TMI Blog2018 (2) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... iability on raw materials, it could be seen from the records that the case of the appellant that the machinery imported was found to be old and unused machinery and because of the wrong supply of sub-standard machines, the appellant could not produce the goods and fulfill the export obligation, in which case, the appellant should have immediately informed the authorities regarding the same, which the appellant failed to do so. It is a clear case and is also admitted by the appellant before the authority that the goods were never lost or destroyed, but they become unfit for consumption, since they were not put into use by the appellant. Besides that the appellant failed to inform the department about stoppage of production at any point of time. When the officers verified stocks, they found shortage of stocks, which the appellant admitted and also paid duty on such quantities of shortage. The authorities below have appreciated the aspect of depreciation of value of capital goods at 90% of the value in terms of CBEC Circular 43/91-Cus. dated 26.06.1998 and accordingly, ordered the appellant to deposit the admitted liability of ₹ 10,17,283/-, which is a direct answer to the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed by a learned single Judge. Against which, the present Writ Appeal has been filed raising the following grounds:- i) The order passed by the learned Judge is contrary to law, weight of evidence and probabilities of the case. ii) The finding of the learned Judge that there was no allegation made as to the violation of principles of natural justice. In ground 20.a), the appellant raised the specific plea of violation of principles of natural justice which has not been properly considered. iii) The learned Judge failed to appreciate that the order passed by the 1st respondent is beyond the scope of application filed by the appellant before the 1st respondent. iv) The finding given by the learned Judge about the shortage of raw materials and payment of duty thereon, were not relevant to the application for settlement of the case. It is only whether there is true and full disclosure and whether the appellant co-operated with the proceedings is the only criteria to decide by the Settlement Commission. v) The learned Judge failed to appreciate that in the application filed before the 1st respondent itself, the appellant claimed NIL liability insofar as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant or if there was non-cooperation on the part of the appellant, then the 1st respondent was empowered to send the entire matter to the adjudicating authority. The appellant has also filed C.M.P.No.1233 of 2017 under Section 151 of CPC praying to grant stay of the operation of the order passed in Order No.25 of 2016-Cus. Dated 25.05.2016 passed by the first respondent pending disposal of the Writ Appeal. 3. Learned counsel for the appellant would submit that in the application filed before the 1st respondent, the appellant has claimed NIL liability, insofar as the raw materials is concerned, which amount was not mentioned anywhere by the Department in the report and 90% depreciation claimed by the petitioner was objected by the Department and the first respondent fixed the admitted liability, even though the appellant has claimed that the raw materials were unfit for consumption and to be destroyed. That is why, the appellant in the application before the first respondent and in the worksheet attached has mentioned NIL duty on the raw materials. 4. Learned counsel for the appellant would also submit that in the order dated 21.02.2006, the Bench had pointed out to the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the goods were not lost or destroyed, but the raw materials lost its utility due to the appellant's failure to clear the goods and leaving it to become unworthy and therefore, it cannot be construed, as a case of goods lost or destroyed, and such cases are not covered by the provisions of Section 23 of the Customs Act. 8. Learned counsel would further contend that the letter dated 10.05.2016, is the reply to the letter of Settlement Commission dated 28.04.2016, calling for comments for the letter dated 25.04.2016 received by the department from the learned counsel for the applicant, and in the said letter itself, the department has mentioned about the duty on raw materials. Learned counsel would further submit that the appellant cannot challenge an order of the Settlement Commission, in a piecemeal manner, and the findings of the fact recorded by the Commission is not open for examination either by the High Court or by the Hon'ble Supreme Court. Substantiating his above contentions, learned counsel cited the following decisions:- (i) Hon'ble Apex Court Judgment reported in (2010) 251 ELT 3 (Singhvi Reconditioners Private Ltd., vs Union of India and others), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icants are attempting to hoodwink the legal provisions and therefore, while settling the case, directed the entire Central Excise duty to be paid, apart from imposing penalty of ₹ 50,00,000/- on the applicant and giving an option of redemption of the seized goods on payment of redemption of fine of ₹ 2,00,000/- with simple interest and settling the interest at 10% (simple interest), and granting immunity from prosecution to the applicant and co-applicants. 11. The Constitutional Bench of the Hon'ble Supreme Court in the case of Brij Lal Ors., vs. Commissioner of Income Tax, (Civil Appeal Nos.516-527 of 2004, reported in (2011) 1 SCC 1 held that the order of Settlement Commission under Section 245D(4) of the Income Tax Act shall be final and conclusive. In UOI vs. IndSwift Laboratories Ltd., reported in 2011 (265) ELT 3 (SC), the Hon'ble Supreme Court held that an order passed by the Settlement 9 Commission could be interfered with only if the said order is found to be contrary to any statutory provisions of the Act. 12. So far the findings of the fact recorded by the Commission or questions of fact are concerned, the same is not opened for examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soles . The appellant unit has been registered by the Assistant Commissioner of Central Excise, Pondicherry Division, as a Private Bonded Warehouse with Licence No.3/92. The EOU imported machinery, spare parts and raw materials for the value of ₹ 6,28,12,691/- in terms of Notification No.13/81-Cus. dated 09.02.1981. However, the imported machineries were found to be old and used machineries and because of the wrong supply of the sub-standard machines, the appellant could not produce any goods, as per the norms and fulfill the export obligation. 