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In Re : Responsive Industries Ltd.

Settlement of a case - Demand of Custom duty and imposition of penalty - Section 112, 114A & 114AA of Custom Act, 1962 - Evasion of Special Additional Duty - Goods imported through Free Trade Warehousing Zone without payment of SAD by claiming exemption under Notification No. 45/2005-Customs, dated 16-5-2005 and were used in their factory for manufacturing of PVC flooring - Clearances made during the period from 12-3-2013 to 30-7-2013 - Revenue objected that the application is inadmissible becau .....

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enefit of exemption from SAD under this notification would be available when a DTA unit imports goods and routes it through SEZ/FTWZ for self-consumption i.e. in the nature of stock transfer from SEZ/FTWZ” - Held that:- the Board through circular 44/2013, dated 30-12-2013 has clarified that the benefit of the notification is not available to the goods which are for self-consumption and consequently SAD is attracted. In the instant case, the goods were for self-consumption and condition of the no .....

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s circular confirms the claim of the applicant that there was confusion about the applicability of SAD. This fact will have a bearing on the quantum of penalty. The immunities to the applicant and the co-applicant are granted under Section 127H(1) of the Act. Their attention is also invited to the provisions of sub-section (2) and (3) of Section 127H ibid. This order shall be void and immunities withdrawn if the Bench, at any time finds that the applicant had concealed any particular material fr .....

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ries Ltd. (hereinafter referred to as applicant or RIL ) and Shri Rajesh Pandey, (co-applicant), Director of Responsive Industries Ltd. filed under Section 127B of the Customs Act, 1962 for settlement of their case arising out of the show cause Notice F. No. DGECEI/MZU/I&IS/12(4)235/28-5-2015, dated 28-5-2015 issued by the Additional Director General of DGCEI, Zonal Unit, Mumbai and answerable to the Commissioner of Customs, Nhava Sheva, General, demanding Custom duty of ₹ 1,84,29,550/ .....

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ring, the officers of Directorate General of Central Excise Intelligence ( DGCEI in short), Mumbai Zonal Unit ( MZU in short), Mumbai initiated investigation on 24-1-2014 against M/s. RIL. 2.2 The investigations have revealed the following : M/s. RIL had imported their raw material viz. PVC resin under various Bills of Entry for their own consumption and not for sale. The importer s name mentioned on the Bill of Entry was M/s. Responsive Industries Ltd. and all the containers arrived at JNP .....

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hem in their factory as raw material for manufacture of their finished goods. Thus M/s. RIL were importer from beginning till its clearance to factory. In this case there was no ambiguity that M/s. RIL were importer from the stage when goods left the supplier s premises till the goods reached their factory. Further the goods cleared by M/s. RIL through M/s. Arshiya FTWZ were for own consumption, i.e., for use as raw material for their finished product. It was not amounting to sale and did not co .....

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for benefit of SAD exemption under Notification No. 45/2005-Customs, dated 16-5-2005. Thus, the SAD not paid by them at the time of clearance of their goods from FTWZ is required to be recovered from them. 2.3 On the basis of information submitted by M/s. RIL vide their letters dated 9-7-2014, 16-7-2014 and 24-7-2014 the investigation worked out the SAD liability as ₹ 1,84,29,550/ including EC and SHEC in respect of clearances made by the applicant during the period from 12-3-2013 to .....

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ms Circular No. 44/2013, dated 30-12-2013 issued under F. No. DGEP/SEZ/32/2011, F. No. 354/261/2013-TRU, dated 30-12-2013 has clarified that the SAD exemption will not be available if the goods are cleared from SEZ/FTWZ for own consumption. 3.1 On completion of the investigations, the show cause notice was issued to RIL asking them to show cause to the Commissioner of Customs (Nhava Sheva-General), Mumbai Zone-II as to why :- (i) The extended period specified in the proviso to sub-section ( .....

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from them in terms of proviso to sub-section (4) of Section 28 of the CA, 1962 and why the amount of ₹ 1,84,29,550/- paid by them during investigation should not be appropriated against the SAD payable; (iv) Interest at the appropriate rate on the said amount of SAD [mentioned at (iii) above] should not be charged and recovered from them for non-payment of SAD within the period specified under Section 28AA of the CA, 1962 and why the amount of ₹ 38,60,394/- paid by them, during inve .....

