TMI Blog1998 (10) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... s duty leviable on those goods were worked out by the KAFTZ Customs. The total value as worked out was Rs. 6,19,179/- and total duty worked out was Rs. 9,58,570/-. 1.3 In view of the appellants unit being imperative for a long time and their failure to utilise the aforesaid goods in production for export goods or failure to export the finished goods, a show cause notice dated 4-6-1993 was issued asking the appellants to show cause why the goods found unutilised/unexporated should not be confiscated under Section 110(o) of the Customs Act and why a penalty should not be imposed on them under Section 112 ibid for the above contraventions and why duty of the aforesaid amount should not be demanded from them as the goods were no more eligible for exemption under Notification No. 77/80-Cus., dated 17-4-1980 in view of no extension having been granted to the appellants in terms of the bond. 1.4 The appellants in their reply to the show cause notice stated that they established their unit to manufacture and export brushes on rupee payment basis and that they had manufactured/exported brushes to USSR for a period of five years. Thereafter, due to decline of the rupee-rouble trade they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued only after five years had lapsed and there was no deliberate suppression of facts or mis-statement on their part. They further contended that as they had not breached the conditions of any notification, the goods were, therefore, not liable to confiscation under Section 111(o). They also stated that there is no case for imposition of penalty since there is no mens rea involved under Section 112 ibid from their side. 1.9 On adjudication various contentions of the appellants were not accepted except their prayer for destroying waste and scrap consisting of 400 pieces of damaged brushes noticed during stock taking. The adjudicating authority confirmed the duty of Rs. 9,56,192/- for the unutilised/non-exported goods and the capital goods, as mentioned above under the provisions of the said notification dated 17-4-1980 and in terms of the bond executed for export obligation. A penalty of Rs. 1,00,000/- has also imposed on the appellants. By way of clarification, it has also been clarified that the sound goods shall be cleared to domestic tariff area (DTA) on payment of duty subject to fulfilment of ITC provisions at the time of clearance of such goods. 1.10 It is against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is concerned. For this proposition he relies on Supreme Court s judgment in the case of Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India (Para 12). 3.5 We have carefully considered the pleas from both sides on this issue. A careful persual of the Notification No. 77/80-Cus., discloses that the importer has to execute a bond to fulfil not only export obligations but also to fulfil inter alia the conditions stipulated in this notification. One of the conditions, namely, Clause 7 of Para 1 of the notification casts on the importer (appellants herein) to pay on demand an amount equal to the duty leviable on capital goods, on goods other than capital goods and on the finished goods which have not been exported under certain circumstances. Para 2 of the notification also indicates as to which goods are not to be accounted for in terms of Condition No. 6 as mentioned in Para 1. Condition No. 9 of Para 1 also indicates that which goods shall not be liable to duty. Notification No. 77/80-Cus., thus is a self-contained scheme regarding demand of duty etc. Consequently, a limitation under Section 28 of the Customs Act will not operate in respect of demand of duty in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But such a duty will have to be calculated on the present value of the goods as if they have been imported now in the condition in which they are found now at the time of clearance from the KAFTZ. For this purpose proper valuation will have to be done. It cannot be the original valuation of the goods because in any case the appellants have utilised the capital goods for fulfilling their export obligation and consequently the purpose of the said notification for a number of years. It is only now for circumstances beyond their control that they are not able to carry on the export obligations in terms of the said notification. The clearance of the capital goods, therefore, has to be made on the basis of the present valuation of the goods when they are cleared from KAFTZ. We gather support for this finding on the analogy of Para 2C of the notification when debonding is formally allowed by the KAFTZ Board. The adjudicating authority s finding for not giving them the depreciation on capital goods is that they had not been permitted to debond from the zone or allowed to sell their goods in the DTA by the KAFTZ Board, in our view, is not relevant for the purpose of demand of duty on cap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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