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TMI Blog2016 (1) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... t the goods were not only entered in the gate register as noted by the ld. Member (Technical) but also entered in the raw-material register. In addition, the goods were actually duly found in the factory and it is not a case that there was any shortage noticed. It is also to be noted that these goods are imported only after a certificate authorising their import is given by a central excise officer and thus, the central excise officers are in the know of the duty free imports authorised by them for the 100% EOU. Impugned order is set aside and the appeal is allowed with consequential relief to the appellant. - Decided in favor of assessee. - Excise Appeal No. 3590 of 2005 - EX[DB] - Final Order No. A/53342/2015-EX(DB), - Dated:- 12-10-2015 - MS. ARCHANA WADHWA, MEMBER (JUDICIAL) AND MR. MANMOHAN SINGH, MEMBER (TECHNICAL) AND R.K. SINGH. MEMBER (TECHNICAL) For the Petitioner : Shri Rupender Singh, Advocate For the Respondent : Shri M S Negi, SDR ORDER Per Archana Wadhwa (for the Bench): The appellant is a 100% EOU engaged in the manufacture of cotton yarn falling under heading 52.05 of the first schedule to the Central Excise Tariff Act, 1985. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al adjudicating authority stand upheld by the Commissioner (Appeals). Hence the present appeal. 5. After hearing both sides, and after going through the impugned order of authorities below, we find that main ground for Revenue to uphold the confiscation and imposition of penalty is that appellants have not observed and adhered to provisions of Rule 7(b) of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. In terms of said Rule, the manufacturer obtaining benefits are required to inform the Revenue about receipt of the imported goods in his factory within two days of said receipt. The adjudicating authority has observed that inasmuch as the appellants have not fulfilled the said condition, as they have received the goods vide bill of entry dated 23.6.2003 and have not intimated the department within a period of 2 days. The second condition of the said Rule is that the assessee is required to maintain a simple account indicating the quantity and value of the goods imported, the quantity of imported goods consumed for intended purpose and the quantity remaining in stock bill of entry wise and shall produce the said account as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the same. As such, if the appellants have imported goods in terms of the annexure A issued by their jurisdictional Superintendent and have executed a bond for use of the same in their factory, the Revenue doubted that appellant would mis-utilise the said benefits, is without any basis. Having obtained the said annexure, and having executed the bonds and having imported the goods, the appellants was duty bound, in law, to show the use of the same. 8. Apart from the above, we also note that the goods imported by the appellants were duly entered in their gate register as also in their stock register as also in appendix 18. If that be so, we really fail to understand that having entered the goods in all the registers, how the appellants would have mis-utilised duty free import benefits, inasmuch as they were bound to show the utilization of the said raw materials which was admittedly received in their factory and was duly entered in all the above registers. We further note that lower authorities have not disputed the fact that goods were duly entered in their stock register, which is a form IV register. 9. We have seen a letter dated 1.4.02 submitted by the appellants to their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be so, in terms of Rule 2(1A), as reproduced above, the said Rules of 1996 are not applicable to the imports made under Notification No. 52/03 Cus dated 31.3.03. As such, the entire basis for the Revenues case in respect of violation of condition of7(b) of said Rules gets demolished. 12. In any case, we find that the appellants have admittedly maintained the separate accounts as required under Rule 7(b) and as such, cannot be held guilty of any malafide. 13. Further, the said notification No. 52/03 Cus prescribes a 100% EOU, to maintain proper accounts of receipt, storage and utilization of the goods. As already observed, the appellants have admittedly maintained such accounts. 14. Inasmuch as the goods stand entered in gate register, stock register and appendix 18, in view of the same, the finding of the lower authorities that the goods were not properly entered are absolutely incorrect. 15. Otherwise also, we find that there is no evidence on record indicating that the appellants is mis-utilising the said benefits either by clearing the imported goods free of duty or in any other manner. If the appellant have any malafide intention, they would not have first brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Cotton valued at ₹ 1,82,98,751/- involving duty of ₹ 21,05,409/- were confiscated under Rule 25 of the Central Excise Rules, 2002. And Redemption Fine of ₹ 10,00,000/- in lieu of confiscated goods was also imposed. 19. Issue for consideration arose whether goods which were procured duty free with the required condition of due accountal in the statutory prescribed records under provisions of Rule 7(b) of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 1996.. and in terms of Notification No. 52/2003-Customs dated 31.3.2003 could be dealt leniently and mere mention in the Security Register could be considered a due compliance of the prescribed conditions. 