TMI Blog2014 (4) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking and agreement entered into with the Government, but made sale of shrimp feeds without permission of Development Commissioner. There was no nexus of shrimp/prawn processing unit with shrimp feed unit which was expected to export entire product manufactured. The plea of broad banding of the activity of the appellant did not find support of Board of Approvals to treat the shrimp/prawn processed unit as EOU. Development Commissioner held that there was violation of conditions of EOU by the appellant. Keeping in view earnest prayer of the appellant to satisfy learned Adjudicating Authority on various allegations made against it and also noticing certain materials facts borne by record requiring fresh examination granting fair opportunity of hearing to the appellant, matter is remanded to that authority to examine various issues. Appellant shall be required to furnish such evidence as may be required by learned adjudicating authority to satisfy him that appellant was not enriched at the cost of Revenue availing duty exemption under respective notification and complete the re-adjudication by 31/10/2014. Burden of proof lies on the appellant. - Matter remitted back - De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2001 - 2002) USD 160,00,000 5th year (2002 - 2003) USD 160,00,000 Above approval was subject to the following conditions: (i) The provisions of the CRZ Act shall be complied with and it shall be ensured that decision of Honble Courts/Supreme Court in Aquaculture cases is not violated.; (ii) Prior clearance/NOC from the Aquaculture Authority, Chennai shall be necessarily obtained before taking effective steps to implement the project. 5. By the second amendment to LOP on 24/02/1998 (Ref: Page 72 of the appeal folder), Govt. of India allowed the appellant to have additional location of the EOU project at Gopalapuram (Ravulapalem Mandal, East Godavari District, Andhra Pradesh) subject to following conditions: (i) Premises at both the locations shall be custom bonded; (ii) Other formalities as prescribed by the Customs and Development Commissioner, VEPZ, Vizag shall be complied with; (iii) The additional locations does not violate the provisions of CRZ Act. 6. Revenue noticed that the appellant failed to achieve the undertaking given and terms of agreement entered into with the Govt. of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut permission of the Development Commissioner and no export was made in the years 1999-2000 to 2000-03. Plea of the appellant that it was filing its quarterly returns and annual returns with the Development Commissioner as well as achievement of the minimum NFEP was substituted by positive NFEP did not get appreciation of the learned adjudicating authority. Rather for shortcomings like sales made in DTA, non-fulfillment of export obligation, appellant was imposed penalty of Rs.5 lakhs by the Development Commissioner. 8. Learned adjudicating authority analyzed the mandatory conditions of customs Notification No.53/97-Cus and opined that shrimp feed manufactured using the customs duty free capital goods, raw materials and spares were cleared to DTA without fulfilling export obligation. It was further found that setting up of a processed shrimp/prawn unit in Ravulapalem had no relevance to the manufacture of shrimp feed. Although raw material was imported by the appellant for use in the manufacture of shrimp feed, no such feed was exported. It bought shrimp from open market and processed that for export to earn foreign exchange in order to fulfill the export obligation. 9. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndigenously procured raw materials duty free under aforesaid notifications. Its continuous imports as well as indigenous procurement established deliberate violation of law. 14. It was further observed by learned adjudicating authority that when the appellant failed to satisfy the Development Commissioner on its plea that Ravulapalem shrimp/prawn processing unit was EOU for the period from 01/04/1998 to 19/07/2001, it failed to succeed before Board of Approvals and there was shortfall of minimum NFEP/export performance and export obligation for the period from 01/04/1994 to 31/03/2000. SUBMISSIONS ON BEHALF OF APPELLANT 15. It was submitted on behalf of the appellant that show-cause notice dated. 18/07/2003 at page 78 79 does not allege that the appellant had not made deemed export nor there is allegation that it had violated the norms of EOU. The only allegation in the SCN was that there was violation of provision of Notification No. 53/97-Cus. The appellant was granted LOP on 28/06/1993 for manufacture of shrimp feed as an 100% EOU establishing a new undertaking at Kovvuru, West Godavari District, Andhra Pradesh with the annual capacity of 10000MTs. That licence was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foreign exchange earnings not mentioning the goods exported Foreign exchange earning from shrimp feed Foreign exchange earning from export of shrimp 1998-20/10/1998 USD 3952901.07 1998-99 USD 3952901.07 1999-2000 USD 3160603.59 2000-2001 USD 3846563.49 USD 739080.48 2001-2002 USD 246207.10 USD 7407904.50 2002-2003 USD 179605.18 USD 8082.20 USD 9038064.38 19. Appellant further submitted that summary of foreign exchange earnings was made known to the Revenue as per page 48 of the appeal folder as under: YEAR Physical exports shrimps (in USD) Deemed exports Shrimp feed (in USD) Total foreign exchange earned (in USD) 1998-1999 39,52,901.07 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export: Virlon Textile Mills Ltd. Vs. CC, Mumbai [2007(211) ELT 353 (SC)] Juned Bilal Memon Vs. CCE, Surat-II [2008(221) ELT 45 (LB)] 23. Further reliance was placed by the appellant on the following decisions to submit that once the unit of the appellant was de-bonded by the exit order dated 21/08/2003 (Ref: page 145 of the appeal folder), Department cannot reopen a case: Sudhan Spinning Mills (P) Ltd. Vs. CCE, Madurai [2008(227) ELT 142 (Tri.)] Mphasis Ltd. Vs. CC, Bangalore [2007(218) ELT 587 (Tri. Bang.)] CCE C, Surat Vs. Amitex Silk Mills P. Ltd. [2007(216) ELT 589 (Tri. Ahmd.)] 24. It was also submitted that the appellant was entitled to the exemption benefit under Notification No. 196/94 dated 08/12/1994 in instead of Customs Notification No. 53/97 dated 03/06/1997. 