TMI Blog2013 (9) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... one with respect to the use and the other with respect to the user, both these conditions needs to be satisfied simultaneously and it cannot be said that the condition relating to the user can be ignored - If that was done it would make the condition relating to the user redundant - It was a well settled principle of law that the statute has to be interpreted in a harmonious manner so as to give effect to each and every word/expression used therein. Interpretation of provisions - Held that:- the importer assessee had violated the conditions of exemption and he was not eligible for the benefit of exemption - the confirmation of duty demand along with interest thereon made in the order were upheld - Court should not give such an interpretation to provisions which would render the provision ineffective or odious – following the judgement of Balwant Singh vs. Jagdish Singh (2010 (7) TMI 556 - SUPREME COURT OF INDIA). Confiscation of goods - the end-use condition relating to the goods stands clearly violated -they were rightly liable to confiscation under the provisions of section 111(o). Redemption Fine - Held that:- The fine imposed ought to be reduced substantially - the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant/importer had diverted the Cone Type Stone Crusher before the stipulated period of five years and was not adhering to the end use the condition stipulated in the Notification and therefore, the officers visited the premises of the appellants on 01/02/2008. As per the contract produced by the appellant at the time of importation, the road construction equipment including the aforesaid stone crushers were imported for execution of the Chittorgarh bypass contract awarded by NHAI and as per the contract for the said Chittorgarh bypass executed on 03/08/2005, the same was for a period of two years and had expired on 02/08/2007. However, as the work was delayed due to non-availability of clear path, they had applied for extension till May 2008, which was agreed to by NHAI. When the project site was visited by the officers of the Jodhpur Customs on 08/02/2008, it was learnt that the primary jaw crusher and Cone type stone crusher imported under Bill of Entry No.720254 dated 02/11/2006 had been shifted to a new project site at village Deoli on NH-6, near Bhandara District, Maharashtra in the month of December, 2007 and the said new project was a venture of M/s.Ashoka Build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... week of December, i.e. on 22/12/2007. He further confirmed that the said cone type crusher was being used by M/s. Ashoka Buildcon Ltd. for crushing aggregates required for the construction work against the contract awarded by NHAI. 5. Statement of Shri S.P. Londhe, Director of M/s. Ashoka Buildcon Ltd. was recorded on 19/02/2008. In his statement, Sri. Londhe, inter alia, admitted that M/s.Ashoka Buildcon Ltd-Valecha Engineering Ltd. (Joint Venture) was formed as an Association of Persons by two independent companies i.e. M/s. Ashoka Buildcon Ltd. and M/s. Valecha Engineering Ltd., both registered under the Companies Act, to bid for contract of construction of 4/6 Lane Access Controlled Chittorgarh Bypass in the State of Rajastan under NHAI funding with NHAI. He also informed that since both the companies did not have independently the desired experience as per the pre-qualification criteria for the above project, it was decided to form a joint venture by both the companies to bid for the contract with NHAI and the said contract was formalized in the form of agreement between NHAI and the joint venture and the contract period was for 24 months starting from 24/08/2005 and was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded on 25/07/2008 wherein he admitted and confirmed the facts stated by Shri S.P.Londhe in his statements. He also confirmed that he had authorised Shri S.P. Londhe to import the equipment in the name of joint venture for availing duty exemption and the diversion of the cone type stone crusher from Chittorgarh to the project site of M/s. Ashoka Buildcon Ltd. in Maharashtra was done with his permission. 8. On completion of investigation, a show-cause notice dated 20/08/2008 was issued proposing to deny customs duty exemption under notification No.21/2002 dated 01/03/2002 on cone type stone crusher imported under Bill of Entry No.720254 dated 02/11/2006 and demanding customs duty of Rs.1,60,50,182/- along with interest thereon under the provisions of Section 28 (1) read with section 12 of the Customs Act, 1962 and Section 125 (2) of the said Customs Act and also by enforcing the bond/undertaking executed at the time of import. It was also proposed to confiscate the machinery under Section 111 (o) of the Customs Act, for non-fulfillment of the condition of the exemption notification. It was further proposed to impose penalty on the importer M/s.Ashoka Buildcon-Valecha Engineering L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assets. The purpose of the Notification is to reduce the cost of construction of roads by granting duty concession on equipment required for the construction of roads and considering this broad policy objective of the Government, it may be seen that the appellant has not indulged in any malpractice. Further the appellant could have got back the equipment any time inasmuch as the ownership vested with them. 3) The Ld. Counsel also relied on the meaning of the term disposal as given in the book Words and Phrases of Central Excise, Customs and Service Tax Edited by Shri S.B. Sarcar IVth Edition. As per the said book, disposal means transfer of title in the goods to any person. In the instant case, they have not transferred the