2019 (8) TMI 282 - AT - Customs

100% EOU - extension of warehousing period for various capital goods - It was alleged that the appellants have removed the goods from bonded premises without following proper procedure and without maintaining proper records - HELD THAT - It is seen that the appellants have obtained extension of warehousing period in respect of 82 bonds and only in respect of 8 bonds, they could not produce the goods for verification. While the goods appear to have been imported during 2002-03, the inspection appears to have been conducted during 2008 i.e. above 5 years later than the import - As submitted by the appellants, we do not find that the Department has produced any evidence to prove that the goods have been clandestinely removed by the appellants from the bonded warehouse. It is also not disputed that the goods have been warehoused after import. Looking into the volume of the capital goods and other goods imported by the appellants under 82 bonds for which they have sought extension, the items which were not produced before the authorities at the time of inspection appear to be very minuscule. As submitted by the appellants the possibility of the items being consumed up during the process are the possibility of the items being misplaced cannot be ruled out. - No penalty Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Extension of warehousing period for capital goods
2. Alleged removal of goods from bonded premises without proper procedure
3. Applicability of Section 15 of the Customs Act, 1962
4. Duty calculation based on depreciated value of goods
5. Dispute resolution based on previous tribunal decisions
6. Justification of duty, interest, and penalty imposition
7. Mens rea requirement for penalty imposition

Analysis:

Extension of Warehousing Period for Capital Goods:
The case involved M/s. American Power Conversion (India) Pvt. Ltd., a 100% EOU, seeking an extension of warehousing period for various capital goods imported under specific notifications. The Department observed certain goods were not available for physical verification, leading to duty payment by the appellants. The lower authorities confirmed the duty, penalty, and interest, which was upheld on appeal. The appellant argued that the goods were present in the bonded premises and not removed clandestinely, citing legal precedents to support their claim.

Alleged Removal of Goods from Bonded Premises:
The appellant contended that the impugned goods were small, prone to movement within the warehouse, and lacked individual identifiable marks for tracing. They argued against the presumption of removal, emphasizing the absence of evidence proving contravention of Customs Act sections. The appellant highlighted the lack of findings on dishonest conduct and cited tribunal decisions to challenge the penalty imposition.

Applicability of Section 15 of the Customs Act, 1962:
The appellant raised concerns regarding the non-speaking order issued by the appellate authority and the incorrect application of Section 15 of the Customs Act. They argued that duty should be based on the depreciated value of goods at inspection, not the imported value. Legal errors in the order were pointed out, urging for its quashing based on Supreme Court judgments.

Dispute Resolution Based on Previous Tribunal Decisions:
The appellant referenced a previous tribunal decision to support their case, emphasizing the settled nature of the dispute. They argued that without evidence of dishonest conduct, the penalty imposition was unsustainable, echoing Supreme Court rulings to strengthen their position.

Justification of Duty, Interest, and Penalty Imposition:
The Department reiterated the duty demand, interest, and penalty imposition based on Customs Act sections, highlighting the repeated nature of violations by the appellants. The Department emphasized the need for fulfilling legal conditions for depreciation and waiver of interest, citing relevant legal precedents to support their stance.

Mens Rea Requirement for Penalty Imposition:
The Department contended that mens rea was not essential for imposing penalties, referencing a Supreme Court decision. They justified the duty demand, interest, and penalty imposition based on the deemed removal of goods from the bonded warehouse due to failure in verification.

In the final judgment, the Tribunal found merit in the appellant's submissions, noting the lack of evidence proving clandestine removal of goods and the negligible nature of the unverified items. Citing a previous tribunal decision, the Tribunal set aside the impugned order, allowing the appeal in favor of M/s. American Power Conversion Ltd.