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C.C. (ACC & Import), Mumbai V/S G.E. Medical Systems (I) Pvt. Ltd.

    Final Order Nos. A/86423-86424/2017-WZB/CB in Appeal No. C/10/2007-Mum and Cross Objection No. C/CO/90/2007-Mum

    Decided On, 23 February 2017

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai

    By, THE HONORABLE JUSTICE: M.V. RAVINDRAN
    By, MEMBER AND THE HONORABLE JUSTICE: C.J. MATHEW
    By, MEMBER

    For Petitioner: Ahibaran, Additional Commissioner (AR) And For Respondents: B.V. Kumar, Advocate



Judgment Text


1. This appeal is filed by the Revenue against Order-in-Original No. CC(SP)-48/2005 ADJ-ACC, dated 31st December 2005. Heard both sides and perused the records.

2. The Revenue is in appeal against the said Order-in-Original on the ground that the first appellate authority having held that the goods are liable for confiscation under Section 111(o) of the Customs Act, 1962, has not confiscated the goods and has not imposed any penalty on the respondent.

3. Learned Departmental Representative brings to our notice that having held that the goods are liable for confiscation, the adjudicating authority should have confiscated the goods and should have given an option of redemption of the goods by imposing redemption fine and should have imposed the penalty. Having not imposed the penalties and confiscated the goods, the order of the learned Commissioner is not legal and proper. It is also his submission that the adjudicating authority has arrived at the conclusion that the importer was liable for penalty under Section 112 of the Customs Act, 1962 but decided not to impose any penalty on the grounds that the respondent co-operated fully with the department and voluntarily paid the full duty. It is his submission that these findings are not legal and correct. He would relied upon the decision of Hon'ble High Court of Bombay in the case of Unimark Remedies Ltd. v. CC [2016-TIOL-2969-HC-MUM-CUS] for the proposition that the goods are liable for confiscation if they are not fulfill the condition of exemption notification and power of the Customs Department and that once goods are held liable for confiscation and penalty follows as corollary.

4. Learned Counsel for respondent submits that the entire issue is regarding the demand of Customs duty on certain goods imported and cleared without payment of Customs duty, subject to their end use and investigation initiated regarding non-production of consumption certificate by the importers and also failure to utilise the goods for the prescribed end use. It is his submission that the respondent had availed the Notification Nos. 153/94-Cus., dated 13th July, 1994, 56/95-Cus., dated 16th March, 1995, 36/96-Cus., dated 23rd July, 1996, 11/97-Cus., dated 1st March, 1997, 23/98-Cus., dated 2nd June, 1998, 20/99-Cus., dated 28th February, 1999, 16/2000-Cus., dated 1st March, 2000 are Customs Notification which mandate for utilising the goods imported for the purpose declared under the said notification i.e. for manufacture of mobile image intensifiers and imports took place through Mumbai port during the period 1996-2000. It is his submission that the importers submitted various documents to show the goods were exported and also showed the Consumption Certificates. After failing to produce any Consumption Certificate for the entire quantity inputs, they paid the amount of the duty involved on imported goods, for which Consumption Certificate could not be produced on 14th October, 2003 and 18th November 2003 and informed the department about the same. It is his submission that the show cause notice dated 8th November, 2004 for demand the very same of the Customs duty paid by them was issued by invoking the provisions of notification under which exemption was claimed and also proposition for the confiscation of the goods and for the amount of duty. It is his submission that the Customs duty paid by them under various notifications should have suffice requirement of the non-fulfillment of conditions of notifications and adjudicating authority was correct is not imposing penalty and ordering for the confiscation. He relies upon the decision of the Tribunal in the case of Sun Knitwear Pvt. Ltd. v. Commissioner of Customs, Bangalore [2007 (207) E.L.T. 85 (Tri.-Bang.)] which has been upheld by the Hon'ble High Court of Karnataka [2012 (278) E.L.T. 165 (Kar.)]. He also submits that the decision of the Principal Bench in the case of Hotel Surya Continental v. Commissioner of Customs [2014 (314) E.L.T. 564 (Tri.-Del.)] and Davangere Wire Rope Industries Pvt. Ltd. v. Commissioner of Customs (Appeals), Bangalore [2006 (196) E.L.T. 445 (Tri.-Bang.)] has held the same.

