9911796707
TMI Blog2022 (9) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant made application to Secretariat for Industrial Approvals (SIA) for grant of industry license as a 100% EOU for manufacture of assorted cosmetics, perfumery, et cetera. The unit was to be set up in association with M/s Estee Lauder international INC and its affiliates. In the application it was stated that at present the appellants had an order of Rs. 2.5 crores for immediate export to the USSR. It was specifically stated that in the 1st year they would only re-package and label finished products imported from the associates and then subsequently, import raw materials in bulk and other consumables as required. 2. The appellant was issued letter of intent (LOI) by the SIA - Ministry of Industry vide letter No. LI/953 (85) EO No. 68 (85) IL dated 6th August 1985, for manufacture of assorted cosmetics, perfumery and toiletry products, falling under chapter 33 of the Central Excise Tariff Act, 1985 with an annual capacity of 3000 tons and export of the same, which was later on converted into an Industrial license No. IL/184 (91) dated 12th September 1991. 3. On 14th October 1985, the SIA permitted the appellant to import finished products and re-export the same after rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eau De Toilette natural spray 12,000 pieces. Total amount of contract: INR 4,84,40,000. iii Contract No. 27/661250 dated 10/1/1986 for: (a) Art. 0667 Moisture Balance Free Powder Compact White with Gold I Gold Box- 150,000 pieces; (b) Art. 4261 Estee Super Silken Tassel Perfume Flacon-100,000 pieces. Total amount of contract- 2,59,51,500. 6. The appellant imported 3 consignments of finished goods alongwith consumables namely - cartons, liners, labels for compact, labels for cartons and carriers, flacons, caps, tassels, pouches and setup boxes and carriers and film wraps. They filed 3 bills of entry as follows: - 15/11/1985 (i) B/E NO 2756 dt 15/11/85 CIF value Rs. 2,02,42,660. 1/12/1985 (ii) B/E No A11195 dt 1/12/85 CIF value Rs. 3,62,15,106/- 25/7/1986 (iii) B/E No 1640 dt 25/7/86 CIF value Rs. 1,92,72,345 Total CIF value Rs. 7,57,30,111/- the aforesaid 3 bills of entry included consumables having CIF value Rs.1,21, 73,788/-. 7. The appellant also imported the following capital goods vide bill of entry for warehousing No. 1481 for CIF value Rs. 3,08,131/- namely i) labelling machine, ii) strand carton iii) wrapping machine and iv) embossing machine. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms and conditions set out in the extension permission dated 29th April 1987. They also sent a letter dated 30th June 1987 to the Export Promotion Officer, Joint Director wherein they provided list of imports of consumables amounting to Rs. 1,21,73,788/- alongwith the shipping bills duly certified by the customs officers. Thereafter, the Government of India issued another letter dated 7th April 1989 modifying the terms and conditions of the LOI. 12. The office of CCI and E issued show cause notice dated 25th July 1989 wherein it was accepted that the appellant had re-exported the finished goods imported, and had achieved the minimum value addition, but had not taken any keen interest in setting up of the unit and therefore failed to fulfill the export obligation. Thus action was proposed under Section 4-I. 13. The appellant started receiving the capital goods imported by them for setting up of the factory unit in April 1990, which was set up in the Industrial Area at MIDC, Thane. By order dated 7th November 1990, the Additional Controller confirmed the show cause notice dated 25th July 1989. 14. On 11th November 1990, the appellant entered into an agreement with the USSR f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , giving details of the aforementioned 3 contracts (for supply to USSR), the import value and export value and also enclosed a statement of calculation of the value addition, clarifying that the value addition was 22.96, 23.10 and 23.01 percentage, in respect of the 3 contracts. It was pointed out that the figures were taken from the audited balance sheet which was also enclosed. It was also urged that the allegation in the audit report of having not achieved 20% value addition is erroneous. 19. With respect to the appeal filed by the appellant against the order dated 20th September 1996 passed by the Additional DGFT wherein penalty of Rs. 50 lakhs was imposed, the Appellate Authority advised the appellant to furnish the bank guarantee of Rs. 1 lakh. Such bank guarantee was furnished on 14th December 1996. However, the Appellate Authority rejected the appeal of the appellant for non-submission of bank guarantee erroneously. This order was never communicated/served on the appellant. Appellant came to know about this order for the first time, in the course of hearing of their stay application before this Tribunal, when this was filed by the revenue before this Tribunal in the month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty would be the date at the time of import iv) Appellants failed to fulfil conditions of notification therefore cannot claim benefits of the scheme and notification and therefore required to be paid customs duty v) No adjudication order in respect of the demand of duty earlier therefore Appellant's contention that the matter was already adjudicated and cannot be reopened, was rejected. vi) Appellants had not started manufacturing activities from inception of the unit thus, the proposed duty and penalty were confirmed. 