Customs, Excise and Gold Tribunal - Tamil Nadu
Meirs Pharma (India) Pvt. Ltd. vs Cc on 19 March, 2004
Equivalent citations: 2004(167)ELT53(TRI-CHENNAI)
ORDER
Jeet Ram Kait, Member(T)
1. This appeal filed by M/s Meirs Pharma (I) Pvt Ltd, hereinafter referred to as the appellants herein is directed against the order in Original No. 98/2000 CAU dated 26.9.2000 passed by the Commissioner of Customs, Chennai by which the Commissioner has denied the benefit of Customs Notification No. 169/90 dated 3.4.90 on the goods imported against EPCG licence No. P/CG/125697 dated 14.9.89 and confirmed the duty of Rs 62,79,249/- and confiscated the goods valued at Rs 48,82,000/- under Section 110(O) of the Customs Act, 1962 with option to redeem the same on payment of a fire of Rs 6,30,000/-. He has also demanded interest @ 24% per annum on the duty foregone from the date of clearance of the goods. He has also ordered enforcement of Bank Guarantee of Rs 63,00,000/- executed with D.G.F.T. and appropriation of the same towards the above dues, apart from imposing penalty of Rs 63,000/- on the appellants under Section 112(a) of the Act.
2. The brief facts of the case are that the appellants herein are manufacturers of Musical strings etc. Intelligence was gathered that the appellants had imported capital goods worth Rs 68,12,540/- in terms of the above noted licence, but had not fulfilled the export obligation within the prescribed period as stipulated in the licence. On scrutiny of the documents, it was noticed that the appellants (importers) had imported machinery & equipments valued at Rs 68,12,540/- for production of Musical Strings etc. through Chennai Port and claimed benefits of Customs Notification No. 169/90 dated 3.4.90 and paid the concessional rate of duty at the rate of 25& ad valorem. As per the EPCG licence the appellant were permitted to import Capital goods worth DM 5,27,212.00 with a condition that they have to fulfil the export obligation with a period of five years from the date of first import as mentioned in the EPCG licence. Accordingly, the importer had executed bonds with Bank Guarantee for Rs 63,00,000/- for the duty amount foregone, with DGFT and undertaking with concerned Assistant Commissioner binding themselves to pay the differential duty on demand in the case of non-fulfilment of the Export obligation. Officers of the DRI after visit to the appellants factory on a reasonable belief that the appellants had not fulfilled the export obligation detained the imported plants and machinery valued at Rs 48.82 lakhs under Mahazar dated 24.5.99 and the machinery was deposited with the appellants after obtaining an undertaking from them that they will not part with the goods. It was in these circumstances that show cause notice was issued which culminated in the order of adjudication passed by the Commissioner as noted above, against which the present appeal has been filed. In the grounds of appeal, it is inter alia stated as under:
(a) The Notification No. 169/90 envisaged execution of bond before the licensing authority. As such for the consequences of non-fulfilment of export obligation, the appellant was bound to the President of India through the bond executed before the licensing authority.
(b) The Hon'ble High Court of Madras vide order in the Writ Miscellaneous Petition No. 22817/1995 in the Writ petition No. 14349/95 has stayed the communication dated 29.9.95 of the licensing authority invoking the Bank Guarantee. Therefore, the order of the lower authority ordering enforcing the Bank Guarantee is an order incapable of execution.
(c) The lower authority committed an error in not conceding the plea of the appellants not to persist with the show cause proceedings till such time the orders of extension of time for export obligation are passed by the licensing authority.
3. The learned Counsel submitted that the appellants had taken all out efforts to get extension of the period for fulfilling the export obligations. However, their request was not granted and the adjudicating authority proceeded to pass the impugned order. He has also invited our attention to the copy of the communication dated 17.8.2000 addressed to the appellants by the REgional Office of the WHO, New Delhi and also their letter dated 26.9.2000 addressed to the Secretary to Gvot. of India Ministry of Agriculture, in which they have expressed their inability to meet the export obligation for want of certification from the "OIE". The learned Counsel also invited our attention to the following case laws:
(a) Metropoli Overses Ltd. vs. CC Bangalore reported in 2003 (154) ELT 86 (Tri-Bangalore).
