9911796707
TMI Blog2014 (7) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... years from the date of commencement of the commercial production. It is the say of the petitioner that for setting up a factory, the plant and machineries worth Rs. 10 Crores have been purchased. The petitioner commenced manufacturing process on 10th February 2003. Requisite Licence under section 58 & 65 of the Customs Act, 1962 ("Customs Act" for short) for setting up 100% Export oriented Undertaking ["EOU" for short] was also obtained. Petitioner also executed Form B-17 Bond and renewed the licence upto 31st March 2008. After commencing the production, annual progress reports, audited by the Chartered Accountant, have been regularly furnished. It is averred further that the Foreign Trade Policy 2004-2009 in the meantime was amended and from the definition of 'manufacture', segregation activities came to be excluded. Pursuant to such change, the Ministry of Commerce and Industries through a public notice issued on 31st August 2005 specified that segregation activities shall not be covered under the definition of manufacture w.e.f 1st April 2002. However, it was specifically provided inter alia that those units set up prior to 1st April 2002 for a period of five years sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2 lacs by way of pre-deposit before hearing the petitioner on a stay petition. During pendency of stay petition before the Tribunal, the respondent no.4 initiated coercive actions for recovery of duties and penalty arising from the orders-in-original vide communication dated 21st September 2006. When the order of the first appellant authority came against the petitioner and no stay was obtained from the Tribunal. Request was made for and on behalf of the petitioner not to take any coercive steps in wake of pendency of appeals before the Tribunal. However, the respondent no.4 vide panchnama dated 18th October 2006 attached excisable goods handed over the same under Supratnama with a direction that the seized items will not be cleared without further order in writing from the Central Excise officers. On due compliance of such order of the Tribunal of payment of pre-deposit of Rs. 2 lacs, a correspondence was sent to the respondent no.4, the authority which searched the premises of the petitioner, seeking release of detained goods. Two further communications dated 10th September 2007 and 1st November 2007 also were sent. However, it is averment of the petitioner that the detain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner to adjust Rs. 2 lakhs lying with the Department and the balance amount of Rs. 1.47 lakhs [rounded off] making it total to Rs. 3.45 lakhs [rounded off]. In light of the foregoing change of events, a communication was received from the Superintendent of Central Excise, Range IV, Division-III, Silvassa dated 23rd April 2012 specifying that there was no further recovery of amount of Government dues against the petitioner and the entry made in the revenue record for recovery of such dues have also been deleted. However, it is lamented that the detained goods never came to be released by the respondent no.4. Moreover, since the petitioner could not operate for a period of nearly 896 days for no fault of his, a request is made seeking inter alia extension of LoP as also to grant fresh LoP for the period of five years. Special Civil Application was preferred by the petitioner before this Court being Special Civil Application No. 10760 of 2011. Such petition was permitted to be withdrawn with a liberty to file a fresh petition as various amendments were necessary to be carried out in the petition. Accordingly, the Court granted permission and the said petition was withdrawn on 7th Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliefs as the Hon'ble Court may deem fit and proper in the nature of circumstances of the case." In response to the notice issue, the respondent no. 4 filed affidavit-in-reply inter alia contending that except one consignment where the petitioner imported certain unservicable mixed old and used transformers which were disassembled manually and thereafter the copper coils as well as CRGO sheets were segregated and stored separately, the entire goods of ferrous and non-ferrous waste have been sold in the domestic tariff area on the payment of applicable duties without any specific permission from the appropriate authorities. Such clearance in DTA on concessional rate of duty rather than full rate of duty is impermissible. Availing of benefit of Customs Notification No. 21/2002-Custom dated 1st March 2002 also was impermissible as the petitioner did not submit copy of undertaking nor the end use certificate within six months of the clearance in DTA, and therefore, the full rate of Central Excise duty was required to be paid by the petitioner. It is further contended that such sale in DTA was contrary to EXIM Policy 2002-2007 and Customs Notification No. 53/1997-Custom dated 3rd J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idity period of LoP and the Green-card, no purpose would have been served even if the goods attached were released on implementing the order of the Tribunal on 15th December 2011. It is further contended vide communication dated 3rd April 2012 also, no request was made for release of the goods but instead, it had asked for adjusting the amount of pre-deposit. Likeise, the respondent no. 5 also has filed a detailed reply, contents of which shall be discussed at a later stage in this judgment. Affidavit-in-rejoinder has been filed denying various aspects. Essentially harping on the aspect that some responsibility must be fixed on the respondents