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TMI Blog2014 (4) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no hawla transaction had occurred. The appellant had already faced penalty for the patent violation of terms of LOP, undertaking and agreement entered into with the Government, but made sale of shrimp feeds without permission of Development Commissioner. There was no nexus of shrimp/prawn processing unit with shrimp feed unit which was expected to export entire product manufactured. The plea of broad banding of the activity of the appellant did not find support of Board of Approvals to treat the shrimp/prawn processed unit as EOU. Development Commissioner held that there was violation of conditions of EOU by the appellant. Keeping in view earnest prayer of the appellant to satisfy learned Adjudicating Authority on various allegations made against it and also noticing certain materials facts borne by record requiring fresh examination granting fair opportunity of hearing to the appellant, matter is remanded to that authority to examine various issues. Appellant shall be required to furnish such evidence as may be required by learned adjudicating authority to satisfy him that appellant was not enriched at the cost of Revenue availing duty exemption under respective notification a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following conditions: (i) The provisions of the CRZ Act shall be complied with and it shall be ensured that decision of Honble Courts/Supreme Court in Aquaculture cases is not violated.; (ii) Prior clearance/NOC from the Aquaculture Authority, Chennai shall be necessarily obtained before taking effective steps to implement the project. 5. By the second amendment to LOP on 24/02/1998 (Ref: Page 72 of the appeal folder), Govt. of India allowed the appellant to have additional location of the EOU project at Gopalapuram (Ravulapalem Mandal, East Godavari District, Andhra Pradesh) subject to following conditions: (i) Premises at both the locations shall be custom bonded; (ii) Other formalities as prescribed by the Customs and Development Commissioner, VEPZ, Vizag shall be complied with; (iii) The additional locations does not violate the provisions of CRZ Act. 6. Revenue noticed that the appellant failed to achieve the undertaking given and terms of agreement entered into with the Govt. of India and defeated the object of LOP as amended twice. Adjudication process was initiated to recover the duty exemption granted to the appellant during different years in terms of the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment Commissioner as well as achievement of the minimum NFEP was substituted by positive NFEP did not get appreciation of the learned adjudicating authority. Rather for shortcomings like sales made in DTA, non-fulfillment of export obligation, appellant was imposed penalty of Rs.5 lakhs by the Development Commissioner. 8. Learned adjudicating authority analyzed the mandatory conditions of customs Notification No.53/97-Cus and opined that shrimp feed manufactured using the customs duty free capital goods, raw materials and spares were cleared to DTA without fulfilling export obligation. It was further found that setting up of a processed shrimp/prawn unit in Ravulapalem had no relevance to the manufacture of shrimp feed. Although raw material was imported by the appellant for use in the manufacture of shrimp feed, no such feed was exported. It bought shrimp from open market and processed that for export to earn foreign exchange in order to fulfill the export obligation. 9. When there was no discharge of export obligation by the appellant in respect of shrimp feed, further question that came up before the learned adjudication authority was whether the appellant acquiring a shrimp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d adjudicating authority that when the appellant failed to satisfy the Development Commissioner on its plea that Ravulapalem shrimp/prawn processing unit was EOU for the period from 01/04/1998 to 19/07/2001, it failed to succeed before Board of Approvals and there was shortfall of minimum NFEP/export performance and export obligation for the period from 01/04/1994 to 31/03/2000. SUBMISSIONS ON BEHALF OF APPELLANT 15. It was submitted on behalf of the appellant that show-cause notice dated. 18/07/2003 at page 78 & 79 does not allege that the appellant had not made deemed export nor there is allegation that it had violated the norms of EOU. The only allegation in the SCN was that there was violation of provision of Notification No. 53/97-Cus. The appellant was granted LOP on 28/06/1993 for manufacture of shrimp feed as an 100% EOU establishing a new undertaking at Kovvuru, West Godavari District, Andhra Pradesh with the annual capacity of 10000MTs. That licence was amended twice. The first amendment was made on 25/11/1997 granting broad-band permission to include shrimp/prawn processing unit at Gopalaprum, Ravulapalem Mandal, East Godavari District, Andhra Pradesh and thereafter b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2002 USD 246207.10 USD 7407904.50 2002-2003 USD 179605.18 USD 8082.20 USD 9038064.38 19. Appellant further submitted that summary of foreign exchange earnings was made known to the Revenue as per page 48 of the appeal folder as under: YEAR Physical exports shrimps (in USD) Deemed exports Shrimp feed (in USD) Total foreign exchange earned (in USD) 1998-1999 39,52,901.07 - 39,52,901.07 1999-2000 - 31,60,603.59 31,60,603,59 2000-2001 7,39,080.48 38,46,563.49 45,85,643.97 2001-2002 74,07,904.50 2,46,207.10 76,54,111.60 2002-2003 90,46,146.58 1,79,605.18 92,25,751.76 Grand total 2,11,46,032.63 74,32,979.36 2,85,79,011.99 20. Further submission of the appellant was that there was deemed export of shrimp feed made by the appellant. The revised permission granted to the appellant on 25/11/1997 shows that against the foreign exchange earnings stipulated for different years, following earnings were made by the appellant showing corresponding excess and shortfall thereof as under: Year USD (FOB) stipulated USD(FOB) actual earning Excess/shortfall 1998-1999 32,00,000 39,52,901.07 +7,52,901.07 1999-2000 120,00,000 31,60,603.59 - 88,39,396.41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant reached to Tribunal, has claimed customs duty exemption under Notification No. 53/97-Cus dt. 03/06/1997, before Customs and learned Adjudicating Authority. This is detrimental to the interest of Revenue and such belated plea of appellant is untenable as well as malafide. Customs Authority bona fide believed the appellant to allow duty free import. But benefit of the said notification was abused by the appellant for which its appeal is liable to be dismissed. 