1999 (6) TMI 487 - AT - Customs

Issues Involved:
1. Confiscation of capital goods and raw materials.
2. Demand of customs duty.
3. Imposition of penalty on the appellant company and its director.
4. Alleged violation of export obligations.
5. Jurisdiction of the Commissioner of Customs.
6. Validity of the Show Cause Notice (SCN).
7. Applicability of Notifications No. 339/85 and No. 133/94.
8. Depreciation and calculation of duty.
9. Combined redemption fine and penalty.

Detailed Analysis:

1. Confiscation of Capital Goods and Raw Materials:
The Commissioner confiscated capital goods valued at Rs. 3,63,62,019/- and raw materials valued at Rs. 36,84,288/- with an option to redeem them on payment of a fine of Rs. 40 lakhs. The confiscation was based on the failure to meet export obligations and the non-utilization of imported goods as stipulated under Notification Nos. 339/85-Cus and 133/94-Cus.

2. Demand of Customs Duty:
The demand of duty amounting to Rs. 2,09,54,801/- was confirmed. The appellants argued that the duty demand was not sustainable as Notification No. 339/85 was rescinded by Notification No. 133/94, which did not have a corresponding provision for duty demand if goods remained within the zone. However, the tribunal upheld the duty demand, noting that the exemption on imported goods was conditional upon their use for production or manufacture of articles for export, which was not fulfilled.

3. Imposition of Penalty:
A penalty of Rs. 10,00,000/- was imposed on the appellant company and Rs. 1,00,000/- on its director. The tribunal set aside the imposition of a composite penalty, stating that penalties under separate acts should be apportioned to enable the appellant to contest them.

4. Alleged Violation of Export Obligations:
The tribunal noted that the appellants failed to meet the export obligation of Rs. 1,150 lakhs, achieving exports worth only Rs. 57 lakhs. The Development Commissioner and the Board of Approval confirmed the non-fulfillment of export obligations, justifying the demand for duty and the confiscation of goods.

5. Jurisdiction of the Commissioner of Customs:
The appellants contested the jurisdiction of the Commissioner of Customs, Delhi, to adjudicate the case. The tribunal referred to various notifications and circulars, confirming that the Commissioner of Customs, Delhi, had jurisdiction over the Noida Export Processing Zone for both customs and central excise matters.

6. Validity of the Show Cause Notice (SCN):
The SCN was issued on 26.9.1996. The tribunal held that the demand for duty was sustainable as it was based on the recommendation of the Development Commissioner and the provisions of Notification No. 133/94, which was in force at the time of the SCN.

7. Applicability of Notifications No. 339/85 and No. 133/94:
The tribunal examined both notifications and concluded that the exemption from duty was conditional upon the fulfillment of export obligations. Notification No. 133/94 required the satisfaction of the Development Commissioner regarding the use of imported goods for specified purposes, which was not achieved by the appellants.

8. Depreciation and Calculation of Duty:
The tribunal noted that depreciation was to be calculated from the date of commercial production. The appellants' contention that the cut-off date for depreciation was arbitrary was rejected, as the scheme provided for depreciation from the date of commercial production.

9. Combined Redemption Fine and Penalty:
The tribunal found that while the confiscation of goods was justified, the combined redemption fine should have been shown separately under the two different enactments. However, the composite fine was upheld as it was based on the value of the goods and other relevant considerations. The order imposing a combined penalty was set aside, as it did not allow the appellants a fair chance to defend their case.

Conclusion:
The tribunal upheld the confiscation of goods and the demand for duty while setting aside the composite penalty. The jurisdiction of the Commissioner of Customs, Delhi, was confirmed, and the validity of the SCN was upheld. The appellants' arguments regarding the applicability of notifications and the calculation of depreciation were rejected. The appeals were disposed of with the above modifications.

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