Namco Industries Pvt. Ltd. Vs Commissioner of Customs (Exp.) (CESTAT Mumbai)
CESTAT Mumbai held that as differential duty was paid with interest on expiry of export obligation period, there is no violation of the conditions of Advance License under Notification no. 96/2009-Cus. dated 11.09.2009 and hence redemption fine and penalty set aside.
Facts- The appellants are engaged in manufacture of flat rolled products of iron or non-alloy steel falling under Chapter 72 of the Schedule to the Central Excise Tariff. They had obtained an Advance Authorization/license for import of goods at concession rate of duty. The said EPCG license was issued to the appellants for 3% concessional duty as ‘service provider’ involving export obligation for a FOB value of exports of US$2,731,313.37 or Rs.11,94,94,960/- with export obligation period of 8 years. The amount of duty saved was also given as Rs.1,49,36,870/-.
On the basis of intelligence by DRI, that the appellants have not fulfilled the export obligation in respect of the imports under Advance Authorisation/License, in violation of EXIM policy, an investigation was initiated. On completion of the investigation, show cause proceedings were initiated against the appellants for confiscation of the imported goods, demand of duty payable but for the Advance Authorisation/ license concession availed and for imposition of penalties. Learned Commissioner of Customs upon adjudication of the case passed an Order‑in-Original confirming the adjudged demands, confiscation of the impugned goods and imposed redemption fine and penalty. Feeling aggrieved of the impugned order, the appellants have filed this appeal before the Tribunal.
Conclusion- Held that the appellants have fulfilled the conditions of export obligation at (iii) and (v), after the expiry of the export obligation period but upon payment of an amount of Rs.6,46,63,619/- towards differential customs duty and Rs.4,48,80,062/- towards interest thereon to the government. These payments made by the appellants have been duly taken into account by the DGFT in their letter dated 19.02.2020 while giving the redemption cum regularisation permission to the appellants.
Since the appellants have already paid the amounts of 6,46,63,619/- towards differential customs duty and Rs.4,48,80,062/- towards interest thereon before the issuance of show-cause notice, we uphold the order of the learned Commissioner in confirming the adjudged demands and appropriating the same to the account of government exchequer. However, in view of the detailed discussions and findings in paragraphs 8.1 to 8.3 to 12, we set aside the portion of the impugned order imposing redemption fine of Rs.60,00,000/- in lieu of confiscation of subject goods and also set aside the imposition of penalty of Rs.30,00,000/- on the appellants.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed by M/s Namco Industries Private Limited (herein after, referred to as ‘the appellants’) with address at 527, 5th Floor, Nav Vyapar Bhawan, 49, P. D’Mello Road, Carnac Bunder, Masjid (East), Mumbai against Order-in-Original CAO No. 102/2021-22/CAC/ Commr./ MMT/Adj.(Exp.) dated 17.11.2011 (referred to as ‘THE impugned order’) passed by Commissioner of Customs (Export), New Custom House, Ballard Estate, Mumbai.
2. Briefly stated, the facts of the case are that the appellants herein are engaged in manufacture of flat rolled products of iron or non-alloy steel falling under Chapter 72 of the Schedule to the Central Excise Tariff duly registered with jurisdictional GST authorities under GST No. 27AADCN0843L1ZC. They had obtained an Advance Authorization/license No.0310746001 dated 20.08.2013 for import of goods at concession rate of duty. The said EPCG license was issued to the appellants for 3% concessional duty as ‘service provider’ involving export obligation for a FOB value of exports of US$2,731,313.37 or Rs.11,94,94,960/- with export obligation period of 8 years. The amount of duty saved was also given as Rs.1,49,36,870/-. On the basis of specific intelligence developed by the Directorate of Revenue Intelligence (DRI), Lucknow Zonal Unit (LZU), that the appellants have not fulfilled the export obligation in respect of the imports under Advance Authorisation/License, in violation of EXIM policy, an investigation was initiated. On completion of the investigation, show cause proceedings were initiated against the appellants for confiscation of the imported goods, demand of duty payable but for the Advance Authorisation/ license concession availed and for imposition of penalties. Learned Commissioner of Customs upon adjudication of the case passed an Order‑in-Original dated 17.11.2021 confirming the adjudged demands, confiscation of the impugned goods and imposed redemption fine and penalty. Feeling aggrieved of the impugned order, the appellants have filed this appeal before the Tribunal.