(b) Nirmal Metal Fabricators vs. CCE, Mumbai-II reported in 2003 (154) ELT 90 (Tri-Mumbai)
(c) Philips India Ltd. vs. CC, Mumbai reported in 2001 (134) ELT 697 (Tri-Mumbai)
(d) FAL Industries vs. CC Chennai reported in 2002 (53) ELT 86 (CEGAT-Che).
(e) Dyna Lamps and Glass Works Ltd. v. CC, Chennai 2003 (Tri.Che.)
4. Shri A Jayachandran, learned JDR defended the impugned order and submitted that in the present case, non-fulfilment of the terms of the licence has been admitted by the appellants themselves and therefore, the order passed by the lower authority is in order and he prayed for rejection of the appeal.
5. We have carefully considered the submissions made before us. We note that when the case came for hearing on 30.10.2003, the leaned Counsel for the appellants submitted that the Hon'ble High Court has disposed of the Writ petition. We observe that in this case, the admitted fact remains that the appellants have failed to fulfil the export obligation in respect of the machinery imported under the EPCG Scheme. They could export only upto 1.5% of the export obligation. Though the machinery imported were installed in the factory of the appellants in December 1991 itself, the actual production could be started only in March 1994. As could be seen from the copies of various communications filed in the paper book, the appellants have made sincere efforts to fulfil their export obligation but the circumstances were beyond their control and they could not fulfil the export obligation. The appellants have taken a ground in the appeal that the communication of the DGFT invoking the Bank guarantee has been stayed by the Hon'ble High Court of Madras and that the Customs authorities have no jurisdiction to enforce the Bank Guarantee since it has been executed before the licensing authority. This plea has no force and has to be rejected for the reason that, Bank Guarantee has been furnished on account of the amount of Customs duty foregone and Customs Officers are empowered under the said Act to collect duty of Customs and take period which under the customs Act. 462 and the said function is not assigned to the DGFT. so far as stay of the communication of the DGFT enforcing the Bank Guarantee is concerned, the Hon'ble High Curt has disposed of the Stay petition as submitted by the learned Counsel. Further, we find that the Customs Department has not been made a party in the Writ petition before the Hon'ble High Court and there is no direction to the Customs Department not to enforce the Bank Guarantee. Further, it is to be noted that the appellants gave an undertaking to the concerned Assistant Commissioner of Customs binding themselves to pay the differential duty on demand in case of non-fulfilment of export obligation. Therefore, the argument of the appellants that the lower authority has passed the order without jurisdiction cannot be countenanced.
6. Now coming to the question of demand of duty in cases where the importers failed to discharge the export obligation when they have availed the benefit of Customs Notification for duty free import of capital goods, we note that identical cases have come up before various Benches of the Tribunal as in the case of Philips (India) reported 2001 (137) ELT 697, FAL Industries Ltd. vs. CC Chennai reported in 2002(53) RLT 86 and in the case of Dyna Lamps & Glass Works Ltd. CC, Chennai reported in 2003 (157) 73 wherein the Tribunal has held that while duty has to be paid by the appellants, interest is not payable by the appellants in the absence of specific provision either in the Notification or in the Customs Act, 1962. We, therefore, following the ratio of those rulings, hold that while appellants are liable to pay duty, no interest is chargeable.
7. So far as the confiscation of the goods and imposition of penalty is concerned, it is settled law that mens rea is a necessary requirement for imposition of penalty under Section 112 of the Customs Act, 1962. We have noted above that in the instant case, thee was sincere efforts on the part of the appellants to fulfil the export obligation but the circumstances were beyond their control and they could not fulfil the export obligations in spite of their best efforts. It is not the case of the Department that appellants have made any deliberate attempt to avail of the benefit of Notification. The machinery was in fact installed as the factory, as noted by the adjudicating authority, in para 4 of the impugned order. Production of the goods was also started some time in March 1994 and they could only meet the export obligation to the extent of 1.5% only. There is no material to doubt their bona fides.
8. In view of above, while we uphold the duty liability on the goods, we set aside the order of confiscation of the goods and imposition of redemption fine and penalty and so also the order for charging interest. The impugned order is modified to the extent indicated above. The appeal is thus partially allowed in the above terms.
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