TMI Blog2023 (10) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ficient cause being shown - In the instant case, it is not the case of the Department that the capital goods have not been installed in the factory before the expiry of stipulated period. Therefore, in terms of Condition No.5, duty has to be demanded as if the said capital goods have been removed from the warehouse or the EOU. As the capital goods are not removed from the EOU, the relevant date for the same would be the day of de-bonding or say the date of deemed removal. Hon ble Apex Court in the case of KESORAM RAYON VERSUS COLLECTOR OF CUSTOMS, CALCUTTA [ 1996 (8) TMI 109 - SUPREME COURT] held that the valuation in respect of imported capital goods would be the date on which warehousing period or extended period comes to an end. Tribunal in the case of INTERNATIONAL KNITTING LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [ 2012 (11) TMI 443 - CESTAT, MUMBAI] following the Hon ble Apex Court s decision in the case of Kesoram Rayon held that the rate prevailing on the date of deemed removal is relevant for valuation of capital goods. Duty is payable on the depreciated value or not - HELD THAT:- The appellants also argued that learned Commissioner has demanded the entire du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imported certain capital goods availing benefit of Notification No.53/97 and domestically procured capital goods availing Notification No.1/95-CE dated 04.01.1995. Revenue alleged that the appellant has not fulfilled export obligation and therefore, is required to pay back the Customs and Central Excise duties forgone in the procurement of capital goods; a show-cause notice dated 28.02.2007 was issued demanding Customs duty of Rs.45,84,960/- and Central Excise duty of Rs.4,79,056/- along with interest and penalty; the show-cause notice was adjudicated vide the impugned order dated 22.12.2008 vide which the contentions raised in the show-cause notice were confirmed. Hence, this appeal. 2. Shri S.C. Jain, learned Advocate for the appellant, traces the sequence of events in the case and submits that the impugned order wrongly demands Customs duty at the rate applicable on the day of import rather than the rate of duty prevalent on the day of de-bonding i.e., 30.09.2008 in terms of Clause 5(a) of Notification No.53/97 and in terms of Section 15 of the Customs Act. He also submits that learned Commissioner has wrongly assumed that project export turnover of USD 51 Lakhs was the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, Section 15 of Customs Act; Notification No.22/2003-CE dated 31.03.2003 and Notification No.52/2003-Cus. dated 31.03.2003, provide for normal situation; in case of failure to achieve positive NFE, duty is payable at the rate applicable on the day of import and the interest is payable from the date of importation of the said goods till the payment of such duty. (iii) Proportionate duty can only be demanded in normal circumstances and not in cases of default as in the instant case. (iv) As the appellants did not show to the satisfaction of the Deputy/ Assistant Commissioner that the unit has been allowed to clear the capital goods by the Development Commissioner or the Board of Approval and as the goods have not been taken to any other place in India in accordance with Exim Policy, depreciated value cannot be considered. (v) The appellant has contravened the provisions of the Customs Notification No.53/19-Cus. dated 03.06.1997 and Notification No.01/95-CE dated 04.01.1995 and therefore, imposition of penalty is justified. 6. Heard both sides and perused the records of the case. Brief issues that require our consideration are that in the event of nonfulfillmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be the date on which warehousing period or extended period comes to an end. Tribunal in the case of International Knitting Ltd. (supra) following the Hon ble Apex Court s decision in the case of Kesoram Rayon (supra) held that the rate prevailing on the date of deemed removal is relevant for valuation of capital goods. Hon ble Supreme Court held in the case of Kesoram Rayon (supra) that: 10. Section 61 prescribes the period for which goods may be warehoused. They may be left in the warehouse in which they are deposited for the period of one year if they are such goods as are referred to in clause (a) of sub-section (1), and for the period of three months counted from the date of the order permitting warehousing if they are not such goods. The first proviso to sub-section (1) contemplates the reduction of the periods aforementioned, of one year and three months respectively (now referred to as the permitted periods ), if the goods are likely to deteriorate. It also permits, if the goods are not likely to deteriorate, an extension of the permitted periods on sufficient cause being shown; the Collector of Customs can extend the permitted periods by six months and the Central B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, interest, penalty, rent and other charges; and an order for home clearance. The provisions of Section 68 and, consequently, of Section 15(1)(b) apply only when goods have been cleared from the warehouse within the permitted period or its permitted extension and not when, by reason of their remaining in the warehouse beyond the permitted period or its permitted extension, the goods have been deemed to have been improperly removed from the warehouse under Section 72. 15. The decision in the case of D.C.M. and Another v. Union of India and Another cited by learned counsel for the appellants dealt with, and upheld, the constitutionality of Section 15(1)(b). It did not deal with a situation where goods continued to remain in a bonded warehouse beyond the permitted period. It does not assist the appellants case. 16. The permitted period for warehousing the said bales came to an end on 15th September, 1984, but the said bales remained in the bonded warehouse thereafter. The said bales, by reason of the provisions of Section 72, were deemed to have been improperly removed from the bonded warehouse on that day and subject to duty at the rate then in force. The demand not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No.67/1995-Cus. (NT) dated 01.01.1995, no interest is payable on the warehouse goods for the period they remain in a custom bonded warehouse. We find that in the case of International Knitting Ltd. (supra), the Tribunal held that though the place may be warehouse at the time of deposit of goods but it may not be so at the time of removal of goods from that place and interest is payablein terms of Section 61 with Section 2(44) of the Customs Act, the goods are liable to interest on the delayed payment of duty. The Tribunal held that: 6.3 The next issue for consideration is whether the appellant is liable to pay interest. The appellant has contended that they are not liable to pay any interest on the duty demanded inasmuch as the goods cease to be warehoused goods on the date of deemed removal and, therefore, the provisions of Section 61 would not apply. Section 61(2) provides that where any warehoused goods remained in a warehouse beyond the period specified in the subsection (1) by reasons of extension of the warehousing period or otherwise, interest at such rates as is specified in Section 47 shall be payable, on the amount of duty payable at the time of cleara ..... 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