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2025 (3) TMI 828 - AT - Central ExciseRemoval of certain machineries imported without payment of Customs duty and Excisable goods procured without payment of Central Excise duty under 100% EOU scheme from their premises to other GTA unit without following any procedure and without payment of due duties - levy of penalty in terms of Section 112 and 117 of the Customs Act and Rule 27 of the Central Excise Rules 2002 - contravention of the provisions of N/N. 52/2003-Cus and 22/2003-CE - HELD THAT - Undisputed fact is that the appellant had removed the goods-capital goods received under EOU scheme without payment of customs duty/Central Excise duty outside their bonded premises to the premises of DTA. The said premises where these goods were found in any way does not belong appellant. These machines were found in the premises of M/s D Y Technologies Pvt. Ltd. whom appellant claim to be a job-worker. M/s D Y Technologies Pvt. Ltd. even if job-worker on principal to principle basis and separate entity having no relationship with the appellant the renewal of these capital goods to their premises has been done in contravention of the provisions of Notification No 52/2003-Cus and 22/2003-CE. Admittedly M/s D Y Technologies Pvt. Ltd. is also not EOU unit for a bonded premises removal of these goods in contravention of the provisions of the EOU scheme and the benefit executed by the appellant in this regard. It is quite evident that the there was no permission to remove the capital goods machines from the premises of the EOU to any other place as claimed by the appellant. Further even the claim made by the appellant that they had cleared the said machines to the premises of job worker under a bonafide interpretation of the permission granted is also belied by the job work challans. It is clearly mentioned on the format of challan itself that these challans are meant only for removal of inputs/ partially processed inputs . The claim made by the appellant of bonafides does not carry any weight and needs to be rejected. There are no merits in these submissions as the seized machines were confiscated by order dated 31.03.2017 and allowed to be redeemed on payment of redemption fine of Rs.75, 10, 000/-. The said order of confiscation and redemption has been upheld by the Appellate Authority. Both the orders were passed prior to the date of permission - undisputedly the goods has been removed in contravention of provisions of Notification No.52/2003-Cus and 22/2003-CE from the premises of the EOU to DTA unit of the unconcerned party. There are no merits in the submissions of the appellant. The demand for duty in respect of these goods needs to be upheld. The claim to the depreciation has been rightly rejected by the Original Authority by observing that the depreciation could have been allowed only when the said goods were cleared after obtaining approval from the Commissioner and after payment of due customs duty. In absence of any such procedure being followed there are no merits in the said claim of the appellant. Reliance is placed by the appellant in the case of M/s D Y Technologies Pvt. Ltd. was not part of the alleged contraventions made by the appellant. He has dropped the penalties imposed. Dropping of penalties imposed on M/s D Y Technologies Pvt. Ltd. cannot said to be clean chit given to the appellant in matter of clearance without following the due procedure. The order of confiscation of these machines upheld but the redemption fine reduced from Rs.75, 10, 000/- to Rs.50, 00, 000/- - Penalties imposed on the appellant was alleged for the above contraventions leading to evasion of duties needs to be upheld. Conclusion - i) Strict compliance with procedural requirements is necessary to avail benefits under exemption schemes. ii) The confiscation of goods the demand for duties and interest and the imposition of penalties upheld. The redemption fine reduced from Rs. 75, 10, 000/- to Rs. 50, 00, 000/-. Appeal allowed in part.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legality of Removal and Liability for Confiscation Relevant Legal Framework and Precedents: The relevant legal provisions include Section 111(j) of the Customs Act, 1962, and Rule 25(1) of the Central Excise Rules, 2002. The court also referred to notifications under the EOU scheme, specifically Notification Nos. 52/2003-Cus and 22/2003-CE, which outline conditions for duty-free importation and use of goods within EOU premises. Court's Interpretation and Reasoning: The court found that the appellant, a 100% EOU, removed machines/goods from bonded premises to a DTA unit under the guise of job work without following the prescribed procedures or obtaining necessary permissions. This was viewed as a deliberate act to avail undue benefits under the EOU scheme. Key Evidence and Findings: The appellant admitted to removing the machines under job work challans without proper authorization. The court noted that the procedures under the EOU scheme are stringent and must be followed precisely to prevent revenue leakage. Application of Law to Facts: The court applied the legal provisions to conclude that the impugned goods were liable for confiscation due to non-compliance with procedural requirements. Treatment of Competing Arguments: The appellant argued that the removal was procedural and based on a bona fide belief. However, the court rejected this, emphasizing that ignorance of the law is no excuse. Conclusions: The court upheld the confiscation of the goods under the relevant legal provisions. Issue 2: Duty and Interest Liability Relevant Legal Framework and Precedents: The court considered Section 28(4) of the Customs Act, 1962, and Section 11A(4) of the Central Excise Act, 1944, regarding the recovery of unpaid duties. The court also referred to precedents that emphasize strict compliance with exemption conditions. Court's Interpretation and Reasoning: The court found that the appellant evaded payment of duties by removing goods without following the prescribed procedures. The court emphasized that benefits under the EOU scheme are contingent upon strict adherence to conditions. Key Evidence and Findings: The appellant's removal of goods without permission or payment of duties was undisputed. The court noted that the appellant failed to prove compliance with exemption conditions. Application of Law to Facts: The court applied the legal provisions to determine that the appellant was liable for the payment of duties and interest. Treatment of Competing Arguments: The appellant argued for depreciation on the value of goods, but the court rejected this, citing the absence of necessary permissions. Conclusions: The court upheld the demand for duties and interest, rejecting the appellant's claim for depreciation. Issue 3: Imposition of Penalties Relevant Legal Framework and Precedents: The court considered Section 114A of the Customs Act, 1962, and Section 11AC of the Central Excise Act, 1944, regarding penalties for evasion of duties. The court also referred to precedents that support the imposition of penalties in cases of non-compliance. Court's Interpretation and Reasoning: The court found that the appellant's actions constituted a deliberate attempt to evade duties, warranting the imposition of penalties. The court emphasized that penalties serve as exemplary punishment for intended deception. Key Evidence and Findings: The appellant's removal of goods without compliance was viewed as intentional, justifying penalties. Application of Law to Facts: The court applied the legal provisions to uphold the penalties imposed on the appellant. Treatment of Competing Arguments: The appellant argued against penalties, citing voluntary payment of duties and interest. However, the court rejected this, emphasizing that penalties are justified in cases of deliberate non-compliance. Conclusions: The court upheld the penalties imposed on the appellant. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The court stated, "Ignorance of Law is no excuse" and emphasized that "fraud vitiates everything." Core Principles Established: The court reinforced the principle that strict compliance with procedural requirements is necessary to avail benefits under exemption schemes. The court also emphasized that penalties are justified in cases of deliberate non-compliance. Final Determinations on Each Issue: The court upheld the confiscation of goods, the demand for duties and interest, and the imposition of penalties. The court reduced the redemption fine from Rs. 75,10,000/- to Rs. 50,00,000/-.
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