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M/s. Krishna Knitwear Technologies Limited Versus Commissioner of Central Excise & S.T., Vapi

100% EOU - appellants failed to install Secondhand Textile Machinery (capital goods) within the stipulated time of one year, or within the extended period - Confiscation of goods - exemption under Notification No. 53/1997-Cus dated 03.6.1997 as amended by Notification No. 52/2003-Cus dated 31.3.2003 - Imposition of redemption fine and penalty - Held that:- The goods were allowed to be imported and the duty on the same was exempted for a specific purpose, as per the conditions of the exemption no .....

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ire premises of 100% EOU should be treated as warehouse, and whether for captive consumption within the bonded premises, ex-bond bill of entry has to be filed and duty paid. The issue in Gemini Metal Works (1984 (12) TMI 314 - MADRAS HIGH COURT) related to cancelation of license and is not relevant in the instant case. On the other hand, we find our views are fortified by the decisions of this very Bench of the Tribunal in the case of M/s. Siddeshar Spinning Pvt. Limited vs. CCE, Bhavnagar [2013 .....

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iscation of the goods and penalty on the appellant are not warranted. - Decided partly in favour of assessee. - Appeal No. : C/422/2007 - ORDER No. A/11759/2015 - Dated:- 7-9-2015 - Mr. P.K. Das, Member (Judicial) And Mr. P.M. Saleem, Member (Technical) For the Petitioner : Shri T. Vishwanathan and Shri Manish Jain, Advocate For the Respondent : Shri Alok Srivastava, Authorised Representative ORDER Per : Mr. P.M. Saleem The brief facts of the case in the present appeal are that, M/s. Krishna Kni .....

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. 144 Nos. of Secondhand Textile Machinery during the period January 2003 to February 2004 by availing exemption under Notification No. 53/1997-Cus dated 03.6.1997 as amended by Notification No. 52/2003-Cus dated 31.3.2003. The appellants installed 113 Nos. of Secondhand Textile Machinery (capital goods) out of the total 144 Nos. of Secondhand Textile Machinery procured, within one year from the date of import. The appellants failed to install remaining 31 Nos. of Secondhand Textile Machinery (c .....

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37,569/- and allowed redemption of the same on payment of fine of ₹ 10 Lakh. He also confirmed duty of ₹ 74,11,970/- along with interest and imposed penalty of ₹ 5 Lakh on the appellants. He ordered to enforce the bond for recovery of the aforesaid duty, interest and penalty. Aggrieved by the same, the appellants are before us. 2. Heard both sides. The learned counsel appearing for the appellants argued extensively on various points. He submitted that they could not install the .....

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e goods imported were warehoused and since the goods were not cleared from bonded warehouse, no duty is leviable on the same. He also submitted that there was no suppression or malafide intention on their part and therefore, imposition of penalty was bad in law. The learned counsel cited the decisions of the Honble Madras High Court in the case of Gemini Metal Works vs. UOI 1985 (22) ELT 27 (Mad.) and Tribunal in the case of Macmillan India Limited vs. Commissioner of Customs,Bangalore 2008 (22 .....

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No. 53/97-Cus dated 03.6.1997 3read with Notification No. 52/2003-Cus dated 31.03.2003. He also submitted that the appellant were granted extension of time to install the capital goods up to 30.06.2006 in accordance with the provisions of the notification, but they still failed to install the same. The request of the appellants dated 08.6.2006 to scrap and destroy the said goods were rejected on 20.6.2006 by the Assistant Commissioner, Central Excise and directed them to pay duty with interest. .....

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d. He also cited the decision of the Tribunal in the case of Siddeshar Spinning Pvt. Limited vs. CCE, Bhavnagar 2013-TIOL-841-CESTAT-AHM in his favour. He argues that the appellant had not complied with the conditions of the notifications and therefore, they are liable to pay the duty along with interest, and confiscation of goods and imposition of penalty are justified. 4. On careful consideration of the arguments of the both sides and perusal of the records, we observe that the appellant had i .....

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rety as may be prescribed by the Assistant Commissioner of Customs, binding himself to fulfil the export obligations and conditions stipulated in this notification and in or under said 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% per 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, if (i) in the case of capital goods, such goods a .....

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. 52/2003-Cus. (3) The unit executes a bond in such form and for such sum and with such authority, as may be specified by the said officer, binding himself, (d) to pay on demand- (I) an amount equal to duty leviable on the goods and interest at a rate as specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) issued under section 28AB of the said Customs Act on the said duty from the date of duty free import of the said goods till the date of p .....

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tall 31 Nos. of the Secondhand Textile Machinery (capital goods) within the stipulated period of one year nor could they install the same up to 30.06.2006, the extension of time limit granted for installation of the same as per the provisions of the notification. It is their case that they could not install the goods since they could not procure the spare parts of the machine for installation of the goods. They have also argued that their request for scraping and destruction of the said obsolete .....

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purpose of putting the same into production. The goods were allowed to be imported and the duty on the same was exempted for a specific purpose, as per the conditions of the exemption notification (supra) and the appellant was bound by the conditions. On failure to comply with those conditions, the goods are not eligible for the exemption provided by the said notification and they are liable to pay applicable customs duty. It is settled law that the exemption notifications have to be construed .....

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herefore, the goods are liable to customs duty once it is found that they are not eligible for the exemption under the said notifications (supra). We, therefore, find no reason to interfere with the impugned order of the adjudicating authority confirming the demand of duty of ₹ 74,11,970/- along with interest and therefore, we uphold the same. 6. However, as brought out hereinabove, the appellant had no malafide intention as they had not suppressed the facts from the department. To the con .....

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ot warranted. 7. We find that the case laws cited by learned counsel are not applicable in the present case, as the facts are different in those cases. In Macmillan India Limited (supra), the goods related to Information Technology and export obligations were already met. In Paras Fab International (supra), the issue was whether the entire premises of 100% EOU should be treated as warehouse, and whether for captive consumption within the bonded premises, ex-bond bill of entry has to be filed and .....

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missioner of Customs, Mumbai - 2001 (137) ELT 697 (Tri. Mum.) and Taurus Novelties Limited vs. Commissioner of Customs, Bangalore -2004 (173) E.L.T. 100 (Tri. - Bang.). Paras 7,8 and 9 of the said decision are reproduced below for better appreciation:- 7. We find that on an identical issue, the co-ordinate Bench of the Tribunal in the case of Nava Bharat Enterprises Ltd (supra) (wherein I was one of the Member of the Bench) had specifically held that the liability to pay the Customs duty along w .....

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to close down the business owing to problems such as lack of orders, internal competition, low prices and working capital. They had also submitted that considering these difficulties faced by the EOU, the Development Commissioner had taken a lenient view and imposed a light penalty of ₹ 50,000/- on them. The Commissioner rejected this claim of the appellant as not substantiated. We find that it is reasonable to conclude that the EOU had wound up its business for want of business and funds. .....

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allegation in the show cause that the appellants-importer willfully sought to avail of the benefit of Notification with a view to gain any benefit. It is not the case of the department that there was deliberate attempt to avail of the notification by making any mis-declaration. The extent of the failure to fulfill the export obligation does not matter in a situation, as seen from the records that in this case, in fact the appellants had filed bank guarantee and sought for extension of time to fu .....

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9;ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa, has held that "penalty will not also be imposed merely because it is lawful to do so. Where penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances". Following the ratio of the above decisions, we set aside the confiscation of the goods and imposition of penalty on the a .....

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