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CA, 1962. 3.2 Shri Rajesh Pandey, Director of M/s. RIL was also required to show cause to the adjudicating authority as to why penalty should not be imposed upon him under Section 112 & 114AA of CA, 1962. 4.1 In their application, the applicant have stated that the impugned goods had been captively used in the manufacturing activity and the final products were sold and hence, the question of confiscation of the impugned goods in absentia does not arise and consequently imposing of .....

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lly co-operated with the investigation proceedings and deposited the amounts as demanded. Consequently, they have requested to take a holistic and practical view and grant immunities from penalty and prosecution. 5. The application filed by the applicant was allowed to be proceeded with by the Bench vide orders dated 30-7-2015 on file. 6.1 The DRI has filed its report on behalf of the jurisdiction Commissioner and has made following submissions : (i) The applicant have admitted SA .....

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ettlement Application No. F. No. 68/CEX/KNA/2015-SC (MB) SA (E)116/2015, F. No. 65/CUS/KNA/2015-SC (MB) SA(C) 113/2015 and F. No. 66/CEX/KNA/2015-SC(MB) SA(E)114/2015 all dated 29-4-2015 that M/s. RIL approaching Hon ble Settlement Commission in a habitual manner. Since, M/s. RIL is a habitual offender for indirect taxes, it is felt that this present application with the Hon ble Settlement Commission may be rejected in view of Section 127L of Customs Act, 1962. Applicant s prayer of immunity fro .....

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clear about this issue at the time of the assessment. Had the Customs authorities advised the applicant to pay SAD they would have discharged same. CBEC had issued clarifications that SAD is applicable but the Customs authorities, at the time of assessment, did not advise accordingly. It was a matter of interpretation and there was no intention on the part of the applicant to evade duty. The applicants have already paid the applicable duty and interest and therefore the ld. Advocate prayed for .....

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lication is received after order imposing penalty is passed. Therefore the present application is admissible. 7.4 On behalf of the Revenue Shri Bhosle reiterated the allegations in the SCN and also submitted that applicability of SAD is linked to the usage of the goods and unless the applicants declare the same at the time of assessment it is not possible for assessing officer to subject the goods to SAD. As regards penalty and prosecution, he left it to the discretion of the Bench to pass .....

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owed to be proceeded with before the orders passed in the earlier application. 8.3 Even the assessing officer was not aware of the applicability of SAD. As the bona fides of the applicant were clear, on learning the applicability of SAD, they on their own calculated the payable SAD and the interest and paid the same before issue of the show cause notice. Therefore, no penalty is imposable on them in the absence of any contumacious act and mala fide intention as held by the Apex Court in the .....

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submissions of the applicant/co-applicant and the revenue. As regards the objection of the revenue that the application is inadmissible because of the bar provided in the Section 127L, the Bench observes that the present application has been filed and received in the Commission on 15-7-2015, i.e., before order dated 18-8-2015 of the Bench imposing the penalties. Relevant portions from Section 127L are extracted below : SECTION 127L. Bar on subsequent application for settlement in certain c .....

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n 127L are shall not be entitled to apply . The bar is on applying subsequent to order of settlement imposing the penalty. The applicant s case is not clearly not hit by this bar as in their case the present application has been filed before the order imposing penalty was passed. Thus, the Bench s earlier order allowing the application to be proceeded with is unaffected. The Bench now proceeds to decide other issues. 9.2 The applicant have already admitted and paid the duty and interest dem .....

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-2013 was issued after the import clearance of the impugned goods during 12-3-2013 to 30-7-2013. The opening paragraph of the circular reads, It has been brought to the notice of the Board that varying practices are being followed by the field formations regarding exemption from SAD on goods cleared from SEZs/Free Trade Warehousing Zones (FTWZ) into the DTA under Notification No. 45/2005-Customs, dated 16-5-2005. The issue raised is whether the benefit of exemption from SAD under this notificati .....

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cted rendering the liable to confiscation and the applicant/co-applicant liable to penalty under Section 112. The goods are not available for confiscation but the applicant/co-applicant are liable to penalty under Section 112. As there was no misstatement, fraud, etc., neither Section 114A nor Section 114AA is attracted. 9.4 As regards the quantum of penalty under Section 112, the Bench observes that the opening paragraph of the Board s circular confirms the claim of the applicant that ther .....

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