TMI Blog2002 (1) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... cence was issued to them, during the period 28-11-1997 to 17-8-1998 they imported 16 consignments of capital goods namely wire rope making machines, in knocked-down condition and the consignments were warehoused in the Customs Private Bonded Warehouse on execution of double duty bond. They applied for an EPCG licence for import of these goods, which was given to them on 13-2-1998. (As seen from Advocate V.M. Doiphode written synopsis dt. 22-10-2001.) On 6-1-1998 they applied to the Jurisdictional Assistant Commissioner for permission to assemble the machinery lying in their Customs Bonded Private Warehouse and the same was granted vide letter dt. 8-1-1998. On the objections raised by the Commr. of Customs House Bombay, regarding the assembly, the warehouse was sealed on 18-5-98 by the Jurisdictional Asstt. Commr. On 2-7-1998, Notification No. 44/98 was issued deleting inter alia Regulation 7 of the Manufacture and Other Operations in Warehouse Regulations, 1966 (hereinafter referred to as MOOWR), according to which plant, machinery, fixtures and accessories, necessary for carrying on the manufacturing process or other operations in the warehouse and consumable stores required for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dt. 30-12-1998 and the applicant attended before the Commissioner of Central Excise. On 4th May, 2001 another letter was issued to the applicants informing them that the Commissioner had fixed personal hearing on 25-5-2001 which was attended by them. Thereafter the present impugned order came to be passed confirming duty demand of Rs. 56,41,88,284/- and imposing penalty of equal amount and ordering recovery of interest and confiscating imported goods with option to redeem on payment of a fine of Rs. 64 Crores. This order reasoned, adjudication of total of 17 notices, one dt. 30-12-1998 answerable to the Commissioner and the other 16 notices issued by Jurisdictional Range Superintendent answerable to Deputy Commissioner. The thrust of the finding of the Commissioner is that the act of installation of imported goods amounts to illicit clearance of imported goods for home consumption. Appeal No. C/1025/2001-Mum. is against this order. 2. We have heard both sides and considered the submissions and find - (a) The Commissioner (Appeals) in Order dt. 28-10-99 impugned in Appeal No. C/74/2001-Mum. has found as under - From the case records it is seen that the appellants were give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a sinister cause to result in cancellation of Warehouse Licence. The appellant could seek a manufacture in Custom Bond Licence and such permission was granted. The capital goods used for such an activity were not required to be duty paid especially after 2-7-98, due to issue of Notification No. 44/98-Cus., dt. 2-7-98. Such imposts on capital goods machinery used, were not required, as these goods while in Bonded Warehouse premises could be without payment of duty. Goods while in Bond, whether in use or otherwise, cannot be levied to a duty of Customs, till they are cleared for consumption or the Bond Period Expires. (c) We find that there is a letter permitting the appellant to assemble and install the imported machine, since no other contravention of Sec. 65, or other provisions of warehouse i.e. Chp. No. IX of the Customs Act, 1962 has been alleged to be violated. The Order of cancellation of warehouse licence as arrived at cannot be sustained and Appeal No. C/74/2000-Mum. has to be allowed. (d) In appeal No. C/1025/2001, the impugned order also adjudicates 16 Show Cause Notices, demanding customs duty from the appellant, on the imported capital goods warehoused in the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 7 is applicable to plant and machinery necessary for carrying on manufacturing operations and it imposes the condition that these must be duty paid. The condition is that duty should be paid even before they are packed from their original packing with an intention of using these machineries for manufacturing. If they intended to use these machineries for manufacturing purposes they should have intimated the Bond Officer and should have filed Ex-bond Bill of entry. As the Ex-bond bill of entry was not filed and the machines were installed without discharge of duty liability it tantamounts to illicit clearance of imported goods from the warehouse without payment of duty. Clearance of goods from a Bonded Warehouse on a Bill of Entry for Home Consumption or for other purposes is governed by Section 68 of the Customs Act, 1962. This section doesn t stipulate packing, assembling, installation or use in the manufacture of other goods to be clearance effected only after filing of Bill of Entry and on payment of duty or that such activities would amount to clearance, as arrived at by the ld. Commissioner in respect of Imported Capital Goods herein. The words Home Consumption have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and under physical supervision of the Bond Officers. The case of the Revenue is not, that the operations in the Bond were committed without seeking the necessary permissions. Therefore we cannot understand, as to how, it can be said or found, that the assembly and the installation of the imported machine were without the knowledge of the Bond Officers/Department. The findings arrived at para 21 of the impugned order that the Bond Officers were not aware of the assembly of the machines cannot be accepted. Even assuming that the operations were conducted without permission, Penalty under Section 117 of the Customs Act could only be imposed. The duty demands could not be made. However, no penalty under Section 117 has been found to be levied in this case. (h) The appellant had filed 16 Ex. Bond B/E, under the provisions of Sec. 68 of the Customs Act, 1962 for assessment under Notification No. 53/97. These Bill of Entries are still pending assessment and finalization. The non assessments and sealing of the warehouse had contributed to the goods not being cleared from the Bonded Warehouse. The goods could not be debonded due to this non-assessment and it is not a result due to a fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable for the period of delay in the clearance of the goods. Since the goods warehoused are kept for a longer period such delay entails delayed payment of duty payable and so interest is charged for such delayed payment of duty. Following the same, we find no reason to deny the exBond removal of the goods under Notification 53/97 at NIL rate of duty, as sought, for removal from the bonded Warehouse. We, therefore, do not accept the following finding of the ld. Commissioner in Paragraph 25 of the Order impugned herein :- 25 ....Therefore, I do not find any force in the submissions made by the party. M/s. KFL were required to file Ex-bond Bills of Entry, pay the applicable duties etc. as laid down under Section 68 ibid. Since the same was not done the contravention s as charged in the Show Cause Notice is established. As such the demand is sustainable and subject machines, being non duty paid, are liable for confiscation. M/s. KFL, are also liable for penalty. (i) Since we cannot find any contravention of the warehousing conditions or of the Bond or of Regulation 7 read with Sec. 65; B/E for home consumption under benefit of Notification 53/97 presented are pending asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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