TMI Blog2017 (11) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... installation of the machinery in the premises of the supporting manufacturer i.e. M/s.Regency Glazes Ltd. According to para 5.3.2 of Hand Book, the licencee can install the machinery in the premises of the supporting manufacturer and such a facility is allowed under Foreign Trade Policy / Hand Book. Although they have submitted the Chartered Engineer Certificate regarding installation of the machinery, the same may be taken as a supporting document but not the relevant document because Installation Certificate has to be obtained from the Central Excise Authorities and the Chartered Engineer as the case may be. The appellants have produced sufficient certification not only from the Chartered Engineer but also from the jurisdictional Assistant Commissioner of Central Excise that the capital goods imported by them against the concerned EPCG license had very much been installed and put in use initially at their own manufacturing premises as required. Appeal allowed - decided in favor of appellant. - C/163 & 164/2009 - Final Order No.43005-43006/2017 - Dated:- 21-11-2017 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri B.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods valued at ₹ 7,77,77,987/- installed in the premises of M/s. RGL with option to redeem the same on payment of fine of Rs. One crore under section 125 of the Customs Act, 1962. A mandatory penalty equal to duty was also imposed along with separate penalty of ₹ 10 lakhs on M/s. RGL under section 112(a) of the Customs Act, 1962. Being aggrieved, the appellants are now before the Tribunal. 4. On behalf of the appellants, ld. counsel Shri B.V.Kumar argued in detail by adverting to various documents. He submitted that both the units are adjacent to each other and are sister units. The EPCG license dated 4.8.2004 was granted in favour of M/s. RCL and the capital goods were imported and installed in the premises of M/s. RCL only. The allegation of the department that immediately after import, the capital goods were diverted and installed in the premises of M/s. RGL is factually wrong. To support his contention that after import, the alleged capital goods were installed in premises of M/s. RCL, the ld. counsel relied upon the Installation Certificate issued by Chartered Engineer dated 11.11.2004. He drew our attention to the Handbook of Procedures in relation to the EXIM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange on the exports. A show cause notice was issued by the DGFT for the very same reason of diverting the machinery to a premises other than the premises mentioned in the license. The appellant had contested the show cause notice and Order-in-Original dated 9.4.2008 was passed by the Jt. DGFT. He adverted to para 11 of the said order of Jt. DGFT and submitted that it was observed by Jt. DGFT that M/s. RGL is only a supporting manufacturer and therefore the Jt. DGFT held that prima facie there was no violation of any condition of the license except the fact that the license holder had not intimated the department / DGFT about the installation of the machinery in the premises of the supporting manufacturer i.e. M/s. RGL. The factum of production of the Chartered Engineer's certificate as envisaged in the Handbook of Procedures was also taken into consideration in the said order and being a procedural lapse, not being a serious one, leading to revenue loss to the country, the same was condoned without any further action in this regard on the appellant. It was also noted in the said order that the appellant had fully complied the export obligation by using the imported capital g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed in the Handbook of Procedures whereas the notification stipulates that the installation certificate should have been issued by the AC / DC. The appellants have not produced certificate of installation within the prescribed period as stated in the Notification and that there is no document to show that the authority for issuing such certificate has extended the time. That therefore the installation certificate dated 24.8.2007 cannot be accepted as evidence. The appellants had diverted the capital goods to the premises of M/s. RGL without obtaining permission from the proper authority and without payment of appropriate customs duty which is contravention of condition No. 4 of the Notification No. 55/2003 dated 1.4.2003. In such circumstances, the demand of duty as well as consequent confiscation of the capital goods is just and proper. The ld. AR controverted the order passed by the Jt. DGFT stating that in cases of violation of condition of Notification, it is within the jurisdiction of the customs authorities to conduct enquiry, although the license is issued by the DGFT. Being an admitted case of diversion and M/s. RGL having not been recognized as a supporting manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises, within six months from the date of completion of import. There is also a provision for grant of extended period of time by the said DC/AC of Customs for production of such certificate. At the same time, the parent provision for Export Promotion for Capital Goods (EPCG) Scheme is available in page 5 of the then EXIM Policy and Handbook of Procedures 2002 2007. Under the head Monitoring of Export Obligation in para 5.9, it is mandated that the license holder shall produce to the concerned licensing authority, a certificate from the jurisdictional Central Excise authority or by an independent Chartered Engineer, confirming installation of capital goods at the factory of the license holder etc. within six months from the date of completion of imports. From the view point of this particular provision in the Handbook of Procedures, the appellant cannot be faulted for having produced a certificate from the Chartered Engineer dated 11.11.2004. But, of course, the corresponding Notification No. 55/2003-Cus. does require that such installation certificate should be issued only by the jurisdictional AC/DC. Ostensibly while such certificate from the jurisdictional DC/AC was not produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this letter dated 11.12.2003 addressed to the Central Excise authorities wherein the following facts found by him have been highlighted:- From the preliminary investigation, I could see the following facts : 1. The firm had fulfilled the export obligation. 2. The firm had submitted all the documents to our office. 3. The firm had not sold the machinery to any other party on any consideration. 4. The firm had only installed the machinery in the supporting manufacturer premises at Adavipalem, Yanam. 5. The entire raw material were supplied by the licence holder to the supporting manufacturer. 6. All the intermediate products manufactured by M/s.Regency Glazes Ltd. Were supplied 100% to M/s.Regency Ceramics Ltd. Only for manufacturing the end product, ceramic tiles. 7. Both the licence holder and supporting manufacturer are situated in the same place i.e. Yanam. In view of the above, I could see prima facie that the firm has not violated any condition of the licence excepting the fact the licence holder has not intimated us about the installation of the machinery in the premises of the supporting manufacturer i.e. M/s.Regency Glazes Ltd. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty of Rs. One lakh and that the goods has been regularized since they have paid the amount of Rs. One lakh towards penalty vide adjudication order dated 9.4.2008. 8.4 From the discussion, herein above, we are of the view that the appellants have produced sufficient certification not only from the Chartered Engineer but also from the jurisdictional Assistant Commissioner of Central Excise that the capital goods imported by them against the concerned EPCG license had very much been installed and put in use initially at their own manufacturing premises as required. Only much later, they decided to shift the capital goods to their sister unit M/s. RGL, which also was located in Yanam itself. This unilateral shifting of the capital goods, though done without the permission from DGFT authorities, and/or customs authorities, has nonetheless been regularized by way of adjudication of the matter by the Jt. DGFT, Hyderabad by imposing a nominal penalty vide order dated 23.7.2008. As observed by the adjudicating authority in para 21.7 of the impugned order, that law is clear that on the singular point the customs authorities cannot sit in judgment over the decision of the licensing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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