TMI Blog2021 (2) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is applicable but because of certain aggravating circumstances like suppression of facts, the limitation gets extended to 5 years - Even if the point on suppression of fact is analysed for the sake of completion, the records would show that the First Appellant had sold the Mulberry Raw Silk imported on Exemption Certificate, in the local market through the second and third appellants. After Inspection the First Appellant remitted ₹ 17,00,000/- under challan dated 03.02.1999 and 17.02.1999 towards the appropriation of the duty liability. Knowing fully well about the export obligations on Exemption Certificate and having violated it , the First Appellant had sold them in the local market through the Appellants 2 and 3. The mere delay on the part of the Authorities to detect the violation of export obligation and issue show cause can not be construed as a permissive violation - The Suppression of Facts and materials is very much visible from the conduct and the pattern in which the Appellants caused the disappearance of the raw materials. Had the Tribunal rightly interpreted the the dictum laid down in Bombay Hospital Trust case on the point of limitation for cases fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more stringent provision is mentioned in the concluding portion of the show cause) from the time when show cause was issued and the Appellants have also been given with the opportunity to defend themselves - Hence the Appellant cannot claim that the order of the Tribunal which modified and reduced the penality under sec. 112 is altogether a new one or that they were not given with any opportunity of hearing. Appeal dismissed - decided against appellant. - C.M.A.No.2834 of 2014 - - - Dated:- 11-2-2021 - Honourable Mr. Justice T.S. Sivagnanam And Honourable Ms. Justice R.N. Manjula For the Appellant : Mr. T.Ramesh For the Respondents : M/s.R.Hemalatha Standing Counsel JUDGMENT R.N.MANJULA, J. This Appeal has been filed under Section 130 of the Customs Act, 1962 (hereinafter referred to as the Act ), challenging the order dated 02.12.2013 made in Final Order No.40601 of 2013 on the file of the Customs, Excise Service Tax Appellate Tribunal, Chennai (for brevity the Tribunal ). 2 . The Appellant has raised the following substantial questions of law for consideration of this Court :- (i) Whether the Tribunal is right in confirming the demand f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation, the Commissioner of Customs issued the following order :- (i) I demand from M/s.Varalakshmi Exports, Bangalore customs duty amounting to ₹ 83,00,745/- payable on mulberry raw silk imported under advance licence No.23120212 dated 15.01.93 and 3035148 dated 16.5.94 in terms of undertaking furnished under the conditions of the notification read with proviso to Section 28(1) of the Customs Act 1962. (ii) I impose a penalty of ₹ 83,00,745/- equal to the amount of duty evaded under Section 114A of the Customs Act, on the said M/s.Varalakshmi Exports, Bangalore. (iii) I demand from M/s.Varalakshmi Exports, Bangalore, interest @ 24% per annum from the date of import. (iv) ₹ 17,00,000/- remitted vide Challan dated 3.2.99 and 17.2.99 should be appropriated towards the above dues. (v) I impose a penalty of ₹ 1,00,000/- (Rupees one lakh only) on Shri K.H.Subramani partner of M/s.Varalakshmi Exports, Bangalore under Section 112(a)(2) of Customs Act. (vi) I also impose a penalty of ₹ 25,000/- (Rupees twenty five thousand only) each on M/s.Varalakshmi Handlooms, Bangalore and M/s.Varalakshmi Silk House, Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine of ₹ 20,00,000/- imposed under Section 125 was also set aside for the reason that the earlier order of the Adjudicating Authority dated 01.11.2000 did not mention about the penalty under Section 125. The Tribunal relied on the decision on the case in 2009 (233) ELT 102 (Tri.-Del.) (Goenka Impex Pvt. Ltd. Vs. Commissioner of Customs, Lucknow), 2007 (210) ELT 96 (Tri.-Mumbai) (MRF Ltd Vs. CCE), 2005 (192) ELT 740 (HC Infosystems Ltd. Vs. CCE, Meerut). The ratio decidendi followed by the Tribunal is that in de-novo proceedings neither quantum of penalty can be enhanced nor any new order of confiscation or imposition of fine can be imposed. But the demand of penalty of 50% of duty was sustained under Section 112 of the Act. (iv ) The penalty imposed on appellant No.2 and 3 is reduced to ₹ 25,000/- each and ₹ 1,00,000/- on the 4th appellant under Section 112(a)(ii) of the Act. 9. Now, the Appellants have filed this appeal by partly challenging the order of the tribunal on two grounds. Firstly , the demand of duty issued by the respondent Department itself is barred by limitation and the extended period of limitation is not applicable as ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Needless to say that in a continuing obligations the date of the clearance of the goods cannot be the date for determining the limitation 15 . By accepting that the violation of post import condition is a continuing one, the Five Members Bench of the Tribunal subsequently held in Bombay Hospital Trust case that it is wrong to state that the period of limitation commences from the date of issue of show cause notice and it is held as follows: 12. As regards the time limit under Section 28, both sides have agreed that since the duty demand does not relate to short levy or non-levy at the time of initial assessment on importation, but has arisen