At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
For Petitioner: S. Murugappan, Advocate And For Respondents: A. Cletus, ADC (AR)
1. The brief facts are that the appellant had obtained a EPCG authorization No. 0530153782 dated 21.10.2010 in favour of the appellant. The said authorization was invalidated by EPCG at the request of the appellant themselves. However, the appellants had imported certain capital goods against these EPCG licences on an ex-bond basis from the warehouse without disclosing that their EPCG licences were valid. The matter apparently came to light when the appellant approached the DGFT for grant of EODC. It was observed that instead of indigenous procurement, the appellants made imports vide Bill of Entry No. 3386290 dated 03.05.2011 and 3400925 dated 04.05.2011 against the subject authorization from Chennai port whereas no import could have been made as authorization has already been invalidated for direct import. Once this was found by the DGFT, the same was communicated to the Customs and the latter issued a proper show cause notice dated Nil.02.2014 proposing confiscation of the imported goods under Section 111(o) of the Customs Act besides penalty under Section 112(a) of the Customs Act, 1962. In adjudication, the benefit of exemption Notification No. 102/2009 dated 11.09.2009 in terms of EPCG scheme as claimed by appellant vide Ex. Bond Bills of Entry No. 3386290 dated 03.05.2011 and 3400925 dated 04.05.2011 for import of capital goods was denied, differential duty of Rs. 2,41,175/- was demanded and penalty equal to duty demand was imposed under Section 114A by the original authority. He also imposed penalty of Rs. 50,000/- under Section 112(b) of the Customs Act, 1962. In appeal, Commissioner (Appeals) vide the impugned order upheld the order of the original authority and rejected the appeal. Appellants are therefore before this forum.
2. Today when the matter came up for hearing, on behalf of the appellant, Ld. Advocate Shri S. Murugappan made oral submissions which can be broadly summarized as under:
i) In the initial stage of obtaining license itself they had sought amendment of authorization and accordingly endorsement that this license is made invalid for direct import was made on the body of the Zero Duty Scheme License No. 0592034674. Ld. Advocate also drew attention to page 46 of the appeal file with regard to invalidation letter No. 664 dt. 21.10.2010 which allowed for obtaining the required capital goods from the indigenous supplier. Ld. Advocate submits that M/s. Socomec UPS India Pvt. Ltd. vide a letter dt. 24.9.2010 addressed to the Jt. DGFT had conveyed their consent that they would be supplying the imported goods either under in bond sales from Customs bonded warehouse or High sea sale basis to the appellant against the invalidation letter issued to the latter. Only on the basis of this intimation did DGFT issue the invalidation letter.
ii) Again, when the goods were imported and bonded by M/s. Socomec UPS India Pvt. Ltd., release advice was arranged and EPCG authorization along with other documents including invalidation conditions were given to customs authorities. After due scrutiny of these documents only, the clearance was allowed by customs authorities. Therefore, the finding given by the original authority that only the appellants and M/s. Socomec UPS India Pvt. Ltd. are responsible for the contravention is wholly ill-founded.
iii) Since the customs authorities as well as DGFT authorities are very well aware of the factual position the present demand made by the authorities much beyond the date of clearance of these goods i.e., more than one year is thus barred by limitation and not sustainable. Further when goods were imported and bonded by M/s. Socomec UPS India Pvt. Ltd., Commissioner (Appeals) himself has conceded that customs had allowed clearance of the goods on invalid license but that it was administrative oversight on the part of the department.
3. On the other hand, Ld. A.R. Shri A. Cletus supports the impugned order. He submits that just because the import was allowed by oversight that does not absolve the importer of their responsibility. It is very clear that appellants have done this with intent to evade duty liability. He further states that the assessing officers are hard pressed with considerable work in their hands, on a daily basis and such oversight may well have happened inadvertently. But the appellant cannot take shelter of such oversight to wriggle out of the duty and penal liability.
4. Heard both sides and have gone through the facts.
5. Indubitably, the appellants have been in the wrong in having cleared the impugned items on the invalidated license. Nonetheless, it is not the case that the imported goods were cleared under Risk Management System or without intervention of assessing officers. In imports made on such license, the clearances cannot be allowed till the imported goods and the import licences are matched and found tallied and endorsements made. Evidently, as the Commissioner (Appeals) has pointed out that in page 5 of the impugned order, this was obviously an administrative oversight on the part of the department. However, having made such observation, Commissioner (Appeals) has not considered the possibility of whether there could have been a similar oversight on the part of the importer also. On the other hand, he has concluded that the non-disclosure and categorical non-communication to the department by the appellant that their license is invalidated is an offence and not an oversight. We are unable to digest such a conclusion, especially when it is not disputed that the licences had indeed been produced to the concerned officers at the time
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of import. In the circumstances, from the facts on record, no irresistible evidence has been put forth to prove the charge of willful suppression by the appellant and justification of extended period of limitation. This being so, we are afraid that show cause notice not having been issued within the normal period of limitation will have to be considered as time-barred. Consequently, the proceedings thereon, including the impugned order, cannot sustain and will have to be set aside, which we hereby do. Appeal is allowed with consequential relief, if any, as per law. (operative part of the order pronounced in court.)