TMI Blog2012 (11) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold accordingly. Interest - held that:- A combined reading of the provisions make it clear that the place where the goods are deposited should be a warehouse at the time of deposit of the goods. On the date of removal, it is not necessary that the place where the goods have been deposited remains a warehouse. Therefore, reading the provisions of Section 61 with Section 2(44) of the Customs Act, the goods are liable to interest on the delayed payment of duty. Penalty - Held that:- Appellant imported the goods subject to the condition that he would fulfil the export obligation which obligation he failed to fulfill - goods became liable to confiscation under Section 111(o). Since the goods are liable to confiscation under Section 111(o), penalty under Section 112(a) is attracted. In this case, penalty has been imposed under Section 112(a) and there is no illegality or infirmity in imposing penalty apart from demanding differential duty Redemption fine – Held that:- When the goods are liable to confiscation, the adjudicating authority has the power to allow the redemption of the goods on payment of fine in lieu of confiscation under Section 125 of the Customs Act - good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00% of the production for a period of 10 years. They were also required to achieve value addition to the extent of 40%. The appellant imported duty free capital goods and spares valued at Rs. 2,51,61,089/- involving Customs duty amounting to Rs. 1,77,22,464/- under Notification No. 13/1981-Cus., dated 9-2-1981 and No. 53/1997-Cus., dated 3-6-1997. They also procured the said goods indigenously valued at Rs. 35,76,762/- involving Central Excise duty amounting to Rs. 5,83,730/- under Notification No. 1/1995-C.E., dated 4-1-1995. The unit was functional only for a period of 2 years from August 1996 and stopped their manufacturing activities from March 1999 and they did not fulfil the export obligation as stipulated in the LOP granted to them and in terms of the letter of undertaking and bond executed by them before the authorities. As per the LOP granted to them, they were required to achieve an export obligation of Rs. 553.42 lakhs during 1997-1998 and 1998-1999. However, they actually achieved an export obligation of only Rs. 166.39 lakhs during 1997-1998 and nil during 1998-1999. Inasmuch as the appellant did not fulfil the export obligation, the department initiated the investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rad Singhania, Director of the appellant firm under Section 112 of the Customs Act, read with Rule 209A of Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2002. Hence, the appellants are before us. 4. The ld. Counsel for the appellant submits that licence under Section 58 of the Customs Act was initially granted for a period upto 31-3-1999 and subsequently it was extended upto 31-3-2001. The LOP granted by the Development Commissioner was also valid till 31-3-2001. Thereafter, the same was not renewed or extended. Therefore, for the purpose of demand of duty, 31-3-2001 should be taken as the date of de-bonding of the unit and the duty liability on the imported goods lying with the unit will have to be determined in terms of Section 68 of the Customs Act read with Section 15, i.e. the rate of duty will be the effective rate prevailing on the date of removal of the goods from the warehouse and as per the decision of the Hon ble Apex Court in the case of Kesoram Rayon reported in 1996 (86) E.L.T. 464 (S.C.), the date of expiry of warehousing licence shall be deemed to be the date of removal of the goods from the warehouse. He further submits that since they have put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod after 31-3-2001. As far as the period prior to 31-3-2001 is concerned, there was a Notification No. 67/1995-Cus., dated 1-11-1995 exempting 100% EOUs from payment of interest on the warehoused goods and this exemption would apply. 4.3 The ld. Counsel also relies on the decision of this Tribunal in the case of Fal Industries Ltd., reported in 2008 (231) E.L.T. 524 (Tri.-Chennai) in support of his contention that they are not liable to pay any interest in the instant case. He also relies on the judgment of the Tribunal in the case of Pudumjee Plant Laboratories Ltd. v. C.C.E. Pune, vide Order No. A/161/CSTB/C-I/2012, dated 3-2-2012 in support of his other contentions. 5. The ld. Commissioner (AR) appearing for Revenue on the other hand pleads for upholding the order of the adjudicating authority and relies on the judgment of this Tribunal in Parasrampuria Synthetics Ltd. v. C.C., Jaipur, [reported in 2004 (173) E.L.T. 164 (Tri.-Del.)] which was upheld by the Apex Court (reported in 2005 (179) E.L.T. A-265). He also relies on the judgment of this Tribunal in the case of King Rotors and Air Charter Pvt. Ltd. v. C.C.E. reported in 2011 (269) E.L.T. 343. 