23. Being aggrieved the appellant preferred the present appeal before this Tribunal. Vide stay order dated 21st November 2011, this Tribunal had directed the appellant to make pre-deposit of Rs. 1.5 crores. Being aggrieved the appellant had preferred Customs Appeal No. 14 of 2012 before Hon'ble Bombay High Court. The appellant also filed a separate Writ Petition No. 6353 of 2012, before the Hon'ble Delhi High Court, challenging the communication of the Appellate Authority - DGFT, dated 13th October 1997. 24. The Hon'ble Bombay High Court taking notice of the letter of the learned Commissioner dated 23rd August 2004 addressed to the member CBEC, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ables, being CIF Rs. 1,21,73,788/- which was set out in item 4 of Annexure 2. No duty was demanded in respect of item No. 4 as no separate bill of entry was filed for the same, as actually, these consumables being packing materials had been imported along with the 1st three items and were inclusive in the value of the same. This fact have also been accepted by the learned Commissioner, Thane, in his communication dated 23rd August 2004. Thus, this amount has been erroneously added to the value of the imported goods, resulting in double consideration of the same amount. Once this amount is reduced, (added double), the appellant have evidently achieved value addition of more than 20%, as has been accepted by the learned Commissioner in his communication dated 23rd August 2004. Thus, the 1st demand of Rs. 33,00,23,408/- is fit to be set-aside. 29. It is also urged that the said letter dated 23rd August 2004 has been filed and relied upon by the revenue at the time of hearing of the stay application before this Tribunal and brought on record. Hence, the same is a good and reliable piece of evidence which cannot be ignored. Accordingly, the penalty imposed of matching amount is also fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notification. 34. It is further urged that the Department cannot, on the one hand, refuse to permit the appellant to de-bond the capital goods from the warehouse, after the warehousing period has expired, and on the other hand, purport to demand duty under Section 72 (b) of the Act. The revenue cannot be permitted to take advantage of its own wrong. It is submitted that the order of confiscation of the capital goods and the demand of duty and penalty is bad in law, erroneous and deserves to be set-aside. 35. It is further urged that even if the condition of notification was not fulfilled, it is well settled that the rate of duty has to be the rate prevalent at the time of the de-bonding. There can be no question of demanding any duty on capital goods before de-bonding. The observation of learned Commissioner - " since there is no exit of EOU, the rate of custom duty will be the rate prevailing at the time of import", is evidently baseless and without the authority of law. 36. Further the order of confiscation of capital goods is bad as the goods are still lying under bond in the bonded warehouse (factory premises). Evidently, the appellant have not violated any of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been demanded or proposed in respect of such export, and thus the issue was wholly irrelevant. Evidently, the appellant had taken proper permission for importing finished goods - toiletries in bulk and for re-exporting the same after repacking and labelling. 40. It is further urged that under the facts and circumstances, the show cause notice is bad for invoking the extended period of limitation. Evidently, no case of mala fide could be made out in the facts and circumstances. 41. It is further urged that no separate penalty is imposable under Rule 173 Q(1) of CER 1944. Evidently, in the facts and circumstances when the goods were imported for manufacturing under Bond for export and earning net foreign exchange, no excise duty is attracted under the provisions of Central Excise Act. Thus, the imposition of penalty under Central Excise Rules is unwarranted and fit to be setaside. 42. Accordingly the learned Counsel for the appellants prays for allowing the appeal with consequential benefits. 43. Opposing the appeal, Learned Authorised Representative for revenue contended that there is a clear finding by the Additional DGFT to the effect that the appellant have failed to fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he admitted facts on record, particularly, the communication of the learned Commissioner, Thane to the Member CBEC dated 23rd August 2004, wherein, it has been admitted that there have been error in the calculation and the appellant have achieved min. value addition of 20%, and therefore have complied with the condition. Accordingly, we set aside the demand of Rs. 33,00,23,408/- along with the penalty imposed. 45. So for the 2nd demand of Rs. 64 lakhs approx is concerned, we find that admittedly the appellant pursuant to import have brought the capital goods to the factory (in the bonded warehouse). Such goods have admittedly, not been removed by the appellant and are still lying under bond, under the control of the Customs Department. In spite of several requests by the appellant for de-bonding, the Customs Department have not cared to allow the de-bonding, which is wholly arbitrary. It is established law that duty can be demanded on the capital goods from an EOU on the event of de-bonding. Accordingly, we set aside the demand with penalty. We further direct the respondent Commissioner to allow the de-bonding of the capital goods and the appellant shall be liable to pay duty on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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