5. We have considered the submissions made at length by both sides and perused the records.

6. The issue involved in this case is regarding whether the appellant needs to be saddled with the confiscation of the goods imported by availing benefit of various notifications or otherwise; penalty to be imposed on appellant or otherwise. The adjudicating authority has held that on discharge the duty liability from the importer-respondent, there is no need for confiscation the goods as also imposition of penalty. We find that it is not in dispute, that appellant had imported various parts for the manufacture of mobile image intensifiers and the claimed benefit in terms of notification which mandated production of a certificate from the jurisdiction of Central Excise Authorities as to parts has been used for the manufacture of the special medical equipment. It is also on record that the parts which have been imported are declared for use in manufacturing of special medical equipment was not used so and diverted for home consumption.

7. The show cause notice dated 8th November 2004 as reproduced in the Order-in-Original is issued for demand of duty by invoking conditions of bond executed at the time of clearance of the said parts from the port by claiming benefit of various notifications which had specific conditions. The conditions of the notification which are common to all is reproduced from the Notification No. 16/2000-Cus, dated 1st March 2000.

"Condition No. 48

If the importer furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, to the effect that-

(a) the parts, or as the case may be, the spare parts shall be used for the manufacture or maintenance, as the case may be, of the specified medical equipment;

(b) he shall, within three months or such extended period that the said Deputy Commissioner or the Assistant Commissioner may allow, produce-

(i) in the case of parts, a certificate from the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over the factory manufacturing the specified medical equipment, to the effect that the parts have been used in the manufacture of the specified medical equipment; or

(ii) in the case of spare parts, necessary evidence to the satisfaction of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, to the effect that the spare parts have been used for the maintenance of the specified medical equipment and

(c) he shall pay on demand, in the event of his failure to comply with the above conditions, an amount equal to the difference between the duty leviable on such quantity of the parts or, as the case may be, spare parts, but for the exemption under this notification and that already paid at the time of importation."

It can be seen from the above reproduced condition number 48 of notification that in non-compliance of full or part, differential duty needs to be discharged by the importer is only requirement and there is no condition or requirement that adjudicating authority should confiscate the goods under Section 111(o) of the Customs Act, 1962, nor there is any clause for imposition of penalty on the importer.

8. It is undisputed case in hand, the respondent has discharged the entire Customs duty having not met the conditions of notifications; on being pointed out by the Departmental Officer, if that be so appellant has fulfilled the mandate of notification by paying duty on being demanded. In our considered view adjudicating authority was correct in dropping the proceeding initiated by the show cause notice for confiscation the goods and imposition of penalty. Learned Counsel was correct in bringing to our notice that similar issue was considered by Hon'ble High Court of Karnataka in the case of Sun Knit Wear Pvt. Ltd. (supra) and has settled the law inasmuch that in paragraph No. 5 their lordship held as under.

"5. It is clear that the Notification No. 27/97-Cus., dated 1-4-1997 as amended grants benefit to the assessee insofar as payment of customs duty is concerned. The condition precedent for availing the benefit is, it is required to import capital goods up to the threshold level of Rs. 1 crore. If that condition is fulfilled, then, the notification is applicable and after availing the benefit of importing goods, they pay the duty. If it does not perform its export obligations, then, it can be said that he has violated the terms of the notification. Though in the instant case, relying on the said notification, the assessee imported the capital goods but not to the extent of Rs. 1 crore, he cannot have the benefit of waiver of duty. It is under these circumstances, he paid the duty and for delayed payment, he paid interest and thus, he did not avail the benefit of that notification. Therefore, the question of assessee conducting himself contrary to the notification thus exposing himself to the order of confiscation, do not arise. It is under these circumstances the Tribunal was justified in holding that when once the assessee pay the duty and interest, goods will be out of the ambit of the said notification and they cannot be held liable for confiscation under Section 111(o) of the Act. The said finding is legal and valid and we do

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not see any infirmity in the said order which calls for interference. Thus, substantial questions of law framed in this appeal are answered in favour of the assessee and against the Revenue." 9. In our view the above reproduced ratio of the Hon'ble High Court of Karnataka is directly on the point and covers the issue in favour of the appellant. The reliance placed by the learned Departmental Representative on cases is different in facts, inasmuch in that case, demand was raised invoking unfulfilled condition by invoking Section 28 of the Customs Act, 1962 and also in respect of non-fulfillment under various conditions, the facts of case in hand are totally different as is in the case of Unimark Remedies Ltd. (supra). 10. In view of the foregoing, in the facts and circumstances of this case, we hold that the impugned order is correct, legal and does not require any interference to the extent challenged by the Revenue. The cross objection filed by the appellant in support of impugned order also stand disposed of. The appeal is rejected.
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