20. I have examined the Scheme of Grant of Exemption and Statutory requirement of procedures and due accountal in the prescribed records within two days of receipt within the factory. On the basis of facts prescribed above, it clearly came out that the goods were nor recorded in the prescribed register even after the gap of 7 days. While going through the Rule 7(a) of Customs (Import of goods at concessional Rate) Rule, 1996 it is clearly stipulated that manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96 are extracted as below: [7. Manufacturer to give information regarding receipt of the imported goods and maintain records. The manufacturer, obtaining benefit in these rules, shall, - (a) give information of the receipt of the imported goods in his factory, within two days (excluding holidays, if any) of such receipt, to the Superintendent of Central Excise having jurisdiction over his factory; and (b) maintain a simple account indicating the quantity and value of goods imported, the quantity of imported goods consumed for the intended purpose, and the quantity remaining in stock, bill of entry wise and shall produce the said account as and when required by the (Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise.] 24. In view of the above discussion, it is evident that manufacturer M/s Winsom Spinners have failed to fulfil the mandatory requirements of the Rules and Notification, and no liberal interpretation can be given, once the value of the goods i.e. 298770 Kgs of Greek Raw Cotton valued at ₹ 1,82,98,751/- involving duty of ₹ 21,05,409/- allowed to be imported duty free reposing a great faith that the goods impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. A Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave - (1996) 2 SCR 253, held that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption. 23. Of course, some of the provisions of an exemption notification may be directory in nature and some are of mandatory in nature. A distinction between provisions of statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. In Tata Iron and Steel Co. Ltd. (supra), this Court held that the principles as regard construction of an exemption notification are no longer res integra; whereas the eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the substance or essence of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EPZ/STP/ETHP/SEZ except for those in textile and chemical sector would be issued by the jurisdictional Superintendent of Customs of Central Excise. 2. Representations has been received from the textile units and units in Chemicals Sector that they are facing difficulties in getting procurement certificates and CT-3 from the jurisdictional Asstt. Commissioner /Dy. Commissioner. It has been pointed out that the representatives of the units have to travel long distances to obtain these certificates. In the process, a lot of time is wasted, resulting in delay in clearance of import consignments and procurement of indigenous goods. 3. In other to mitigate the difficulties being faced by the EOUs in textiles and chemical sector, it has been decided that henceforth, the procurement certificates for clearance of import consignments would be issued to the EOUs and units in EPZ/SEZ in textile and chemical sector by Superintendent of Customs/Central Excise Further, CT-3 certificate to EOUs in textile and chemical sector would also be issued by the jurisdictiona Range Officer instead of the Asstt. Commissioner/Deputy Commissioner. However, the procurement certificate and CT-3 may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were found in factory only and attempt to remove goods was not brought on record, penalty of ₹ 5.50 lakhs (Rupees five lakhs and fifty thousand) will be sufficient under the provision of rule 25 of Central Excise Rules 2002. 27. Order-in-Original is partially modified as above. ORDER R.K. Singh. Member (Technical) The following Difference of Opinion has been referred to me:- Whether non-accountal in statutory records but accountal in gate register and Form IV, etc. could be considered as due compliance for accountal of duty free receipts of goods and not liable to imposition of redemption fine and penalty as held by Member (Judicial). Or Whether non-accountal in statutory records but accountal in gate register is not to be considered as due accountal of duty free receipt of goods and thus liable to imposition of redemption fine and penalty as held by Member (Technical). 2. Heard ld. Advocate for the appellant. 3. The Difference of Opinion has arisen in the context of the following facts of the case. 4. The appellant (an EOU) has imported 2,98,770 kgs. of greek raw cotton on the basis of Annexure A issued by the Superintenden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the impugned goods were not entered in the raw-material register and thus the allegation is sustainable. 7. I have considered the contentions of both sides. I find that the impugned goods were cleared duty free under Notification No.52/2003-Cus, dated 31.03.2003. Perusal of the said Notification makes it absolutely clear that the said Notification does not prescribe for the observance of the said Rules. Incidentally, whenever the said Rules are required to be followed, the Notification makes a clear mention to that effect. In any case, in view of Rule 2(1A) of the said Rules and in view of the fact that Notification No.52/2003-Cus does not prescribe for the observance of the said Rules, the appellant was not required to follow the said Rules and therefore the question of the appellant violating Rule 7(b) thereof does not arise. As the entire Show Cause Notice is predicated upon the appellant having violated the said Rule 7(b), jurisprudentially Show Cause Notice is not sustainable and the lower authorities have travelled somewhat beyond the Show Cause Notice by involving condition 3(b) of Notification No.52/2003-Cus, which is not permitted for them to do. 8. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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