12. The further case of the appellant before the Settlement Commission is that the appellant has filed a suit before the Hon'ble Supreme Court of India, against the German Collaborator, who supplied the machinery, for breach of contract, which resulted in closure of the unit and also claimed compensation for the loss suffered by the company. The Hon'ble Apex Court appointed an Arbitrator and an Arbitration award was in favour of the appellant herein and that the appellant is trying to execute the award. In the meanwhile, the appellant company has been declared as a sick unit under the Sick Industrial companies (Special Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng imported capital goods and raw materials; though they had undertaken to export 100% of their production excluding rejects during the entire period of 10 years under the EOU Scheme, their export was very minimal and they had exported only 4100 pairs of shoe soles against the annual capacity of 77.18 lakh; in ten years, they exported 0.005% of the permitted value, in total. The Development Commissioner has issued suo-motu exit order for non-functioning of the appellant unit under the scheme and to stop them from getting goods without payment of duties under EOU scheme; Suo-motu exit order could not be treated as permission for debonding and therefore, the appellant unit is not eligible for depreciation and the rate of duty applicable, which is prevalent at the time of suo-motu exit order. 15. On 21.02.2006, the Settlement Commission passed Proceedings-Cum-Interim order of the hearing held on 21.02.2006, wherein, the Additional Bench of Customs Central Excise Settlement Commission, accepted the plea of the petitioner for destroying the raw materials, unfit for consumption, however, directed the department and the petitioner to re-work the amount payable after taking into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as Hon'ble High Court of Madras. Subsequent to the said letter, the appellant moved the first respondent to fix the date of hearing in the case. The case was fixed for final hearing on 05.04.2016. The department representative confirmed that the admitted liability had been discharged by the appellant, however, pleaded for imposition of suitable penalty, and as regards immunities, the departmental representative left it to the discretion of the commission. 17. After affording necessary opportunities and recording the proceedings, under various hearing including post - hearing submissions made by the appellant dated 25.04.2016, as well as the revenue dated 10.05.2016, and accepting the claim of 90% depreciation on the capital goods by the appellant, the Settlement Commission, passed Final Order No.25 of 2016-Cus. dated 25.05.2016 and ordered that the amount of Customs Duty is settled at ₹ 46,52,571/- (Rs.10,27,099/- for capital goods on the depreciated value and ₹ 36,25,472/- on the raw materials). After giving credit to ₹ 10,17,283/- paid by the appellant, the Settlement Commission ordered the appellant to pay the balance amount within 30 days from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng for the report, the Settlement Commission, directed the revenue and the appellant to rework the amount payable. After submission of the calculation, Settlement Commission, 1st respondent herein, has granted 10 days time to the appellant to pay the remaining amount. After affording full and fair opportunity, the 1st respondent has proceeded to pass final order dated 25.05.2016 settling the appellant's case, by arriving at the customs duty payable, at ₹ 46,52,571/- by giving credit to ₹ 10,27,099/-, which was deposited by the appellant, for the capital goods, on the depreciated value, apart from directing the appellant, to remit the remaining amount, with regard to raw materials. The appellant has sought settlement on the admitted liability, and prayed for immunity provided under the law. The direct answer to the grounds raised by the appellant are that even during the preliminary proceedings, wherein an interim order was passed by the respondents, at no point of time, the department has accepted that there is no liability towards the duty on raw materials. In fact, on the submission made by the appellant, at various points of time, when the appellant was assailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted that the raw materials have lost its utility value due to the appellant's failure to clear the goods and leaving it to become unworthy and in such cases, remission of duty cannot be covered under Section 23 of the Customs Act, 1962. The appellant, on his own volition, has rendered the goods unfit for consumption and therefore, the same cannot be construed as the goods being destroyed or lost. Decisions cited by the learned counsel for the respondents are against the case of the appellant and that the appellant cannot be permitted to accept a portion of the order, which is favourable to them and make contra submissions against another portion, which is against to them. It is rightly held by the Writ Court that findings of fact recorded by the Commission are not open for examination or re-examination, by the High Court under Article 226 of the Constitution of India. Merely because, the order of the Settlement Commission does not suite the appellant herein, the appellant cannot be permitted to dissect the order of the Settlement Commission. 23. Insofar as the ground of 'violation of principles of natural justice' is concerned, the learned counsel for the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