title in goods to any other person. Therefore, it cannot be said that they have otherwise disposed of the goods as stipulated in the notification. He also relies on the decision of the Hon ble apex Court in the case of Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes) Ernakulam Vs. Thomas Stephan Co. reported in 1988 (34) ELT 412 (SC) wherein the apex Court interpreted the meaning of the expression disposal as follows: The question, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms duty exemption on the advice of the CHA and the appellants also knew very well that Chhattisgarh Bypass would be completed soon and they will no longer being able to utilize the equipment after completion of the project. Therefore, the equipment was transferred to M/s. Ashoka Buildcon Ltd. for use elsewhere than in the approved project. The said transfer was not intimated to Customs authorities at any point of time. It is his contention that the appellant had resorted to transfer of the imported equipment after its use for about an year to another person and therefore, the condition of exemption is clearly violated. Since the goods have been transferred to M/s. Ashoka Buildcon Ltd., the lead partner, it amounts to disposal of the goods within the period of five years as stipulated in the notification. He submits that notification has to be interpreted strictly and any violation of the terms and condition of the notification would result in denial of benefit of exemption. The appellant had given an undertaking at the time of import that the appellant importer, namely, M/s. Ashoka Buildcon-Valecha Engineering Ltd., (JV) hereby agrees that we shall use the goods imported as descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had clearly admitted that the entire transaction was managed in such a way as to avail the benefit of notification No.21/2002 and the diversion of the machinery after the completion of the project at Chittorgarh was also taken by him and he had directed Shri S.P. Londhe to shift the machinery from Chittorgarh to Maharashtra. From this statement it is evident that the entire transaction was a sham and was done with a fraudulent intention to avail ineligible duty exemption. 10.1 The Ld. AR also relies on the decision of the Hon ble apex Court in the case of Novopan India Ltd., Vs. CCE, Hyderabad, reported in 1994 (73) ELT 769 (SC) wherein it was held that exemption being in the nature of exception has to be construed strictly at the stage of determination whether assessee falls within its terms or not and in case of doubt or ambiguity, benefit of it must go to the state. He also relies on the decision of the apex Court in the case of Gammon India Ltd., Vs. CC, Mumbai, reported in 2011 (269) ELT 289 (SC) wherein the same principle was reiterated. Accordingly, he submits that the condition of notification with regard to non-sale/non-transfer of the imported equipment within a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... user should be the importer who furnishes the undertaking to the Customs authorities. The undertaking stipulates that the importer shall not sell or otherwise dispose of the said goods in any manner for a period of five years from the date of importation. In other words, it is the user who has to undertake the use and not anybody else. Secondly, the importer should be the owner of the goods at the time of importation; otherwise, the condition regarding sale or otherwise dispose of the goods cannot be satisfied and the undertaking would become meaningless. In the case under consideration after using the imported goods for a period of one year or so, the goods were diverted for use elsewhere than for the project for which contract was awarded to the importer. Further, the user was also different. The contract for the Chittorgarh bypass was awarded to M/s. Ashoka Buildcon-Valecha Engineering Ltd., (JV) and the use was in respect of the construction of roads, namely, Chittorgarh bypass. After using the equipment for a period of about one year, the goods were diverted to use elsewhere in the District Gondia in the state of Maharashtra by M/s. Ashoka Highway Bhandra Ltd. for the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute should be construed in favour of the assessee - assuming that the said principle is good and sound -does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Manga/ore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave, (1969) 2 S.C.R. 253 that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (o) of the Customs Act and we hold accordingly. 11.7 Regarding the quantum of fine of Rs.90 lakhs imposed on the goods, some leniency might be called for. Though the goods were diverted, they were used for the construction of roads though by a different user which could be considered as a mitigating factor in this case. Therefore, we are of the view that the fine imposed ought to be reduced substantially. Accordingly, we reduce the redemption fine imposed from Rs.90 lakhs to Rs.30 lakhs. 11.8 As regards the penalties imposed on the appellant firm under section 112 (a), penalty is liable to imposed for contravention of the provisions of the law and there is no mens rea required to be established. In this case, the mens rea is also evident from the conduct of the appellant. Considering the amount of duty sought to be evaded to the tune of Rs.1.6 Crore, the penalty of Rs. 9 lakhs imposed cannot be said to harsh or unreasonable. 11.9 With regard to the penalties imposed on the Managing Director Mr. S.D.Parakh and the authorized signatory Shri. S.P. Londhe, from the statements recorded, it is evident that they are the two persons who conspired to enter into a sham transaction of h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
