of the goods. The only argument was that the order is not valid in-as-much as the fine in lieu of confiscation has not been indicated separately. In so far as the showing of the fine separately is concerned under the two different enactments. We note that the goods have been confiscated a composite fine does not render the order in-valid showing the fines separately in lieu of confiscation would have been better but does not vitiate the order as the total quantum of fine is based on the value of the goods and other considerations relevant and in case of imported goods, the margin of profit etc. Thus, we hold that showing the fine in lieu of confiscation jointly is sustainable in law. Moreover, no evidence has been brought before us to prove that the margin of profit was not as much as to show that the redemption fine was much higher than the one permissible under Section 125 of the Customs Act, 1962.
14. In so far as the composite penalty is concerned, we note that penalty was leviable under the two separate acts. The apportionment of penalty was necessary to the two acts so as to enable the appellant to contest it since the combined penalty has been shown, therefore, the appellant did not get fair chance to defend their case in regard to penalty. Therefore, the order imposing penalty is set aside.
15. It was also contended before us that the cut off date for depreciation allowing has been arbitrarily arrived at. It has been provided in the scheme that the depreciation will be admissible from the date of commercial production. We note that in this view of the matter, there has not been any arbitrary decision in fixing the date for calculating depreciation.
16. Another point that was argued before us was that Customs Duty or withdrawal of exemption will arise only from the date of de-bonding. We find that the Department produced before us letter No. 4/9/90-Prej/11226 dt. 3.12.1996 from the Asstt. Development Commissioner wherein it has inter alia been stated that:
I am directed to say that the performance of unit has been reviewed and the Board of Approval in principle debonding of their unit in Noida Export Processing Zone in terms of para 117 of Export Import Policy 1992-97 subject to the following conditions:
1. Applicable Customs & Excise duties would be paid on the imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock.
2. The penalty imposed by the appropriate Authority under the Foreign Trade (Development & Regulation) Act, 1992 for non fulfilment of the conditions of approval, would be paid. In case an appeal against an order imposing penalty is pending or proceedings under the Act have not been finalised, a legal undertaking for payment of penalties, that may be imposed, would be executed with the Joint Director General Foreign Trade concerned.
In the letter of the Min. of Finance Circular No. 21/95 dt. 10.3.1995 it has been stated It is, thus, clear that if the competent authority namely the Board of Approval or the Development Commissioner concerned determines the units failed to export the fixed percentage of articles for the specified period, then in such case it may be held that the conditions of the exemption notification has been violated. At this stage, it will be open for this Department to issue a SCN to the unit for demanding the due duty on the imported goods.
17. In the instant case as has been brought out above that the Development Commissioner had reported that the export obligation with the prescribed value addition has not been fulfilled by the appellant. The Board of Approval had reviewed the performance of the appellant unit in terms of para 117 of the Exim Policy 1992-97 and that the applicable Customs and Excise duty would be paid by the unit. Thus, when the export policy findings of the Board of Approval and conditions of the exemption notification are examined together, it becomes very clear that Customs Duty becomes demandable from the appellant unit and therefore, Customs Duty has correctly been demanded in terms of Section 15 of Customs Act, 1962 read with instructions issued on the subject. Goods have rightly been confiscated and we hold accordingly.
18. But for the above modifications, the impugned order is upheld and the appeals are disposed of accordingly.
Pronounced today (18.6.1999).