Top Forty Suspension (P) Ltd. Vs Commissioner of Central Excise (CESTAT Chandigarh)
CESTAT Chandigarh held that penalty u/s. 112 not imposable as goods are not held liable for confiscation. Further, penalty cannot be imposed on EOUs for failure to achieve positive NFE.
Facts- The appellants are a 100% EOU; they have 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 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 vide which the contentions raised in the show-cause notice were confirmed.
Conclusion- Held that in terms of Section 15 read with Section 68 of the Customs Act 1962, interest liability will arise on the date of expiry of warehousing license; in terms of 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 payable in terms of Section 61 with Section 2(44) of the Customs Act, the goods are liable to interest on the delayed payment of duty.
Held that the appellants contend that as long as the goods are not held to be liable for confiscation, penalty under Section 112 cannot be imposed and the conditions which are required for the imposition of penalty under Section 114A do not exist. We find that Tribunal has been consistently holding that in such circumstances, penalty cannot be imposed on EOUs for failure to achieve positive NFE.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The appellants, M/s Top Forty Suspension (P) Ltd., are a 100% EOU; they have 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., 30.09.2008in 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 export obligation; moreover, the export obligation fulfilled by the appellant, of USD 48,595 has not been taken into consideration. He relies on the following:
