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TMI Blog2015 (9) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... e of fact that imported goods were to be used for intended purpose, appellants failed to fulfill undertaking given to Customs authorities as required by condition of notification – That warranted appellant to pay duty in event of failure of not using goods for manufacture of fertilizer. Members of successful bidder/awardee in their statements admitted that they have to bear all duties and taxes as stipulated in e-auction but there was no mention of any payment of customs duty on imported machineries – When whole plant was sold to third party, nothing prevented appellant to collect differential customs duty on imported goods contained in plant which was sold – Appellant cannot take shelter on ground that mere installation of imported machinery and commissioning plant for short period shall absolve it from liability – Therefore, adjudicating authority rightly demanded Customs duty from appellant who are owners and beneficiary of imports – Decided against Appellant. - C/86/2012 - Final Order No.40966/2015 - Dated:- 10-8-2015 - Shri D.N. Panda, Judicial Member and Shri R. Periasami, Technical Member, JJ. For the Petitioner : Shri B.V. Kumar, Advocate For the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority rejected the concessional benefit availed under Notification No.20/99 and 16/2000 on the imported goods covered by various Bills of Entry and confirmed the demand of differential duty of ₹ 10,02,42,538/- recoverable from the appellant for violation of conditions of aforesaid notifications read with Section 12 and 143 of the Customs Act and also appropriated an amount of ₹ 5,46,915/-. Adjudicating authority also ordered confiscation of the goods. But valued the same at ₹ 23 crores under Section 111 (o) of the Act and allowed redemption thereof on payment of fine of ₹ 2,30,00,000/-. He also imposed penalty of ₹ 10,02,42,538/- under Section 112(a) of Customs Act and dropped the proceedings against the co-noticees. The adjudicating authority also ordered for enforcement of bank guarantee given by the appellant and appropriated the same towards differential duty against provisional release of the seized goods ordered. Hence the present appeal. 4.1 Heard both sides on 9.4.2015 and proceeding recorded in the open court. 4.2 Learned counsel for the appellant submitted written synopsis and paper book. He submitted that the appellant had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the modernization and renovation of that plant availing service of a contractor namely, UREA Casale. Even this unit was found to be infeasible to operate as an integral part of the fertilizer plant. 4.5 In view of the aforesaid unviability reported by ICICI, e-auction of the appellant was done for the reason beyond control of the appellant. 4.6 Revenue came out with a show-cause notice dated 12.3.2007 to recover the differential duty in respect of imported equipments and spares imported during the period March 1999 to August 1999 and May 2000 to August 2000 concerning above two plants. 4.7 It was submission of the appellant that it has no intention to stop functioning of the plant suo motu but compelling reason dragged it to dispose the same on the basis of unviability recommended by ICICI. The condition No.24 of the notification No.120/99-Cus. dated 20.02.1999 requires that the importer has to furnish an undertaking to the customs authority at the time of import stating that the goods imported shall be used for the purpose specified in Sl. No. 142 of the notification and in the event of failure to do so, the differential duty shall be recovered. Customs author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further contention of Revenue that the appellant availed duty exemption on the basis of certificate issued by line Ministry for which it cannot disclaim that it has no liability. 5.3 Relying para 31.4 of Page 142 of the Order-in-Original and 35 thereof, learned DR submitted on behalf of Revenue that appellant was aware as early as 1997 - 98 that its unit was not viable to operate but still then in the year 1999 it went for renovation for no good reason. That has caused prejudice to Revenue because Customs duty concession was availed at the cost of the exchequer. Such conduct of the appellant is established when it again became unviable by the report of ICICI. Therefore, appellant cannot plead that it was beyond its control to dispose the plant. 5.4 Reliance was placed by Revenue in the case of Mediwell Hospital and Health Care Pvt. Ltd. Vs. Union of India reported in 1997 (89) ELT 425 (SC) to submit that use of the goods imported availing duty concession casts a responsibility on the appellant to avail the benefit to make use of the goods but not merely make any temporary use and discard the same causing prejudice to interest of Revenue. Relying on the decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and no loss caused to Revenue by disposal thereof. Appellant having failed to discharge such burden, proper consequence of law has followed. 6. In the rejoinder, appellants submission was that entire action of appellant being based only on the technical feasibility it cannot be construed that the appellant has disposed the unit without any reasonable cause. Due to compelling reason, it went for disinvestment. Relying on page 140 of the Order-in-Original, appellant submitted that entire fact was within the knowledge of Revenue as to the import of the goods, use thereof, infeasibility of the plant as well as disposal thereof for which there was no suppression of any fact at any stage by the appellant. Accordingly, adjudication is time barred. In this regard, appellant invited attention to letter dated 24.5.2004 which brought out the appellants good conduct and proper disclosure of material fact as to unviability of the plant calling for disposal thereof. Appellant also submitted that there was condition in the notification restraining the appellant to dispose the plant before certain period like the impediment/ conditions prescribed in other notifications such as : conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be enforced and adjusted towards the differential duty and adjudication liabilities. 8.2. The primary issue appears to have been enumerated in para 25 (a) and 25(e) as above which calls for addressing on the basis of pleadings of both sides. 