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TMI Blog2014 (7) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have been released to give an effect to such order of the second appellate authority. Failure of the department to release of goods despite the decision in favor of assessee - Held that:- For want of such release of attachment and return of the goods and machineries, the petitioner continuously has lamented alleged of having lost substantial business. It is for sure an arrogant way of putting it by way of an affidavit in reply by the respondent that due to expiry of LoP and the green card, return of such goods and machineries would have also served no purpose. Denying any citizen of his due and particularly the articles of his own ownership after second appellate authority held in his favour, surely was an act which needs to be adjudged with a strong disapproval. The respondents therefore are expected to act promptly as ensured by the learned counsel for the Revenue. Extension of LOP - Held that:- Thus, to direct the respondent to grant further LoP without petitioner debonding its unit and also without necessary inspection and scrutiny of the premises would prove to be against the requirements of law on the subject, and therefore, as far as the second ground raised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shall not be disturbed. The respondent no. 2-Joint Director of Foreign Trade, in wake of such public notice also issued a circular and clarified that units set up prior to 1st April 2002 should be treated differently from those set up after the said stipulated date. It is the case of the petitioner that the respondent no. 4 searched the premises of the petitioner on 30th September/1st October 2003 and various documents were seized. Statement of the manager and other staff members have been recorded during the course of investigation which resulted into issuance of the show cause notice calling upon the petitioner as to why it may not be asked to pay the duty amount for clearance of goods from EOU to domestic tariff unit in violation of notification dated 1st March 2002 and as provided under the proviso of Exim Policy 2002-2007. Two separate show cause notices consisting of period from April to September 2003 and October to March 2003-04 were issued. These notices were adjudicated by the Joint Commissioner of Central Excise Customs vide sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined goods. Two further communications dated 10th September 2007 and 1st November 2007 also were sent. However, it is averment of the petitioner that the detained goods were not released nor are they released till the date. It is the say of the petitioner that on account of such action on the part of the respondent no. 4, the petitioner is deprived of undertaking any operation for nearly 896 days i.e., 18th October 2006 to 31st March 2008. It is also urged that as per the LoP, the period of 31st March 2008 is valid upto 31st March 2009, therefore, an application for renewal of licence was made under Section 58 and 65 of the Customs Act for private bonded warehouse to the respondent no. 2 alongwith necessary accomplishments. A communication was received by the petitioner from the respondent no.2 dated 24th July 2008 inter alia stating that the renewal of extension of LoP was not granted in wake of public notice dated 31st August 2008. The petitioner's appeal pending before the Tribunal came to be decided on 12th October 2011 whereby the orders of lower authorities, orders-in-original and that of the Commissioner [Appeals] were quashed. The Tribunal held in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty 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 August 2012. And therefore, the petitioner has preferred the present petition seeking writ of mandamus with the following prayers : (a) To issue writ of mandamus, or other writ, order or direction, in the nature of mandamus, directing- (i) The respondent nos. 3 4 to release the inputs, finished goods and capital goods detained by them as per Panchnama dated 18th October 2006 (Annexure H colly. hereto). (ii) The respondent no. 2 to allow the petitioners to continue the activity of segregation of stocks and complete the Export order under the scheme. (iii) The respondent no. 3 4 to renew the licence (Annexure B colly. hereto) issued under Section 58 and 65 of the Customs Act, 1962; (iv) To direct the Respondent no. 2 to revalidate and extend the LOP for a period of 896 days the petitioners were unlawfully deprived of carrying out their operation under the E.O.U scheme. (v) Or in the alternative, the respondent no. 2 to revalidate and exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tom duty saved by making sale in DTA need to be recovered from the petitioner, and therefore, the show cause notice. It is further contended that the appellate authority confirmed the demand of duty finalized in orders-in-original and in absence of any prohibitory order issued by the CESTAT, the respondent attached on 18th October 2006 the inputs and the finished goods and the capital goods of the petitioner for the purpose of recovery of huge outstanding dues to the tune of ₹ 24.88 lakhs under section 11 of the Central Excise Act, 1944 { the Act for short} and the Rules of 2002 { Rules for short}. According to the respondent, on 7th November 2006, the petitioner had been directed to make pre-deposit of 50% of the confirmed dues of duty by the Tribunal and CESTAT, after eight months recalled its order [3rd July 2007 and instead directed the petitioner to deposit a sum of ₹ 2 lakhs] which was deposited by the petitioner on 23rd August 2007. It is the say of the respondent that the CESTAT was aware of the action of attachment of goods worth ₹ 6.29 lakhs, while passing such an order. However, subsequently when both the appeals of the petitioner were allowed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Dhaval Shah for the petitioner has fervently argued that the action on the part of the respondent