for not allowing the petitioner unit to carry out their manufacturing activities when the LoP was valid and for seizure of goods when the petitioner had already filed appeals alongwith stay applications. Non grant of these goods have also been insisted upon and emphasis is also made of the later communication dated 23rd April 2012 issued by the fourth respondent to contend that despite such admission seized goods have not been released, thereby making the petitioners handicapped in carrying out the manufacturing activities. Learned senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of five years. He, however, fairly conceded that non-grant of goods, despite direction by the Tribunal was not a desirable action but the same might have happened due to inadvertence and the respondent is ready to return the same without further loss of time. Upon thus hearing both the sides and on careful examination of the material on record, the undisputed facts as emerged are to the effect that the petitioner company incorporated under the Companies Act, 1956 was granted Letter of Permission No. 92 on 18th September 2001 for manufacturing, by way of segregation of ferrous and non-ferrous scrap for a period of five years from the date of commencement of the commercial production. Such manufacturing process of the petitioner started on 10th February 2003 and the petitioner also obtained Green Card on 8th April 2004, which was valid upto 31st March 2009. The licence was also obtained under Section 58 and 65 of the Customs Act by the petitioner for setting up 100% Export Oriented Undertaking from the respondents no. 3 & 4 in Form B-17 and the licence was renewed upto 31st March 2008. Regular returns were filed, annual audited progress reports were also submitted time and again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was held responsible to pay full rate of duty while making the clearance to DTA and clearance of goods made at concessional rate was held violative of para 6.8 (a) of the Foreign Trade Policy. This judgment of the first appellate authority dated 30th November 2005 travelled to the CESTAT and the CESTAT vide its order dated 7th November 2006 directed the petitioner to make pre-deposit of 50% of the confirmed demand of duty. However, vide its latter order dated 3rd July 2007, it recalled its earlier order at the behest of the petitioner which claimed of not having received any intimation notice for hearing scheduled on 7th November 2006 where the order of pre-deposit of 50% of the confirmed demand of duty was passed. The Tribunal directed deposit of a sum of Rs. 2 lakhs by way of pre-deposit to be deposited within eight weeks and report compliance on or before 27th August 2007. What weighed with the Tribunal was the argument of the petitioner that the process, if is held to be of 'manufacture', the question of demand both of Custom duty and Excise duty would not arise. The Tribunal on entering into the merits at the final hearing of these appeals, delivered its decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate before the lower authorities which has been discarded by the lower authorities as certificate on the ground that they have been produced at a later date. In our considered view, such narrow view taken by the lower authorities is incorrect. If the benefit of notification is available to the assessee, on imports goods and produces end use certificate of consumption of the same, benefit of notification cannot be denied to him." It can be noticed thus, from the said decision of the Tribunal that while answering the second issue in favour of the assessee, it sought to rely upon the decision of the Tribunal rendered in case of Ratnagiri Textiles. Such decision of the Tribunal, as admitted in the affidavit-in-reply of the respondent no.3, in no unclear terms was communicated to the respondent in January/February 2012 wherein, it is amply made clear that the Circular of DGFT dated 29th October 2004 treats the units set up prior to 2002 differently. They are permitted to continue the activity of segregation, treating them as manufacturing concern for the entire period of original LoP, for the purpose of fulfillment of export obligation and for grant of other benefits available u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o cannot be frowned upon on the ground of being a high handed action or contrary to the direction of the Tribunal. The respondents also rightly contended that attachment of goods of the petitioner worth Rs. 6.96 lakhs would have been known to the Tribunal when it passed the order on 7th November 2006 or for that matter on 3rd July 2007. However, the version of the respondent, as set out in the affidavit-in-reply that the release of goods, pursuant to the final order of the CESTAT dated 15th December 2011/16th January 2012 would have served no purpose in absence of validity period of LoP/Green Card surely will have to be regarded as an attempt to challenge and upset the hierarchical wisdom and discipline. The Tribunal once having held in favour of the assessee on both the issues and having said unequivocally that the unit set up prior to 1st April 2002 is to be treated differently and the activity of segregation of ferrous and non ferrous material shall need to be treated as manufacturing concern and the benefit of Notification No. 21/2002 available for clearance from EOU to DTA, surely resulted into the balance heavily tilting in favour of the petitioner, and therefore, without ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these amended provisions, there can be no justification for any Assistant Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or to the