25. On the aforesaid grounds it was prayed by the appellant that adjudication having been made contrary to the facts and evidence on record remand of the matter may be made to examine the permission of the Development Commissioner relating to DTA sales and foreign exchange earnings and pass appropriate order. ARGUMENT ON BEHALF OF REVENUE 26. Learned AR inviting attention to the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ravulapalem Unit of the appellant was not at all EOU from 01/04/1998 to 19/07/2001. In such circumstances the appellant cannot be said to have made any deemed clearance for that period. In view of the penalty imposed by Development Commissioner, no deemed export is proved and appellant failed to fulfill its export obligation as well as failed to achieve NFEP requirement. Accordingly, the FOB value of export for the relevant period cannot be considered towards fulfillment of NFE obligation. 30. The appellant having failed to fulfill the basic condition of the notification as to its eligibility, it is not entitled to any benefit under law. It was further argued that Notification No.53/97-Cus. was an incentive given to aquaculture farms and appellant not being so, made undue gain. Therefore undue benefit availed by the appellant is required to be restored back to the treasury with interest and penalty to protect interest of Revenue. 31. It was further argued by Revenue that merely filing the return and showing DTA clearance in page 61 62 of the appeal folder, it shall not get immunity from the levy without real permission letter produced before learned Adjudicating Authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Basic Customs Duty Addl. Customs Duty Total duty payable by the Unit From To Rs. Rs. Rs. Rs. 01/08/1999 31/03/2000 13,51,42,830 2,47,24,760 72,52,923 3,19,77,683 01/04/2000 31/03/2001 32,99,01,845 5,28,11,877 1,77,92,681 7,06,04,558 01/04/2001 31/03/2002 16,26,40,330 2,56,13,827 1,09,26,399 3,65,40,226 Total 62,76,85,005 10,31,50,464 3,59,72,003 13,91,22,467 IMPORTED RAW MATERIALS IMPORTED SPARES Period Assessable value of imports Basic Customs Duty Addl. Customs Duty Total duty payable by the Unit From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 3,846,563.49 1,7333.31 4,585,643.97 2,074.39 01/04/2001 to 31/03/2002 7,407,904.50 3,528.26 246,207.10 115.74 7,654,111.60 3,644.00 01/04/2002 to 31/03/2003 9,046,146.58 4,377.71 179,605.18 87.26 9,225,751.76 4,464.97 Total 21,146,032.63 9,919.01 7,432,979.36 3,525.33 28,579,011.99 13,444.34 38. It is an admitted fact on record that the appellant did not produce DTA sales permission before learned adjudicating authority nor satisfied that authority about earning of foreign exchange making exports. Some of the figures of the foreign exchanged claimed to have been earned by the appellant could not be justified by it as to whether such earni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the appellants used the same fabrics which was imported for export production and exported the goods. Correlation between imported goods and the exported goods was established. The imported fabrics were arranged by the buyers of the finished garments and the buyer has also accepted the exported garments as produced from the fabrics which they arranged to send. The appellant had fully satisfied the DEEC criterion, i.e. use of the imported materials for export production and export of the goods. The dispute came before Tribunal was as to whether the description of the goods tallied in the various documents. Accordingly it was held by Tribunal that the benefit of DEEC scheme is not deniable in cases where the export obligation was met. 41. Appellant further relied on the decision in the case of Raja Imports Expots V. CC, Bombay - 2000 (119) ELT 346(Tri). It was noticed in that case that the Textile Committee had certified that the exported goods were made out of 100% acrylic fibre and there was no reason for Tribunal to disagree with that report. The appellant was allowed to import the goods to fulfil the export obligation and the licence issuing authority held that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of goods manufactured in 100% EOU and allowed to be sold in India under para 9.9 (a), (b), (c) and (d). Once DTA sales against foreign exchange are held to be covered by the proviso to Section 3(1) of the 1944 Act then the whole difference between DTA sales against rupee and DTA sales against foreign exchange, for the purposes of Notification No. 2/95-CE would stand eliminated. This would be, however, subject to the compliance of other conditions of Notification No. 2/95-CE. Therefore, the Court held that Tribunal had erred in relying on para 9.9(b) for limiting the benefits of exemption under Notification No. 2/95-CE by imposing a new condition to the effect that the benefits would be admissible only in respect of 50% of such DTA sales against foreign exchange. Secondly, once the permission was granted by the competent authority under the Exim Policy to make DTA sales against foreign exchange, the assessee was entitled to the benefit of concessional rate of duty under Notification No. 2/95-CE. If DTA sales against rupee were allowed the benefit of Notification No. 2/95-CE, then DTA supplies against foreign exchange, which were at par with physical exports, cannot be denied the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a fundamental flaw in the Show Cause Notice. Even on merits, there was no justification for demand of duty as the appellants had de-bonded the said goods and paid the appropriate duty. Accordingly it was held by Tribunal that the impugned order had no merit for which appeal was allowed. In the present case, duty liability was discharged by the appellant before de-bonding. 45. Appellant also relied in the case of CCE C, Surat V. Amitex Silk Mills P. Ltd. - 2007 (216) ELT 589 (Tri Ahmd). The issue before Tribunal in that case of was as to where the deemed exports has to be included for the purpose of determining entitlement in the DTA. It was held that the clearances made by the respondent were clearly within the permissible limit of DTA sales as permitted by the Development Commissioner. Raw materials were admittedly issued for manufacture in the 100% EOU and no raw material as such was diverted. Accordingly demand of duty on the raw materials was not sustainable on the ground that the raw materials which have gone into manufacture of finished products/wastes and rejects, were sold in DTA with the permission of the Development Commissioner. 46. Keeping in view earnest praye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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