2005 (98) ECC 76 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(B)

Shri S.S. Kang, Member (J) and Shri V.K. Agrawal, Member (T)

Parasrampuria Synthetics Ltd.

Versus

CC, Jaipur

Appeal No. C/126/2003-NB(B)

[Arising out of Order-in-Original No. 2/2003 dated 23.1.2003 passed by the Commissioner of Customs, Jaipur]

Final Order No. 554/2004-B, dt. 12.7.2004, Certified on 19.7.2004

Duty (Customs)

Export obligation -- EPCG licence -- Not obtained -- Assessee have not fulfilled the export obligation -- They have to pay differential Customs duty. Demand of duty upheld -- Sec. 28 of Customs Act.

Confiscation (Customs)

Capital goods which were imported by availing exemption under Notification No. 160/92 are liable to confiscation as the condition of the Notification has not been fulfilled by the assessee. -- Secs. 111, 112 of Customs Act.

PRESENT :

Shri L.P. Asthana, Adv. for the appellant.

Shri O.P. Arora, SDR for the respondent.

Cases Cited :

1. Dadha Pharma (P) Ltd. v. Secretary of Govt. of India, 2000 (126) ELT 535 (Mad.) [Para 5]

2. Ram Khajana Electronics v. C.C., Air Cargo, Jaipur, 2003 (156) ELT 122........... [Para 4]

Per : V.K. Agrawal

The issue involved in this appeal filed by M/s. Parasrampuria Synthetics Ltd. is whether they have fulfilled their export obligation.

2. Shri L.P. Asthana, learned Advocate, submitted that the Appellants manufacture Polyster Filament Yarn, Polypropylene Filament Yarn, etc.; that they imported capital goods under EPCG Scheme and obtained the benefit of Notification No. 160/92-Cus dated 20.4.92; that they were under an obligation to export finished products equivalent to 4 times the CIF value of the goods imported within a period of 5 years from the date of issue of licence i.e. 2.4.1993; that they fulfilled the export obligation to the extent of 64% upto 1.4.98 and remaining obligation could not be fulfilled due to conditions in the international market. The learned Advocate, further, mentioned that the Appellants are having other manufacturing units in the name of M/s. Parasrampuria International and Parasfab International, both divisions of Parasrampuria Synthetic Ltd. which are 100% E.O.Us.; that in terms of liberalized Export-Import Policy and in particular Para 6.5 of the EXIM Policy, 1997-2002, they are eligible to club the export made by their division, namely Parasrampuria International; that if the export made by this division is clubbed with the export made by the Appellants, 100% Export obligation have been achieved; that the Commissioner of Customs under the impugned Order has confirmed the demand of duty and imposed penalty holding that as per the condition of Para 6.5(ii) of EXIM Policy, the export shall be direct export in the name of EPCG licence holder which conditions has not been satisfied in the present matter; that the Commissioner had also given his finding that the goods exported by Parasrampuria International had not been manufactured by using the capital goods imported under EPCG licence which is the requirement of Para 41(i) of EXIM Policy, 1992-97 under which they had obtained EPCG licence.