is not only in complete disregard to the decision of the Tribunal but is also highly discriminatory. He urged that not following the decision of CESTAT would attract the provisions of contempt. Moreover, the change in the policy decision would not in any manner affect the activities of the petitioner-unit as the policy itself very clearly had indicated that those units which had been set up prior to 1st April 2002 shall not be affected. He further urged that not only the extension sought for has not been granted but the attachment of machineries and the goods while the stay granted by the Tribunal was in operation by the respondent no. 4 which has resulted into business of the petitioner getting completely ruined. Even till the date, machineries and goods are lying in attached condition and are not being returned. He urged the Court to direct issuance of writ of mandamus and to direct the respondent to extend further period of LoP by five years. He has sought to rely upon the following authority. (i) Damodar J. Malpani v. Collector of Central Excise 2002 (146) ELT 483 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein that segregation activities w.e.f 1st April 2002 shall not be covered under the definition of 'manufacture'. However, all those units set up prior to 1st April 2002, activity of such a nature would be continue to be operated. A circular also came to be issued from the Joint Director General of Foreign Trade clarifying such issue and thereby specifying the units set up prior to 1st April 2002 to operate and carry out activity of segregation. The dispute arose on account of a team of Central Excise authorities, Preventive, Vapi Commissionerate, which visited the factory premises of the petitioner for preventive checks. The assessee, an 100% EOU, as mentioned above, was having the licence and was engaged in manufacture of segregation of ferrous and non ferrous scrap. Certain incriminating documents were seized under the panchnama dated 30th September/1st October 2003. Statement of Joseph Thomas, Manager-cum-Authorized Signatory of the petitioner company was recorded on 1st October 2003 under Section 14 of the Central Excise Act. It was found that total 19 clearances in the DTA out of which 18 clearances were for ferrous waste, which was made at a concessional rate of Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant had been granted LOP NO. PER:92(2001)/SEEPZ/EOU-47/2001-02 dated 18th September 2001 by the Development Commissioner, SEEPZ, Mumbai for segregation of ferrous and non ferrous scrap or Computer and Electric scrap. It is also seen that the said activity was considered as an activity of manufacture by the authorities, which is reiterated by DGFT vide Circular No. 01/92/ 182/282/AMo4/VC-II/431, dated 29.10.2004, wherein the DGFT has clearly indicated that the unit already set up prior to 01.04.2002 have to be treated differently from the unit set up after 01.04.2002. In other words, an unit engaged in segregation activity, which was set up prior to 01.04.2002 would be continued to be treated as manufacturing concern, as for the entire period original LOP, for the purpose of fulfillment of export obligation and grant of other benefits available under the Foreign Trade Policy and Customs and Central Excise laws. The circular has not been withdrawn by DGFT authorities. As is recorded by us in 2001 for segregation of scrap from imported burnt transformers, considered activity as manufacture. If that be so and there being no dispute that the appellant to an activity of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al held in favour of the petitioner by holding that the benefit of notification cannot be denied to the petitioner. Therefore, after the visit of the petitioner's factory for the purpose of preventive check, the action of the respondents in issuance of the show cause notice alleging breach/violation of the provisions of Foreign Trade Policy and evasion of Customs duty may have been started with a valid cause by holding a view that segregation activity on the part of an EOU is not a manufacturing activity, and therefore, the DTA clearance made by the EOU engaged in segregation would attract the duty, interest and penalty, the entire issue was set at naught by the decision of the Tribunal, and therefore, no cause whatsoever survived in the period post October 2011. After the order-in-original confirmed the demand of duty on 22nd February 2005; as noted, the first appellate authority confirmed such order on 30th November 2005 and the petitioner was required to make payment of ₹ 24.88 lakhs [rounded off] towards duty and equal penalty. The Tribunal's first order was passed for pre-deposit of 50% of the demand of duty on 7th November 2006. However, before that on 18th O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Apex Court in case of Kamalakshi Finance Corpn. Ltd. (supra), where the Apex Court was examining the decision of the Bombay High Court which passed strictures against the two Asstt. Commissioners for flouting the order of the Collector [Appeals] on classification based on the Tribunal's judgment. Such decision had been upheld by the Apex Court and the Department had been directed to pay utmost regard to the judicial discipline by giving effect to the orders of higher appellate authorities, which are binding to the authorities below. The Court held and observed thus 7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35E confers adequate powers on the department in this regard. Unless sub-section (1), where the Central Board of Excise and Customs [Direct Taxes] comes across any order passed by the Collector of Central Excise with the legality or propriety of which it is not satisfied, it can direct the Collector to apply to the appellate Tribunal for the determination of such points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further seeking the adjustment of ₹ 2 lakhs deposited by way of pre-deposit from the authority, such communication would have been sufficient guide for the authority to