9. The main dispute is whether the concessional benefit is available to NLC under notification No.20/99-Cus. dated 28.2.1999 and 16/2000-Cus. dated 1.3.2000 as amended, on the goods imported under the Bill of Entry as per Annexure I II of the SCN. The goods covered under the Bill of Entry were imported for revamping of fertilizer plant and not utilized for the intended purpose but the same were sold. As seen from the Notification No.20/99 at Sl.No.142 which is already reproduced in para 1.1 of this order the concessional rate of customs duty for plant and machinery required for renovation or modernization of fertilizer plant is chargeable to concessional rate of duty @5% and additional duty @ 10% and the said concession was allowed subject to fulfillment of conditions stipulated at condition No.24 of the said notification. For the purpose of convenience, Condition 24 of the Notification No.20/99 is reproduced as under :- 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the differential duty if to be demanded, it is to be demanded from PDIL and not from the appellants. On perusal of the above notification and the impugned order, we find that the issues made out in their grounds of appeal before this Tribunal and the issues brought out in their written submissions to SCN before the adjudicating authority are identical nature and the adjudicating authority discussed in his findings each and every plea raised by appellant in detail in his elaborate order containing 148 pages. 11. It is pertinent to see that the concessional rate of duty is available to a person under Notification 20/99 (S.No.142) or under Notfn 16/2000 (Sl.No.182) for import of plant and machinery for renovation or modernization of Fertilizer Plant only if they fulfill all the 3 conditions stipulated in the Condition No.24 or Condition No.27 appended to the above two notifications respectively. Sl.No. (1) (2) of the conditions relates to administrative approval and recommendations by the Competent Authority of the concerned Line Ministry and the value of limit of the imported goods. This was duly complied by the appellants at the time of clearance of the imported goods. The Sl.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plant. The appellant's Board meeting held on 28.1.2003 approved for closure of Fertilizer plant which was not in operation since 31.1.2002 and also approved for sale of plant as is where is basis . 15. It is pertinent to state that it is the appellant who took decision to go ahead for revamping the said plant in spite of the Disinvestment Commission's report which is against them and proceeded ahead and approached the Line Ministry for granting such approval and to issue necessary certificate for import of machineries at concessional rate under the said notification and also availed the exemption under the respective notification. Appellants having availed the conditional exemption and having been fully aware of such facts, and being a PSU they failed to discharge the differential customs duty on the imported goods when they got approval for closure of the plant on 28.1.2003. In spite of being fully aware of the fact that the imported goods were to be used for the intended purpose, the appellants failed to fulfill the undertaking given to the Customs authorities as required by the condition of the notification.That warranted the appellant to pay the duty in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Sl.No.142 of the Notification 20/99 read with condition No.(24) casts a continuous obligation on the appellant and the benefit exemption was extended to the appellant only for manufacture of fertilizer but not to sell the plant to third party immediately availing duty exemption at the cost of the exchequer. 19. The Hon'ble Supreme Court in the case of Mediwell Hospital And Health Care Pvt. Ltd. Vs UOI (supra) has laid down the law that once the person who availed the benefit of exemption and failed to discharge continuing obligations, Revenue has right to recover the customs duty forgone. This was again affirmed by the Apex Court in their subsequent decision in the case of CC Vs Jagdish Cancer Research Centre (supra). It is held therein that the importer has a continuing obligation of the use of the goods imported under exemption notification. 20. In the case of Bombay Hospital Trust Vs CC (supra) the Larger Bench of Tribunal has relied on the Apex court's decision referred above and discussed the issue at length and held that failure to fulfill the post-importation condition by the importer, the Customs has jurisdiction to demand duty for violation of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing genuine charitable work with bonds and bank guarantees), this cannot be a valid plea by the appellants not to pay the demanded duty when the conditions of free treatment are violated. We also do not think that it is necessary for an exemption notification issued under Section 25 to contain a recovery provision when the power to recover duty can be traced to Section 12, nor any mandate to provide such a recovery provision in an exemption notification is contained in the said Section 25. 15. We find that in Mediwell (supra), the Apex Court has interpreted the said Notification No. 64/88 in the context of allowing import of medical equipment without payment of duty and has observed in Paragraph 12 thereof as follows :- While, therefore, we accept the contentions of Mr. Jaitley, learned senior Counsel appearing for the appellant that the appellant was entitled to get the certificate from Respondent No. 2 which would enable the appellant to import the equipment without payment of customs duty but at the same time we would like to observe that the very notification granting exemption must be construed to cast continuing obligation on the part of all those who have obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court in the case of CCE Vs Hari Chand Shri Gopal (supra) has explained what is mandatory condition and what is directory condition and held that mandatory condition of the exemption notification must be obeyed/fulfilled exactly as it is stated in the notification. The relevant paragraphs of order are reproduced as under :- 22. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption.In Novopan Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means actual compliance in respect to the substance essential to every reasonable objective of the statute and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition of the notification and the adjudicating authority had rightly ordered recovery of the differential duty. That is upheld. Appellants fail to succeed on plea of limitation for the above reasons. 22. As regards the appellant's contention that they kept informed the Customs and Central Excise authorities on their closure and sale of the Fertilizer Plant, on perusal of correspondences of NLC with Superintendent of Central Excise vide their letters dt.30.6.2004, 1.6.2004 and 20.6.2004 and the Superintendent-Central Excise letters addressed to NLC dt.26.5.2004, 7.6.2004 we find the jurisdictional Superintendent-Central Excise had sought specific clarification from NLC as to whether any concessional duty benefit availed on the plant and machinery which is on sale; it is noticed that the appellants had replied that they had only availed duty benefit on furnace oil but failed to inform the customs duty exemption availed on the imported machinery installed in the plant. Further, we find from the appellant's letters dt.30.6.2005 addressed to Commissioner of Customs and Central Excise, Puducherry and Customs, Chennai that nowhere appellant disclosed availment of conce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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