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2015 (5) TMI 943 - CESTAT NEW DELHI

2015 (5) TMI 943 - CESTAT NEW DELHI - 2015 (328) E.L.T. 505 (Tri. - Del.) - 100% EOU - Exemption under 136/94-CE - Double jeopardy - Non fulfillment of export obligation - Import of goods before 2003 - Confiscation of goods - Imposition of penalty - whether the duty foregone at the time of procurement of impugned goods is recoverable or not - Held that:- there cannot be any doubt/dispute that for the goods procured prior to 31.3.2003, the conditions of Notification No. 52/2003-Cus dated 31.3.200 .....

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ub-Rule (2) only states that An order Sub-Rule (1) shall be issued by Central Excise officer following the principles of natural justice . Thus non intention of Sub Rule of Rule 25 ibid has in no way prejudiced the appellants.

Appellants contention of double jeopardy on the ground that they have already been penalised under the FTDR Act, 1992 is totally invalid as the ingredients of offences under the FTDR Act and the Customs Act, 1962/Central Excise Act, 1944 are different.

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642/2008-CU(DB) - F. Order No. 51491/2015 - Dated:- 5-5-2015 - Hon ble Mr. Justice G. Raghuram, President And Hon ble Mr. R.K. Singh, Member (Technical),JJ. For the Appellant : Shri J.M. Sharma, Advocate For the Respondent : Shri A.K. Agarwal, C.A. Shri Amresh Jain, D.R. ORDER Per R.K. Singh : Appeal has been filed against the Order-in-Original No. 5/JM/CUS/07/6352 dated 31.5.2008 in terms of which Customs duty amounting to ₹ 3,99,668/- and Central Excise duty amounting to ₹ 2,75,61, .....

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duct. As per terms and conditions of the said LOP the appellants were inter alia required to : (i) export their entire production (excluding rejects not exceeding 5%) to GCA/Hard Currency area for a period of 10 years and achieve the target of export worth ₹ 1380.46 lakh, during the period of 5 years after commencing production; (ii) achieve minimum value addition (VA/NEEP) not less than 90%; (iii) carry out entire production activity in customs bonded area; (iv) follow the conditions spec .....

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l their export obligation and other obligations under this scheme. In terms of the above LOP the appellants procured capital goods, components, raw materials etc. duty free under Notification No. 136/94-CX dated 10.11.1994 / 22/2003-CE (on which Central Excise duty of ₹ 2,75,61,081/- was otherwise leviable) and under Notification No.126/94-Cus / 52/2003-Cus (on which Customs duty of ₹ 3,99,668/- was otherwise leviable). The adjudicating authority confirmed the demand of the said Cent .....

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pite of there being no such permission they cleared the goods in the Domestic Tariff Area (DTA). The adjudicating authority observed that they had exported roses valued at ₹ 98.02 lakhs only since inception and that they had cleared the said product mainly in the DTA. The adjudicating authority also specifically referred to Notification No. 52/2003-Cus. dated 31.3.2003 (as amended) and Notification No. 22/2003-CE dated 31.3.2003 (as amended) which inter alia required proportionate payment .....

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incorporated in the relevant notifications only in the year 2008. (iii) The LOP was cancelled on 29.3.2007 as a result of which debonding had to follow and accordingly they paid the duty on the capital goods procured by them duty free (both imported and indigenously procured) at their depreciated value as required under the respective exemption Notifications availed of by them. (iv) the non-fulfilment of export obligation on their part has been adjudicated by the Development Commissioner and for .....

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e to the tune of ₹ 2.19 cores as against ₹ 98.02 lakhs stated by the adjudicating authority; (vii) they were issued a Show Cause Notice on 13.9.2001 demanding duty of ₹ 26,14,587/- on DTA clearances which demand was dropped vide order in original dated 26.8.2004 and the second Show Cause Notice dated 31.7.2007 was issued after their LOP was cancelled and that they on their own, on receipt of the said Show Cause Notice, computed the duty liability in respect of imported/indigeno .....