have acted and responded positively and promptly in releasing the goods. We notice that till the date, no such release is made. For want of such release of attachment and return of the goods and machineries, the petitioner continuously has lamented alleged of having lost substantial business. It is for sure an arrogant way of putting it by way of an affidavit in reply by the respondent that due to expiry of LoP and the green card, return of such goods and machineries would have also served no purpose. Denying any citizen of his due and particularly the articles of his own ownership after second appellate authority held in his favour, surely was an act which needs to be adjudged with a strong disapproval. The respondents therefore are expected to act promptly as ensured by the learned counsel for the Revenue. With regard to the second relief of the petitioner having deprived of the business on account of the attachment done on 18th October 2006 which did not allow it to complete the period available upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 29th September 2009, the petitioner made a request for extension of earlier LoP dated 18th September 2001 and also further requested for certain broad banding permission. It was further stated that the petitioner unit would not like to de-bond its existing project and would like to enjoy all their taxation rights which have been granted vide LoP dated 18th September 2001. The request for continuation of EOU status granted vide LoP dated 18th September 2001 came to be rejected by the Development Commissioner. The request for broad banding was also not considered since the original LoP was no longer valid nor was the further continuation as an EOU was considered. Yet another communication was sent by the petitioner on 24th February 2010 that the petitioner did not want to de-bond. Unit approached the Board of Approval seeking extension of LoP. In its meeting dated 13th July 2010, the Board of Approval considered and rejected such request. A request was also made to submit the No Due Certificate vide communication dated 27th July 2010. Once again on 20th October 2010, the petitioner approached Board of Approval for extension of LoP. However, since the validity period of Lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oached the Board of Approval seeking extension. An appeal preferred before the BoA also was rejected. Once again, on 20th October 2010, the Board of Approval was approached for extension of LoP. The petitioner also applied to BoA for renewal of LoP on 31st May 2011 also. As per the details provided on record, the Board of Approval had examined the case of all the applicants and took a decision on 30th July 2011, which reads as under : 3.11 (11) M/s. Unitech International Limited - an appeal filed before BoA to renew their LoP after expiry of 1st Five Years Block : The representatives of the unit informed that they have filed an application for extension of LOP within the time period and had installed ingot making facilities in their factory premises. Development Commissioner informed that since segregation activities are not eligible under EOU scheme in terms of Appendix 14-I-C of HBP, the UAC did not grant extension of LOP. The Board, after due deliberation, did not approve the proposal of extension of LoP. It was observed, however, that if the unit wanted to apply for a fresh LOP, the DC, SEEPZ may consider it after due inspection of the factory premises. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment Commissioner because the assessee could not resume its operation even after the extension of LOP in the year 2009, on account of Custom authorities not having reviewed the private bonded warehouse licence. The assessee had not violated any of the provisions contained in Foreign Trade [Development Regulation] Act, the Customs Act or the Central Excise Act, and therefore, the Court held that the Customs authorities were not justified in reviewing the warehouse licence and enforce the duty demand on the ground that the assessee failed to fulfill the export obligation within the first block of five years. Facts in case of the petitioners are different where for the second block of five years, no extension is granted and there are requirements to be fulfilled before its case could be reconsidered by the authorities. As far as M/s. MGA Associates is concerned, heavy reliance is placed on the order dated 8th June 2008 whereby M/s. MGA Associates has been permitted manufacturing activities in respect of repair, re-engineering, re-conditioning, re-making, etc of absolute out-date/ discarded electrical, electronic components, devices, appliances, instruments, telecommunica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve policy. Government would take diverse factors for formulating the policy for import or export of the goods granting relatively greater priorities to various items in the overall larger interest of the economy of the country. It is, therefore, by exercise of the power given to the executive or as the case may be, the legislature is at liberty to evolve such policies. An applicant has no vested right to have export or import licences in terms of the policies in force at the date of his making application. For obvious reasons, granting of licences depends upon the policy prevailing on the date of the grant of the licence or permit. The authority concerned may be in a better position to have the overall picture of diverse factors to grant permit or refuse to grant permission to import or export goods. The decision, therefore, would be taken from diverse economic perspectives which the executive is in a better informed position unless, as we have stated earlier, the refusal is mala fide or is an abuse of the power in which event it is for the applicant to plead and prove to the satisfaction of the court that the refusal was vitiated by the above factors. Thus, to direct the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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