6. We have carefully co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehoused goods. As per Section 2(44) of the Customs Act, 1962 warehoused goods has been defined as goods deposited in a warehouse. A combined reading of both these provisions make it clear that the place where the goods are deposited should be a warehouse at the time of deposit of the goods. On the date of removal, it is not necessary that the place where the goods have been deposited remains a warehouse. Therefore, reading the provisions of Section 61 with Section 2(44) of the Customs Act, the goods are liable to interest on the delayed payment of duty. Further the appellant has executed a warehousing bond under Section 59 before the Customs authorities to pay on demand, all duties and interest, if any, payable under sub-section (2) of Section 61. Inasmuch as there is a default in payment of duty, interest liability will accrue in terms of the bond and we hold accordingly. 6.4 The issue of payment of interest on the duty demanded in respect of goods wherein export obligation was not fulfilled was considered by this Tribunal in the case of Parasrampuria Synthetics Ltd. and this Tribunal held that interest is payable on defaulted amount of duty. This decision of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndbook of Procedures to which it made a reference and the undertaking contained in the agreement executed between the parties. It is also not in dispute that the condition subject to which the petitioner could have availed of a reduced rate of duty, namely, performance of the export obligation has not been complied with. The question then is whether a party who has availed of a benefit on a solemn assurance and a legal undertaking that it shall perform certain acts necessary for the enjoyment of the benefit being extended in its favour could continue enjoying those benefits while the conditions subject to which the benefit was extended are violated. Our answer is in the negative. No party can avail of a benefit which was available subject to its performing conditions prescribed for the same, without performing such conditions. If the conditions fail, the party cannot retain the benefit. There is no equity in favour of a person who has availed of a benefit but failed to perform the obligation subject to which alone it could take such benefit. If that be so, as it indeed is, we see no reason why this court should come to the rescue of a party who fails to do equity in exercise of our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Handbook of Procedures would in such situations step in to provide for what may appear to be a grey area as to the period for which interest on such duty would be recoverable. A reading of para 105 of the Handbook which happens to be the stipulation incorporated even in the legal undertaking furnished by the petitioner would show that the liability to pay interest at the stipulated rate arises from the date of import of the first consignment till the date of payment. Regardless therefore of which, the failure of the export obligation is noticed or established against the importer, once a failure is established or admitted the obligation to pay the differential duty along with interest at the stipulated rate arises and the period for which such payment has to be made will be reckoned from the date when the first consignment was cleared till the date of actual payment. There is in that view sufficient legal sanction for the demand of interest raised against the petitioner on the amount of differential duty. Reliance upon the decisions of the Supreme Court in Indian Carbon Ltd. v. State of Assam, AIR 1997 S.C. 3054, JK Synthetics Ltd. v. Commercial Taxes Officer, AIR 1994 S.C. 239 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed unless the non-observance of the condition was sanctioned by the proper officer. In such an eventuality, the goods imported shall be liable to confiscation. In the instant case the goods were imported availing a concessional rate of duty on the condition that the goods will be put to use for manufacture and export of specified goods achieving certain value addition within a specified period. When the importer failed to fulfil the condition by not exporting the goods of required value within the stipulated period, then he was no longer eligible for the concessional rate of duty and the duty liability has to be discharged in full without availing the benefit of the exemption. For the same conduct, the goods also became liable to confiscation under the provisions of Section 111(o). The duty liability arises on account of importation. The liability to confiscation or fine is for violation of the conditions of the importation. The act of importation and the conditions of importation are two different aspects and for violation of each of them, separate consequences would follow. In the instant case the duty liability has been imposed for the import of the goods and the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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