27. It is an admitted fact by the appellant that it was not a acquacultural farm at the time of import of goods free of duty. But Customs Authority was made to believe that benefit of Notification No.53/97-Cus was available to the appellant. Which is fraud designed by the appellant against Revenue. It cannot make out a new case before the Tribunal nor Tribunal entertain above belated plea of appellant which has not met scrutiny of the learned adjudicating authority. There should not be misplaced sympathy on the appellant for which its appeal should be dismissed and interest of Revenue protected. 28. When the appellant failed to fulfill the export obligation, clearance of shrimp feed were made in DTA without any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terference. FINDINGS AND CONCLUSION BY TRIBUNAL 33. Heard both sides and perused the Record. 34. When Revenue noticed that the appellant failed to make export of the shrimp feed manufactured by it using duty free raw materials and spares, but cleared entire production thereof in Domestic Tariff Area (DTA) without any permission from Development Commissioner of Visakhapatnam Export Processing Zone, as well as failed to discharge export obligation and earn foreign exchange, show-cause notices were issued to it to recover customs duty of Rs.14,71,30,951/- forgone against duty free imports made by appellant under Notification No.53/97-Cus dated 03/06/1997 and excise duty of Rs. 1,02,94,164/- forgone in terms of Notification No.1/95-CE dated 04/01/1995 allowing duty procurement of indigenous raw materials and spares etc. 35. Revenue's concern was that NFE was not achieved by the appellant even though lot of foreign exchange had gone out of country to make duty free imports by the appellant. It violated terms of LOP, undertaking and agreement made with the Government of India. Very strangely for the first time, Appellant says before the Tribunal that it is governed by the Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,146,032.63 9,919.01 7,432,979.36 3,525.33 28,579,011.99 13,444.34 38. It is an admitted fact on record that the appellant did not produce DTA sales permission before learned adjudicating authority nor satisfied that authority about earning of foreign exchange making exports. Some of the figures of the foreign exchanged claimed to have been earned by the appellant could not be justified by it as to whether such earning was from export of shrimp feed or from any other source. Neither appellant showed export evidence except merely relying on state Bank Certificate nor learned adjudicating authority examined the source of foreign exchange if any earned as certified by State Bank of India. It should be ruled out that no hawla transaction had occurred. The appellant had already faced penalty for the patent violation of terms of LOP, undertaking and agreement entered into with the Government, but made sale of shrimp feeds without permission of Development Commissioner. There was no nexus of shrimp/prawn processing unit with shrimp feed unit which was expected to export entire product manufactured. The plea of broad banding of the activity of the appellant did not find support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision in the case of Raja Imports & Expots V. CC, Bombay - 2000 (119) ELT 346(Tri). It was noticed in that case that the Textile Committee had certified that the exported goods were made out of 100% acrylic fibre and there was no reason for Tribunal to disagree with that report. The appellant was allowed to import the goods to fulfil the export obligation and the licence issuing authority held that the appellant had fulfilled the export obligation. Duty was only demandable for that portion of the inputs which might have not been used in the export product. Tribunal noticing that the export obligation having been fulfilled, there was no question of demand of either duty or penalty. 42. Appellant' s reliance on the civil appeal, in the case of Virlon Textiles Ltd. V. CC, Mumbai 2007 (211) ELT 353 (SC), Court was to submit that when DTA sale was made that became deemed export. In that case, Apex Court was concerned with the law as it stood prior to 11-5-2001 and explained that examination of the Exim Policy throws light that the said Policy as a rule stated that every 100% EOU was obliged to manufacture or produce from duty free imported raw materials capital goods etc., f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndly, once the permission was granted by the competent authority under the Exim Policy to make DTA sales against foreign exchange, the assessee was entitled to the benefit of concessional rate of duty under Notification No. 2/95-CE. If DTA sales against rupee were allowed the benefit of Notification No. 2/95-CE, then DTA supplies against foreign exchange, which were at par with physical exports, cannot be denied the same benefits and they cannot be subjected to a higher duty. Thirdly, once DTA sales against foreign exchange are covered by the above expression allowed to be sold in India, all issues relating to calculation of the duty payable in terms of notification No. 2/95-CE will have to be decided afresh by the adjudicating authority and accordingly, matter was remand to the Commissioner for calculating the duties payable by the assessee in terms of Notification No. 2/95. It was further held that that there is no fundamental difference, as far as the exemption notification No. 2/95-CE is concerned, between DTA sales against foreign exchange and DTA sales against rupee. Once DTA sales against foreign exchange fall within the expression allowed to be sold in India, the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commissioner. Raw materials were admittedly issued for manufacture in the 100% EOU and no raw material as such was diverted. Accordingly demand of duty on the raw materials was not sustainable on the ground that the raw materials which have gone into manufacture of finished products/wastes and rejects, were sold in DTA with the permission of the Development Commissioner. 46. Keeping in view earnest prayer of the appellant to satisfy learned Adjudicating Authority on various allegations made against it and also noticing certain materials facts borne by record requiring fresh examination granting fair opportunity of hearing to the appellant, matter is remanded to that authority to examine following aspects and appellant shall cooperate for the same without seeking adjournments: (A). Appellant to produce all DTA sale permission letters in original issued by Development Commissioner and satisfy on the quantity and sale value if any stipulated (B). Appellant to explain year wise foreign exchange earnings from export of shrimp feed, shrimp and prawn (processed) as stipulated by Development Commissioner in the LOP, undertaking AND agreements from time to time. Genuinity of the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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