Collector so as to enable appropriate proceedings being taken under Section 35E(1) or (2) to keep the interests of the Department alive. If the Officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail." In yet another decision in case of Lanco Kondapalli Power (P.) Ltd. (supra), the Andhra Pradesh High Court passed strictures against the officers of Sinhan Bank Limited for having flagrantly disregarded the binding instructions and circulars of C.B.E.C by observing that uncaring violation of binding norms mandates invocation of writ jurisdiction. We, therefore, hold that the respondents on having come to know about the decision of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from 1st April 2008, a request was made. However, it was communicated that in wake of a public notice No. 45 dated 31st August 2005 [2004-2009], segregation activity since was not covered under the definition of manufacture w.e.f 1st April 2002, such permission was not feasible and a No Due Certificate from the jurisdictional Central Excise authorities for exit from EOU status was requested for. Such certificate has not been submitted by the unit till the date. It is further contended that vide communication dated 23rd March 2009, the unit sought approval of a new activity i.e., manufacturing process/activities by shredding, degreasing, processing and recycling of raw materials of ferrous and non ferrous scrap and computer and electrical and electronics scrap. The petitioner requested to amend items of manufacture in LoP dated 18th September 2001. In response to such a request, the petitioner was asked to submit application in prescribed format as given in Appendix 140I. Such letter was sent on 29th June 2009 for manufacture of baled ingots of raw materials for ferrous and non-ferrous metals and reprocess and re-fabrication of computer, electrical and electronics scra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Certificate from the jurisdictional Central Excise & Customs authorities in terms of paragraph 6.18 of the Foreign Trade Policy existing then. Of course, the Tribunal has held that those units which have been set up earlier prior to 1st April 2002, the rigor of public notice will not apply to such priorly established units and thus, the activity of segregation of scrap from imported burnt transformers was to be treated as activity of 'manufacture'. Vide communication dated 23rd March 2009, the petitioner sought [approval of new activities, being manufacturing process/activities by shredding, degreasing, processing and recycling of raw materials of ferrous and non ferrous scrap and computer and electrical and electronics scrap. An application as was required under Appendix 14-I-5 for the purpose of a new product also was furnished. The Approval Committee on 27th August 2009 held that the petitioner, if has ingot manufacturing facility, then only a new Letter of Permission can be considered. Instead of providing such detail or possibly in absence of such facility, in response to such communication of the respondents, another request for extension was made on 29th Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and apply afresh and after due inspection of the factory premises and after debonding, as also subject to the permission from the Pollution Control Board, agreed to consider its request for grant of LoP. Much time has flown; the policy has changed and the period of five years also expired. The say of the petitioner that yet another unit is permitted, the extension of activity of segregation of ferrous and non ferrous materials on their import of such material, and therefore, it is a clear case of discrimination which requires indulgence being the violation of Article 14 of the Constitution of India, is not finding favour with this Court. We notice that as far as the unit which had been granted extension and for which the decision of Bombay High Court rendered in case of Mavi Industrial Ltd. (supra) has been relied upon, was a case where the LoP was extended for a second block of five-years where the Board of Approval and Development Commissioner considered it fit to grant extension as non-fulfillment of export obligation was for bona fide reasons beyond the control of EOU. The Court, therefore, directed the Development Commissioner to pass a fresh order specifically stating ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of course, the Tribunal upheld the issue in favour of the petitioner, and therefore, the time spent in pursuing legal remedies cannot be compensated by way of extension of original period of LoP when the Tribunal held in favour of the petitioner eventually. The non-grant of interim relief in favour of the petitioner has led to coercive recovery having been initiated for recovering confirmed demand, after nearly ten to eleven months of the passing of the order by the first appellate authority and therefore, it cannot be said that the action on the part of the respondent atleast till the decision of the Tribunal on merit was a mala fide or arbitrary action. We are therefore of the opinion that the period of 896 days cannot be extended, as the period of first block of LoP already has expired on 31st March 2008. Policy of the Government has also undergone a major change. The Courts need not interfere when the Government changes the economic or fiscal policy. Change in policy of the Government in view of Articles 14 and 19 (1)(g) of the Constitution is when challenged before the Court, the same may not be lightly attacked. New fiscal policy can be evolved which also includes power to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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