3. The learned Advocate submitted that the Commissioner has not appreciated the exact scope of Para 6.5(ii) of the Policy since the said Para also states that the export through third party is also allowed provided the name of EPCG licence holder is indicated on the Shipping Bill; that Shipping Bill of Parasrampuria International would show under the column Exporter's Details, "Parasrampuria Synthetic Ltd., Div. Parasrampuria International"; that thus the requirement about mentioning the name of the EPCG licence holder has been completely met; that while referring to Para 41(i) of EXIM Policy, 1992-97 the Commissioner has overlooked the provisions of Paragraph 6.5 of Policy, 1997-2002 inasmuch as Para 6.5(i) states that the export of some goods by different manufacturing unit of the licence holder can be clubbed; that obviously capital goods imported under EPCG Scheme cannot be installed in one unit only and if a view is taken that the goods of the other units must also be manufactured by the machinery so imported, the provisions of Para 6.5 would become impractical and defeat the very purpose of relaxation given therein. He, further, mentioned that they had applied to DGFT for extension of the period of export under their letter dated 30.7.98; that DGFT informed the Appellants under letter dated 25.5.99 that they are eligible for extension of export obligation period upto 31.3.2000 provided they make a specific request alongwith bank guarantee covering the duty in proportion to the unfulfilled export obligation together with 24% interest from the date of import upto 30th September, 2001 within 60 days; that the Appellants thereafter requested DGFT under their letter dated 3.6.99; that extension was required for about 20% only and unless bank guarantee along with LUT executed at the time of obtaining the licence was returned they were not in a position to execute a fresh bank guarantee; that no reply was received from DGFT to their letter dated 3.6.99; that therefore, it cannot be held that their request for extension was reject by the DGFT; that their request is pending with DGFT as is evident from letter dated 11.6.2001 of DGFT regarding eligibility. He also referred to Para 6 of Public Notice No. 5(RE-99)/1997-2002 dated 6.4.99 wherein it is mentioned that "in such cases where export obligation stands fulfilled prior to the date of Public Notice but outside the prescribed export obligation period, such export shall be deemed to have been made within the prescribed Export Obligation period for the purpose of regularisation of the case." He, therefore, claimed that the exports made after 3.8.98 but before 6.4.99 should also be taken into consideration for fulfilment of export obligation.

4. Learned Advocate also contended that capital goods in question were imported legally under import licence and these were used for manufacture of specified goods which were exported; that they had fulfilled the export obligation to the extent of more than 64% and the remaining export obligation cannot be fulfilled due to reasons beyond their control; that the bond had been executed by them only for the duty and not for goods; that the goods are not available for confiscation and as held by the Tribunal in the case of Ram Khajana Electronics v. C.C., Air Cargo, Jaipur, 2003 (156) ELT 122 redemption fine cannot be imposed, if goods are not available for confiscation and no enforceable security is available with the department; that interest cannot be demanded from them as no import was made by them after 1.9.93 and there was no provision of charging the interest; that penalty is also not imposable on them as the Appellants have made sincere efforts to fulfil their export obligation.

5. Countering the arguments Shri O.P. Arora, learned SDR, submitted that the Appellants have availed the benefit of Notification No. 160/92-Cus dated 20.4.92 at the time of importing the capital goods under EPCG Scheme which clearly provides that the importer has to export goods equivalent to four times CIF value of the capital goods over a period of 5 years under paragraph 38 of the Policy; that, therefore, the export obligation had to be fulfilled by the Appellants by April 1998; that Para 41(i) of Policy 1992-97, relating to export obligations in respect of EPCG Scheme provided that the export obligation shall be fulfilled by the export of goods manufactured or produced by the use of capital goods imported under the Scheme; that as the capital goods were imported under EXIM Policy, 1992-97 the conditions contained in the said policy would be applicable to the Appellants; that paragraph 41(i) did not contain the last sentence of paragraph 6.5(i) of EXIM Policy, 1997-2002 which mentions that the export obligation may also be fulfilled by the export of same goods manufactured or produced in a different manufacturing unit of the licence holders; that in absence of such provision in Policy, 1992-97 the benefit of the exports made from another unit cannot be made available to the Appellants. The learned SDR, further, submitted that as per Para 6.5(ii), the exports shall be direct exports in the name of EPCG licence holder; that EPCG licence number is not mentioned in the Shipping Bills under which M/s. Parasrampuria International had exported the goods which is required for the purpose of verification; that accordingly the export made by Parasrampuria International cannot be taken into consideration for the purpose of fulfilling the export obligation of the Appellants. Regarding the claim of the Appellants that the period has been extended by DGFT for fulfilling the export obligation, the learned SDR contended that regularization is not possible as they have not fulfilled the conditions. Regarding confiscation ordered by the Commissioner the learned SDR relied upon the decision in the case of Dadha Pharma (P) Ltd. v. Secretary of Govt. of India, 2000 (126) ELT 535 (Mad.) wherein it has been held that action can be taken under Section 112 of the Customs Act even if the goods are not available for confiscation; that the power to adjudicate upon for the imposition of penalty for improper importation springs from the liability to confiscate and not actual confiscation. Finally the learned SDR submitted that the Appellants has filed an application before the Customs & Central Excise Settlement Commissioner under Section 127B of the Customs Act in which they admitted their duty liability amounting to Rs. 69,19,519; that Section 127I of the Customs Act enable the Settlement Commission to send the case back to the proper officer for disposal, if the Settlement Commissioner is of the opinion that the person who had made application for settlement had not cooperated with the Settlement Commissioner, that further, sub-section (2) of Section 127I of the Customs Act empowers the proper officer to use all the materials and other information produced by the assessee before the Settlement Commission in the case of proceedings before it; that accordingly the department is within its right to rely on the information given by the Appellants to the Settlement Commission. In reply the learned Advocate contended that the admission made by them before Settlement Commission is no evidence.

