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2021 (10) TMI 1134 - HC - Customs100% EOU - non-fulfilment of export obligation - requirement that the entire manufactured goods shall be exported or the unit should achieve positive net foreign exchange earnings as a percentage of export fixed by the authority prescribed as per N/N. 53/1997 Cus dated 03.06.1997 - HELD THAT - The matter under consideration would certainly go beyond the inter-se dispute between the parties and would partake the character of general public importance as enunciated by Hon ble Apex Court in COMMISSIONER OF CUSTOMS, BANGALORE-1 VERSUS M/S MOTOROLA INDIA LTD. 2019 (9) TMI 229 - SUPREME COURT . More particularly, inasmuch as the interpretation of the Notification No.53/1997, the subject matter of the appeal as to whether duty could be levied if the unit fails to achieve Net Foreign Exchange Earning as a Percentage (NFEP) and Export Performance (EP) as specified in Appendix-1 of the Export and Import Policy, within one year of importation or procurement of such goods or within such extended period not exceeding one year, vis- -vis Clause 6(1) and 6(4) of the Notification No.53/1997. The appeal under Section 130 of the Act before this Court would not be maintainable and the appellant/revenue has to pursue its grievance by filing an appeal under Section 130E of the Act before the Hon ble Apex Court - the appeal filed under Section 130 of the Act is held to be not maintainable. Appeal dismissed.
Issues Involved:
1. Maintainability of the appeal under Section 130 of the Customs Act, 1962. 2. Demand of duty for non-fulfillment of the condition of Notification No. 53/1997 Cus. 3. Demand of duty on imported capital goods after the unit lost its EOU status. 4. Justification of demand under Section 72(1)(b) of the Customs Act. 5. Demand of duty for violations of the conditions laid down in the B-17 Bond. 6. Tribunal's oversight on confiscation of goods and imposition of penalties. Detailed Analysis: 1. Maintainability of the Appeal: The respondent raised preliminary objections regarding the maintainability of the appeal under Section 130 of the Customs Act, 1962. The court referred to the case of Commissioner of Customs, Bangalore-1 Vs. M/s. Motorola India Ltd., where the Apex Court held that issues related to the determination of the rate of duty payable must be decided by the Apex Court under Section 130E of the Customs Act, not by the High Court under Section 130. The court cited the relevant paragraphs from the Motorola judgment, emphasizing that questions involving the rate of duty, valuation of goods, classification under the Tariff, and exemption notifications fall under the jurisdiction of the Supreme Court. Consequently, the court concluded that the appeal under Section 130 of the Act was not maintainable and must be pursued before the Apex Court. 2. Demand of Duty for Non-fulfillment of Notification Conditions: The revenue questioned whether the Tribunal was justified in setting aside the demand confirmed by the Adjudicating Authority for recovery of duty due to non-fulfillment of condition 6(i) of Notification No. 53/1997 Cus. The Tribunal had referred to the decision in CCE Vs. SEMCO Electric Pvt., Ltd., which stated that duty on capital goods is not leviable if they are installed and used within the factory for manufacturing export articles. The court noted that the Tribunal's decision was based on the interpretation of the notification and upheld the Tribunal's view that duty on capital goods was not payable if they were installed and used within the factory. 3. Demand of Duty on Imported Capital Goods: The revenue argued that the demand of duty on imported capital goods was justifiable under Section 72(1)(b) of the Act, which treats goods stored in the warehouse beyond the warehouse period as 'improperly removed from the warehouse.' The court examined the Tribunal's decision, which relied on the SEMCO Electric Pvt., Ltd. case, and found that the notification did not provide for the levy of duty on capital goods for failure to achieve Net Foreign Exchange Earning as a Percentage (NFEP) and Export Performance (EP). The court upheld the Tribunal's interpretation that duty on capital goods was not leviable under the given circumstances. 4. Justification of Demand Under Section 72(1)(b): The court addressed the revenue's contention that the duty demand was justifiable under Section 72(1)(b) of the Act. It reiterated the Tribunal's finding that the notification did not mandate duty on capital goods if they were installed and used within the factory. The court agreed with the Tribunal's interpretation and concluded that the demand under Section 72(1)(b) was not justified. 5. Demand of Duty for Violations of B-17 Bond Conditions: The revenue contended that the department was justified in demanding duty for violations of the conditions laid down in the B-17 Bond, executed in terms of the EXIM policy 1997-2002. The court examined the Tribunal's decision and found that the Tribunal had correctly interpreted the notification and the conditions of the bond. The court upheld the Tribunal's view that duty on capital goods was not leviable if they were installed and used within the factory. 6. Tribunal's Oversight on Confiscation and Penalties: The revenue argued that the Tribunal overlooked the confiscation of goods and imposition of penalties by the adjudicating authority. The court noted that the Tribunal had not recorded findings on penalty and confiscation orders. However, the Tribunal had subsequently clarified that once the demand of duty on capital goods was set aside, the question of imposition of penalty under Section 112(a) of the Act did not arise. The court upheld the Tribunal's decision to set aside the penalty related to capital goods and maintained the penalty imposed under Rule 173Q of the Central Excise Rules, 1944, read with Rule 25 of the Central Excise Rules, 2001 and 2002. Conclusion: The court dismissed the appeal under Section 130 of the Customs Act, 1962, as not maintainable, directing the revenue to pursue its grievance before the Apex Court under Section 130E of the Act. The court upheld the Tribunal's interpretation of the notification and the conditions for the levy of duty on capital goods, concluding that duty was not payable if the capital goods were installed and used within the factory. The court also upheld the Tribunal's decision on penalties, maintaining the penalty imposed under the relevant rules.
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