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e penalty under Section 112 is not imposable in the absence of a finding that the goods were liable to confiscation. (xi) Rule 173Q of Central Excise Rules, 1944 is not attracted in their case as the said rule does not apply to 100% EOU. Similarly penalty under Rule 25 of Central Excise Rules, 2002 is not imposable as the adjudicating authority has not specified the sub-rule of Rule 25 under which the penalty has been imposed and that the Commissioner has not held the goods liable to confiscatio .....

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considered the contentions of both sides. The appellants have stated that the imported/indigenous goods were procured during the period 1995-1996 to 2002-2003. The details of procurement of goods submitted by the appellants do indicate that the goods were procured only up to the year 2002-2003. This contention has not been disputed by the adjudicating authority. Therefore there cannot be any doubt/dispute that for the goods procured prior to 31.3.2003, the conditions of Notification No. 52/2003 .....

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xemption notification was that the appellants exported out of India 100% or such other percentage as may be fixed by the Board of articles manufactured wholly or partly from the said goods for the period stipulated by the Board or such extended period as may be specified by the board. The appellants evidently violated the said condition (No. 7)) of the exemption Notification No. 136/94-CE inasmuch as they were required to export 100% of articles (excluding rejects) manufactured wholly or partly .....

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e construed strictly and if the exemption is available only on complying certain conditions, the conditions have to be complied with. 7. The appellants referred to the judgement of Khabros Steel India Ltd. Vs. CCE, Jaipur 2006 (194) ELT 117 (Tri.-Del.) to argue that in the case of debonding the duty is to be paid on the depreciated value at the rate in force at the time of payment of such excise duty. They also referred to the CESTAT judgement in the case of CCE, Vadodara Vs. Solitaire Machine 2 .....

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other import goods. That the original import was under an export obligation scheme makes no difference to duty liability. In this regard, it is to state that we agree with the contention of the appellants that during the relevant time when the goods were procured duty free there was no condition to achieve positive NFEE in Notifications Nos. 136/1994-CE and 126/94-Cus. nor was there any condition requiring only proportionate payment of duty in case of non-fulfilment of export obligation. Indeed .....

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conditions of the exemption Notification No. 136/94-CE regarding exporting the goods produced wholly or partly from the impugned goods (procured duty free) during the stipulated period. Consequently the Central Excise duty demand sustains even without reference to Notification No. 22/2003-CE. 8. Similarly the goods were procured by them from abroad duty free in terms of Notification No. 126/1994-Cus. dated 3.6.1994 which inter alia contained the following conditions : (3) The importer at the ti .....

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ligation and comply with the conditions stipulated in this notification and Export and Import Policy, and to pay on demand an amount equal to the duty leviable on the goods and interest at the rate of 20% pr annum on the said duty from the date of duty free importation or procurement of the said goods till the date of payment of such duty. As per the LOP, the appellants had inter alia the following export obligation: (i) The entire (100% production shall be exported to General Currency Area Coun .....

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nce the Customs duty foregone was correctly confirmed by the adjudicating authority in terms of Section 28 of the Customs Act, 1962 read with the bond executed by the appellants. 9. It is pertinent to reiterate here that in the said Notifications No. 126/1994-Cus. and Notification No. 136/1994-CE there was no provision to recover only the proportionate duty foregone (i.e. to recover only the proportionate duty equivalent to the proportion by which the export obligation was not fulfilled) and the .....

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sly argued that it is a case of debonding of EOU and that they have paid duty on the depreciated value of the goods at the time of debonding which automatically follows on cancellation of LOP and cited judgements to that effect like Mohd. Tariq Abbasi Vs. CCE, Meerut-I 2012 (283) ELT 287 (Tri.-Del.). That debonding follows as a consequence of cancellation of LOP is not an unacceptable proposition. But in the present case the issue is the appellants non-eligibility for the exemption notifications .....

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a shall be liable to confiscation:- (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer. Thus the impugned goods imported duty free were clearly rendered liable to confiscation as they were cleared duty free under Notification No. 126/94-Cus. but th .....

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