TMI Blog2012 (9) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... rder per : Mathew John, Member (T)]. The respondent imported second hand knitting machine having CIF value of Rs. 66,84,185/- under Bill of Entry No. 958, dated 19-3-1996 at CFS Ludhiana and paid customs duty amounting to Rs. 10,02,628/- at concessional rate of 15% in terms of Notification No. 110/95-C.E. dated 5-6-1995. This exemption was available for goods imported under EPCG licence and condition of the licence was that they would export goods valued at four times the CIF value of the goods imported within five years of import of the machinery. But for the exemption, the customs duty to be payable was 25% basic customs duty along with CVD of 10%. The benefit availed under the notification was quantified at Rs. 15,03,941/-. Condition 6 of the notification was that the importer should have installed the machinery in its factory and produced such installation certificate within 6 months from the date of completion of import. 2. The Revenue made out a case that the said machinery was not installed in the factory. There was failure on the part of the respondent to discharge the export obligation. As per show cause notice, the obligation fulfilled by the respondent was only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the order of the Commissioner (Appeals), the Revenue has filed the present appeal. The main grounds in the appeal filed by the Revenue are as following :- (i) The appellant had not produced the installation certificate as required under Condition No. 6 of the Notification; (ii) The investigation report from Central Excise Division from Chandigarh revealed that no unit in the name of M/s. Bestway Enterprises did not exist in Plot No. 144-C, Phase-VII, Mohali; (iii) As per the statement of Shri Gurpartap Singh dated 24-11-00, the appellant commenced production in 1997 only therefore, the goods exported by the appellant prior to the commencement of work in 1997, were produced using machinery other than that imported by the respondent company under above said DEEP licence and therefore, cannot be considered towards the discharge of export obligation; (iv) Notification No. 110/95, dated 5-6-95 itself provides for demand of duty in case of such default and the said proviso does not prescribe any time limit. Further respondent had executed a bond for proper discharge of export obligation failing which the differential duty was to be paid as per terms of the bond. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement under Section 108 of the Customs Act, 1962 in which he stated that they imported the machinery under EPCG licence from England in 1996 through CFS Ludhiana and after installation of machinery, they commenced the production in 1997 and total production from the unit was exported to England. He stated that he looked after the production and sale aspect and he did not remember if the Central Excise authorities were informed about the installation of machinery. He stated that the plot on which the unit was installed belonged to the company. He further stated that due to non-remittance of foreign exchange by the foreign buyers, they could not carry on with the production and the machinery was divided between two parties of Directors. He further stated that out of total machinery, there machines were installed at Phase VIII, Focal Point, Ludhiana and production of cotton fabric from there was sold locally and the unit at Ludhiana was closed at the end 1998. He further stated that they are ready to pay the duty along with interest. As per letter F. No. EPCG-59/AM 96/Lic/LDH/156, dated 2-9-99 of Assistant Director General of Foreign Trade, Ludhiana addressed to the Assistant Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and statement of exports submitted by the party, it is observed that the party has exported six consignments to UK i.e. three consignments of FOB value at pounds 101,496.2 in 1996, two consignments of FOB value pounds 54,999.12 in 1997 and one consignment of FOB value pounds 12536.6 in 1998 (Details as per annexure II attached). Notification No. 110/95-Cus., dated 5-6-95 and para 41(i) of Exim Policy 1992-97 clearly spell out that the export obligation is to be fulfilled by exporting the goods manufactured or produced by the use of the capital goods imported under EPCG scheme. Shri Gurpartap Singh Director of the party has admitted in his statement dated 24-11-2000 that after the installation of imported machinery the production was started in 1997. Thus in view of the explanation of export obligation given in Notification No. 11/95-Cus., dated 5-6-95 and para 41(i) of Exim Policy 1992-97 the export goods valued at pounds 101496.2 cannot be counted towards discharge of export obligation as the same have not been manufactured with the use of machinery imported under the EPCG scheme vide EPCG licence No. 2081519, dated 18-3-96. The details of export obligation as per condition 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of export obligation fulfilled, and where export obligation of any particular year is not fulfilled in terms of the preceding condition, the importer shall within three months from the expiry of the said year pay an amount equal to that portion of the duty leviable on the goods but for the exemption contained herein which bears the portion as the unfulfilled portion of the export obligation bears to the total export obligation together with interest @ 24% per annum from the date of clearance of the goods. 9. It appears that when the importer approached for discharge from obligations that he undertook at the time of import the concerned Superintendent has worked out the liability as per terms of Condition 4. At least there is no allegation in the SCN that the amount demanded at that time was not in conformity with condition 4. The SCN just wants to ignore condition 4 for the reason that installation certificate was not produced and export obligation was not fully discharged. When the importer did not produce installation certificate prompt action should have been taken. If any penalty was required to be imposed it should have been done at least when the importer approached th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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