6. We have considered the submissions of both the sides. The facts which are not in dispute are that the Appellants after obtaining EPCG licence No. P/CG/2130385 dated 2.4.93 imported capital goods and obtained benefit of Notification No. 160/92-Cus dated 20.4.92. It is also not disputed that they have not fulfilled the export obligation i.e. exporting goods equivalent to four times of CIF of capital goods over a period of 5 years. The Appellants wants to club figure of export made by M/s. Parasrampuria International relying upon Para 6.5(i) of the Export & Import Policy, 1997-2002 which the Revenue has not allowed. Para 6.5(i) of the Policy provides that "the export obligation may also be fulfilled by the export of the same goods, for which EPCG licence had been obtained, manufactured or produced in different manufacturing units of the licence holder." However, Sub-para (ii) of Para 6.5 provides that the export shall be direct export in the name of EPCG licence holder. However, the export through third party(s) is also allowed provided the name of the EPCG licence holder is also indicated on the shipping bill. At the time of export EPCG licence number and date shall be endorsed on the shipping bill which are proposed to be presented towards discharge of export obligation." The learned SDR has submitted that the shipping bill under which Parasrampuria International had exported the goods did not contain the EPCG licence number and date. This submission of the learned SDR has not been rebutted by the Appellants. It has only been mentioned that the name of Parasrampuria Synthetics Ltd. is mentioned. This is for the reason that Parasrampuria International, according to the Appellants themselves is one of their Division and it is an 100% E.O.U. which is to export the goods in fulfilment of their export obligation. We also agree with the learned SDR that the benefit of subsequent export as mentioned in the letter dated 11.6.2001 of DGFT is not available to them as the conditions specified therein have not been complied with by them. A perusal of the said letter dated 11.6.2001 reveals that the Appellants were eligible for extension in export obligation period up to 31.3.2002 provided they make a specific request alongwith bank guarantee valid up to 31.3.2003 covering the Customs duty in proportion to the unfulfilled export obligation together with 24% simple interest thereon from the date of import up to 31.9.2002 which should reach DGFT on or before 29.6.2001. Para 3 of the said letter further provides that such request should be accompanied by an export statement as per Appendix 10-C showing export obligation fulfilment up to 31.3.2001 duly certified by a Chartered Accountant and the concerned bank confirming the realization of Free Foreign Exchange. Nothing has been brought on record by the Appellants to show that these conditions mentioned in letter dated 11.6.2001 had been complied by them. In view of this we hold that as the Appellants have not fulfilled the export obligation they have to pay differential Customs duty. We, therefore, uphold the demand of duty made against them. The capital goods which were imported by availing exemption under Notification No. 160/92 are liable to confiscation as the condition of the Notification has not been fulfilled by the Appellants. However, considering the fact that more than 64% export obligation has been fulfilled by them we reduce the redemption fine from Rs. 3 crores to Rs. 1 crore only. For the same reason we reduce the penalty to Rs. 10 lakhs. The interest is chargeable from the Appellants though there was no provision for charging interest at the time of import of the machinery. However, at the time when they were to fulfil the export obligation the provision for charging the interest had come into effect. In 1998 when they failed to discharge their export obligation the provision of interest was very much on the statute book.

The appeal is disposed of in the above terms.

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