3. Learned Advocate appearing for the appellants had submitted that there is no violation of the conditions of Advance License under Customs notification 96/2009-Cus. dated 11.09.2009, inasmuch as they have paid the differential duty and interest thereon. He further stated that though initially at the time of inquiry by DEEC Cell of Customs Commissionerate they did not have the permission of DGFT, subsequently they had obtained necessary permission from DGFT and had also applied for discharge of export obligation, as they had also fulfilled the proportionate export obligation and they had also obtained the same from DGFT. They claimed that there is no violation of the Customs notification or other provisions of the Customs Act, 1962 by citing the decision in the case of Thiagarajar Mills Ltd. Vs. Commissioner of Customs, Trichy reported in 1999 (111) E.L.T. 288 (Tribunal).
4. Learned Authorized Representative (AR) representing the department had reiterated the findings made in the impugned order and stated that inasmuch as the appellants did not fulfil the conditions of the customs notification in respect of export obligation, the impugned order is legally sustainable.
5. Heard both sides and perused the records of the case as well as the submissions made by both the parties.
6. Brief facts of the case are that the appellants had imported “prime non alloy steel slabs” falling under customs tariff item 7207 1290 vide seven bills of entries during August – September, 2013 against Advance Authorisation No. 0310746001 dated 20.08.2013 issued by DGFT, Mumbai under Notification no. 96/2009-Cus. dated 11.09.2009. As per the said Advance Authorisation, the appellants are permitted to import “non-alloy steel slabs” for a CIF value of Rs.115,06,44,000/- and were subjected to an export obligation to export Non-alloy steel plates for FOB value amounting to Rs. 135,15,70,000/-. The maximum period provided for fulfilment of export obligation is 18 months i.e., ending on 28.02.2015. The appellants had actually imported goods of total assessable value of Rs.38,39,52,127/- only as against the permissible higher limit as above, and exported goods of export FOB value of Rs.5,40,43,737/-. The Assistant Commissioner of Customs, DEEC Monitoring Cell of the jurisdictional Mumbai Customs Commissionerate vide letter dated 23.01.2018 had sought the details of fulfilment of export obligation against the Advance Authorisation. The appellants sought extension of time for fulfilment of export obligation by applying to the Policy Relaxation Committee of the DGFT and informed the same to the Customs authorities. The appellants claimed that they had also written to the DEEC cell of Customs about their willingness to pay the differential duty of customs on account of non-fulfilment of export obligation and also claimed to have taken a demand draft for Rs.9,10,69,946/- on 09.2018. However, due to the advice of the DEEC Cell about the incorrect amount of differential duty, they had submitted revised letter on 21.09.2018 to the DEEC Cell of Customs with a demand draft for Rs.8,85,52,866/- being the differential duty long with applicable interest. The appellants also claim to have written to the DGFT on 26.09.2018 informing the duty payment and confirmation of the correctness of such duty paid and requesting to inform the shortfall, if any. Directorate of Revenue Intelligence (DRI), Lucknow Zonal Unit (LZU) had conducted search proceedings at the factory and office premises of the appellants on 23 & 24.10.2018. During investigation of the case, on the basis of the statement of physical exports done by the appellants, DRI had informed them about the error in calculation of duty to be paid in respect of non-fulfilment of export obligation and the objection regarding inclusion of Third party exports for calculation of export obligation fulfilment. They had specifically mentioned in their letter No. DRI/LZU-CI/26/Int-10/2018 dated 10.12.2018 that the appellants are required to pay Rs.91,15,479/- plus interest as applicable, arising on account of difference in duty structure correctly to be applied at 1.88% +12% +3% + 3% + 4% than that actually applied by the appellants at 1.25% +12% +0% +3% + 4% towards their earlier payment as per DEEC Cell of jurisdictional Customs Commissionerate. Accordingly, the appellants had submitted the required demand draft for Rs.91,15,479/- on 20.12.2018 to the DEEC Cell of Customs. Further, the appellants had also paid an amount of Rs.1,18,16,872/- on 04.02.2019. Again in response to the DEEC Monitoring cell letter dated 19.07.2019 for payment of short paid interest, the appellants have paid Rs.58,464/ through their letter dated 20.09.2019. On the basis of the various payments made for default in fulfilment of export obligation as detailed below, the DGFT had issued the Export Obligation Discharge/ Redemption Certificate in exercise of the provisions under Para 4.49 of Handbook of Procedures 2004-09 in it’s file No.03/87/165/00188/AM-19.
