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TMI Blog2013 (12) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to duty free import of raw silk under Advance Licence No. 2310212 dated 25.1.93 under Notification No. 203/92 and Advance Licence No. 3035148 dated 14.5.94 under Notification No. 204/92. 2.1 By the impugned order, it has been held that Appellant No.1 has failed to fulfill the export obligation and the imported duty-free materials were utilized for manufacture of silk sarees and sold locally through their sister unit M/s. Varalakshmi Handlooms and M/s. Varalakshmi Silk House, Appellant No. 2 and 3 herein. Shri K.H. Subramani, Appellant No. 4 is the managing partner of appellant No.1 and also partner of Appellant No. 2 & 3, who was looking after the import and utilization of goods. 2.2 The adjudicating authority confirmed the demand of Rs.83,00,745/- payable on mulberry raw silk imported under advance licence No. 2310212 dated 25.1.1993 and 3035148 dated 16.5.1994 in terms of undertaking furnished under the conditions of the notification read with proviso to Section 28(1) of the Customs Act, 1962 along with interest and imposed penalty equal amount of duty under Section 114A of the Customs Act, 1962 on Appellant No.1. A penalty of Rs. 10 lakhs was imposed on appellant No. 4 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.6.97 and therefore the extended period of limitation under proviso to Section 28(1) of Act, 1962 would not apply. Relied upon the decision of the Tribunal in the case of AMC Coated Fabrics Pvt. Ltd. Vs. Commissioner of Customs 2007 (218) ELT 707 (Tri. Mum) which was upheld by the Honble Madras High Court and also the case of Granules India Ltd. Vs. Commissioner of Customs 2005 (191) ELT 1118 (Tribunal). (d) The imposition of penalty under Section 114A of the said Act on Appellant No. 1 and demand of interest under Section 28AB are not sustainable as the imports involved in the present case are much before introduction of the said Section. It is submitted that Section 114A and Section 28AB were introduced on 20.8.1996. He relied upon the decision of the Tribunal in the case of Ram Khazana Electronic Vs. Commissioner of Customs 2003 (156) ELT 122 (Tribunal). (e) The imposition of redemption fine under Section 125 of the Customs Act and confiscation of goods are not sustainable. In the earlier Adjudication Order, there was no order of confiscation of goods and imposition of fine, against which Revenue has not filed any appeal. In denovo adjudication order, adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case, the relevant date under Section 28(1) is the date on which infringement of the condition of the notification has been noticed by the Department and not the date of clearance. The DRI officers visited the appellants premises on 12.1.1999 and noticed the diversion of the duty-free materials. He relied upon the following decisions of the Hon'ble Supreme Court, High Courts and Tribunal:- (i) Commissioner of Customs Vs. Jagdish Cancer & Research Centre -2001 (132) ELT 257 (SC) (ii) Shesshank Sea Foods Pvt. Ltd. Vs. Union of India -1996 (88) ELT 626 (SC) (iii) Bombay Hospital Trust Vs. Commissioner of Customs -2006 (201) ELT 555 (Bom.) (iv) Lady Amphthil Nurses Institutions Vs. Commissioner of Customs -2002 (150) ELT 776 (Tri. -LB). 4.1 It is submitted that the appellant imported the goods without payment of duty and filed undertaking as per exemption notification and the goods were not physically available for confiscation. The adjudicating authority rightly imposed redemption fine in lieu of confiscation. He relied upon the decision of the Hon'ble Supreme Court in the case of Weston Components Ltd. vs. Commissioner of Customs - 2000 (115) ELT 278 (SC). 4.2 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed on 2-8-1993 and was cleared on 12-8-1993. Show Cause Notice demanding duty in respect of the said imports was issued on 14-10-1998 i.e. after a period of more than five years from the date of imports. In terms of the provisions of Section 28 of the Customs Act, 1962, the demand, even in case of suppression of facts, misstatement, etc. can be issued within the maximum period of five years. The demand raised after a period of five years is clearly beyond the scope of the said section. As such we set aside the impugned demand on the said issue alone. 6. In the impugned order before us, the appellant contended that the date of clearance of the goods under relevant Bills of Entry as provided under Section 28(1) of the said Act would be reckoned relevant date. The adjudicating authority rejected the plea by relying on the decision of Larger Bench of the Tribunal in the case of Lady Amphthil Nurses Institute (supra), wherein it was observed At the point of import no duty was collected. Duty became payable only when infringement of the obligation was observed. Having regard to this aspect the date for rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any hospital without payment of customs duty under Notification No. 64/88-Cus. dated 1.3.1988. The exemption from duty was allowed subject to conditions, as specified in the said notification, free treatment to the patients where income was below Rs.500/- per month and reservation of 10% beds in the hospitals for them as in-patients and for providing free treatment to 40% of out-patients, amongst others. A proceeding was initiated for violation of the conditions of the said notification as under:- 5. The Adjudicating Authority held that installation certificate in terms of Clause 4(iii) was not required to be submitted by the Centre but it failed to comply with other two conditions about providing free treatment as required and reservation of 10% beds in the hospital. It was also found that the Centre did not have inpatient facility at all. Placing reliance upon a decision of this Court in M/s. Mediwell Hospital and Healths Care Pvt. Ltd. v. Union of India, 1997 (89) E.L.T. 425 (S.C.) = (1997) 1 SCC 759, it has been found that providing free treatment in terms of the Notification is a continuing obligation, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consideration relating to alleged violation of the conditions as laid down in Notification No. 64/83-Cus. The issues before the Larger Bench of Three Member of the Tribunal were as to the jurisdiction, whether it is Ministry of Health/DGHS or the customs to check the violation of the conditions of the notification, what was the scope of Section 111(o) and what is the effect of violations of the conditions, what would be violation post-1994 (Notification No. 64/88 repealed in 1994) and what is the scope of violation qua enforceability of conditions when no mechanism is laid down for its enforcement. It has been held that the customs authorities had power to confiscate the equipment and allow it to be redeemed on payment of fine, duty etc. under Section 125 of the Act, 1962. In a continuing obligation, date for raising demand cannot be counted from the date of order of clearance of the goods had been made by the proper officer, but it should be counted only from the date of show-cause notice when infringement is alleged. Following the decision of the Hon'ble Supreme Court in the case of Sheshank Sea Foods Pvt. Ltd. (supra), it has been held that the customs authorities had power t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re cleared for home consumption under Section 47 of the Customs Act without payment of duty subject to fulfilment of the conditions set out in the exemption notification. As in the case of Wockhardt Hospital, in the present case also it is not in dispute that the post clearance conditions of the exemption notification have been violated. Therefore, the goods have been confiscated under Section 110(o) with an option to redeem the same by imposing fine in lieu of confiscation under Section 125(1). In such a case, the duty becomes payable on confiscation and in terms of Section 125(2) the assessee who is admittedly the owner of the goods is liable to discharge the duty liability on imposition of fine in lieu of confiscation, even if the assessee chooses not to redeem the confiscated goods. 12.?It is pertinent to note that the duty liability under Section 47 is on the importer, whereas, the duty liability under Section 125(2) is on the owner of the goods. This distinction is made by the legislature because once the goods are cleared under Section 47, there is every possibility that the goods may change hands. To obviate any difficulty in recovering duty payable on such goods, the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Bombay Hospital Trust (supra) did not agree with the observation of the Three Member Bench decision of Lady Amphthil Nurses (supra). So, the finding of the adjudicating authority in the instant case on the issue of limitation is not sustainable. 6.5 None of the case laws relied upon by the learned Authorized Representative for the Revenue would apply in the present case, for the reasons in those cases, Notification No. 64/88-Cus. casts a continuing obligation. In the present cases, the duty-free imported materials were cleared under Advance Licence accompanied with DEEC Book vide exemption Notification No. 203/92 and 204/92. DEEC book is part of the exemption notification, wherein the information would be recorded for monitoring the clearance of duty free import material, export of resultant product, name and address of the factories and its ancillaries when resultant products are manufactured and details of materials on which condition of notification are not complied with etc. It is pertinent to note that there is a time limit prescribed for fulfillment of export obligation in Advance Licences. Incidentally, in the present case, the adjudicating authority also observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 114A and demand of interest under Section 28AB. The relevant portion of the said decision of the Tribunal is reproduced below:- The contention raised by the appellant regarding applicability of Section 114A and Section 28AB is only to be accepted. Since these sections came into force only on 20-8-96 no penalty could have been imposed under Section 114A and no interest could have been demanded under Section 28AB. We find merit in the contention of the Revenue that the penalty on the firm could be sustained under Section 112 of the Customs Act. But in the facts and circumstances we hold that the firm will be liable to pay penalty to the extent of 50% of the duty demanded. The penalty imposed on the partners are vacated. In view of the above decision, we find that the penalty imposed under Section 114A and demand of interest under Section 28AB are liable to be set aside. But, penalty to the extent of 50% of the duty demanded is liable to be imposed under Section 112 of the Act on Appellant No. 1. 9. The adjudicating authority imposed fine of Rs.20,00,000/- in lieu of confiscation under Section 125 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Weston Components (supra). The Tribunal in the case of Ram Khazana Electronic (supra), distinguished the decision of Weston Components (supra) as under:- We now consider whether the ratio of the above decisions of the Tribunal is against what has been held by the Supreme Court in Weston Components Ltd. The order of the Apex Court reads as follows: - Order - It is contended by the learned Counsel for the appellant that redemption fine could not be imposed because the goods were no longer in the custody of the respondent-authority. It is an admitted fact that the goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine. 2. The appeal is dismissed. 10. A reading of the above order would show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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