subsequently on account of failure to fulfill the post-importation conditions under the Notification under the Notification No.64/68, the said section 28 has no application to a duty demand of this kind. We do not therefore, wish to dwell further on the inapplicability of section 28 to such demands. However we note that since no time-limit is prescribed under any other provisions of the statue, the notice of demand in such cases cannot be subjected to any limitation of time. This view is supported by the ratio of the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal s order in respect of setting aside the portion of the demand of duty of ₹ 48,03,968/- in respect of Bill of Entry cleared during the period between 12.04.1993 to 28.02.1994 on a finding that it is barred by limitation . And claims that the demand of duty for the Bill of Entry relating to the period from 17.03.1994 to 04.10.1995 is also barred by limitation and that he has not suppressed any facts. The learned counsel for the Appellants submitted that the Department has full knowledge about the activities and non-export of the goods under DEEC by the Appellants and that the license in question was expired on 24.01.1994 and 16.05.1994. 18 . The demand of duty for violating the post importation condition of an exemption notification is not confined to any period of limitation and hence there is no relevancy in the argument of the Appellants that they did not suppress any material facts. Just because the Tribunal has wrongly interpreted the order passed in the Bombay Hospital Trust Case or the Revenue was indifferent to such wrong interpretation and the resultant effect, this Court can not make an unnecessary exercise by analyzing the fact whether or not there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d distinguished that in the subsequent cases the Supreme Court relied the decision of the Mediwel Hospital Healthcare Pvt. Ltd , so far it relates to the observation made by the Supreme Court in Paragraph 12 of the judgment. The Tribunal has elaborated on this point in Bombay Hospital Case by reiterating para 12 of Mediwell as under :- 15 . We find that in Mediwell (supra), the Apex Court has interpreted the said Notification No. 64/88 in the context of allowing import of medical equipment without payment of duty and has observed in Paragraph 12 thereof as follows :- While, therefore, we accept the contentions of Mr. Jaitley, learned senior Counsel appearing for the appellant that the appellant was entitled to get the certificate from Respondent No. 2 which would enable the appellant to import the equipment without payment of customs duty but at the same time we would like to observe that the very notification granting exemption must be construed to cast continuing obligation on the part of all those who have obtained the certificate from the appropriate authority and on the basis of that to have imported equipments without payment of customs duty to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sathya Sai Inst. (supra) has overruled the extra conditions imposed under Paragraph 13 of Mediwell (supra) but has left Paragraph 12 untouched. The fact that a Larger Bench of the Apex Court has overruled the Paragraph 13 goes to show that everything beyond Paragraph 11 in Mediwell (Supra) is not in the nature of casual observation contrary to the arguments by the learned senior Counsel. Moreover, since Paragraph 12 has not been overruled, the same, in our view, provides binding authority for recovery of duty. We also note that the Honourable Karnataka High Court has followed the same in Medical Relief Society (supra). 17 . The ratio of Faridabad CT Scan Centre (supra) that benefit of exemption notification is not to be extended to some one on the ground that such benefit had wrongly been extended to others, in our view, does not nullify the interpretation of the impugned notification and direction for duty demand contained in Paragraph 12 of Mediwell (supra) as these are two different legal issues. 18. It has been argued by the ld. Senior Counsel that in Paragraph 12 of Mediwell (supra), the Apex Court has not directed the Customs authorities to demand duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever is higher . 16. Sec. 114- A, mandates a penality equal to duty where there is suppression of facts and also interest. And it has come into effect from 28.09.1996. Since the demand of duty pertains to the Bill of Entries connected to the period prior to the amendment, the Tribunal (CESTAT) had restricted the imposition of penality to the Section 112 (prior to its amendment ) and reduced it to 50% of the duty evaded, by exercising its discretion. . 24. Section 114(A) of the Customs Act which empowers the Department to impose the penalty equal to the duty was not in force during the impugned period and hence the Tribunal modified the imposition of penalty by restricted it to Section 112 (prior to its amendment). The words prior to amendment assumes significance for the reason that subsection 112 (b) (ii) was amended in the year 2015 by virtue of Act 20 of 2015. Prior to the said amendment the said subsection 112 (b) (ii), encompassed a discretion to impose penalty at an amount not exceeding the duty evaded or at ₹ 5,000/- whichever is greater. 25 . In para 17.1 of the show cause notice also, the act of the First Appellant in selling away of the goods liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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