9911796707
TMI Blog2008 (6) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2006 (i) Rs. 25,57,889.56 on the goods which were present in the EHTP bonded premises as per table 1 in para 5 of O-I-O (ii) Rs. 52,84, 725.16 being Customs Duty on the goods which were not found in the EHTP premises (iii) Rs. 2,73,052/-Central Excise Duty on goods locally procured duty free by M/s. HTSL but locally found to be diverted out of EHTP premises Rs. 18,00,000/-on the goods which were found physically present in the EHTP premises, but which were used for carrying out activity not permitted in the licence (i) Penalty of Rs. 50,00,000/- on HTSL Under Section 112 (ii) Rs.1,00,000/- on Shri Nandakumar under Section 112 (iii) Penalty of Rs. 5,00,000/- on Shri V.G.S. Narayanan under Section112 2. 27/2006 dated 28-12-2006 (i) Rs. 2,09,298/- on the goods which were diverted from STP Unit II to STP Unit I without following the IUT procedure under Section 72 of the Customs Act (ii) Rs. 4,60,632/- on the 550 mesh chairs stored in a non-bonded premises under Section 72 of the Customs Act (iii) Rs. 5,69,811/- on the goods which were belonging to STP Unit I but stored in the Multi Level Car Parking, a non-bonded area (iv) Rs. 6,49,468/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder-in-Original 26/2006, the main allegation against the appellant is that they used the capital goods procured free of duty for activities other than permitted in the notification 52/2003-Cus. dated 31-3-2003. Another allegation is that the appellants diverted capital goods out of the EHTP Division. 8. The learned Departmental Representative took us through the exemption notifications and stated that the capital goods were imported for the purposes of manufacture and export of electronic hardware. However, when the Departmental Officers visited the unit, the said goods were used for Business Process Outsourcing (BPO). In terms of the LOP and notification, this item was not a specified activity. Since the goods were used for a different purpose, the appellants are liable for duty. Further, when the officers visited the unit, some of the goods procured duty free were not available in the EHTP premises of the appellant. In view of these facts, it was argued that the demand of duty is legal and proper. Hence, she requested the Bench to uphold the impugned orders. 9. On the other hand, Shri Shiva Dass, the learned Advocate stated that: (I) Initially, the appellants applied for perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant. While taking such a decision, the Director took into account the following facts: (i) The delay was inadvertent and not deliberate. (ii) Due to space constraint in STP licence and expansion proposals. (iii) STP unit and EHTP unit are of single parent/entity. (iv) Facility was used for export of software activity and has brought FE inflow of Rs. 10.93 crs. (II) In any case, after the visit of the Customs Officer, the irregularities of using the capital goods imported for EHTP unit for STP unit was noticed. Some of the capital goods in the EHTP unit were not available there. Moreover, some of the goods belonging to STP were found in the EHTP unit. In view of this, Show Cause Notice dated 26-10-2005 was issued to the appellants demanding duties of Rs. 25,58,418/- and Rs. 66,15,195/-. The appellant replied to the Show Cause Notice urging the following points. (a) The delay in seeking permission vas not deliberate and utilization of a portion of EHTP premises for STP activity was only due to space constraints in the adjoining STP facility. Further, they pointed out to the condonation of the delay in seeking permission by the Director STPI in the order dated 30-10-2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Licensing Authority and they are not permitted to take a view that STP activity was not permitted to be undertaken in the EHTP premises when the Licensing Authority has regularized the said activity for the same period. The following decisions were relied on: (i) Ginni International Ltd. v. CC - 2002 (139) E.L.T. 172 (Tri.-Del.) (ii) CCE, Hyderabad v. Sanghi Spinners (I) Ltd. - 2007 (209) E.L.T. 43 (d) It was argued that the Commissioner's finding at Para 64 to 72 of the impugned order that since the Customs Licence had not been amended is not tenable since once the Licensing Authority had permitted the activity, the endorsement of the licence is more procedural. (e) It was submitted that development of software (Design) was one of the activities which was specifically permitted by the Letter of Permission granted by STPI authorities as well as by the In-bond Manufacturing Sanction Order. In any case, the appellants had exported two consignments of electronic hardware from the EHTP premises. Hence, the duty free goods have been put to the specified use by the appellants. Consequently the conditions of Notification 52/2003-Cus. and 22/2003-CE both dated 31-3-2003 have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods are being used in other bonded locations for carrying out export activity, no prejudice is caused to Revenue. For executing the fresh project, more space was needed and the space available in the EHTP premises had to be used. In view of this, certain projects were moved out of STP units to EHTP premises along with the computer systems. There was no mala fide in the movement of computer system. As the goods are lying in the bonded warehouse of the appellant, there can be no demand of duty on these goods until and unless these capital goods are either cleared for home consumption or removed in contravention of Section 71 of the Act. In fact, the Commissioner himself in Para 41 of the order, has accepted the ratio that demands cannot be sustained if the goods are still lying in the warehouse in respect of demands of Rs. 1,46,78,536/- and Rs. 93,06,491/-. Having applied the ratio to some demands, the Commissioner cannot take a contra view in respect of other demands and consequently, the demands may not be sustainable. 11. With regard to the goods in Multi Level Car Parking and outside bonded premises, it was submitted that the common compound at 151 /1, Dorisanatalya, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is that the department has come to the conclusion that in respect of the above invoices, the total computers cleared is 166. According to for Gate Pass No. 3570, the PC cleared is one and 112 represent the various accessories. If that view is taken the number of PCs cleared will be only 55 which is 1+16+10+28=55. In fact, the appellant contended that they had already paid duty on 153 numbers of PCs, which is far in excess of the balance quantity of 55. Therefore, no duty can be demanded on these computers. It was stated that if the document based on which the allegation is made is to be ignored and the statement of the buyer is to be taken, then the documents have to be ignored totally and the basis for the statement has to be put forth. Between a statement and document, the latter has to be preferred as held by the following case laws: (i) Modern Denim Ltd. v. Commissioner of Central Excise -2005 (191) E.L.T. 1174 (Tri.-Mumbai) Affirmed by Supreme Court - 2006 (199) E.L.T. A181 (S.C.) (ii) Raj Petroleum Products v. Commissioner of Central Excise - 2005 (192) E.L.T. 806 (Tri.-Mumbai). 13. We have gone through the records of the case carefully. The main allegation is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty of Rs. 3.1 lakhs on the appellant for the delay in informing them and getting approval for their activity of Business Process Solution. While taking such a decision, the STPI Director considered the following facts: (i) The delay was inadvertent and not deliberate. (ii) Due to space constraint in STP licence and expansion proposals. (iii) STP unit and EHTP unit are of single parent/entity. (iv) Facility was used for export of software activity and has brought FE inflow of Rs. 10.93 crs. 15. The demand in order-in-original 26/2006 is on account of using the goods for a different purpose, which is other than what is given in the letter of permission by the STPI Director. Another charge is that some of the capital goods imported were not available in the EHTP premises. Another irregularity was, some of the STP goods were found in the EHTP premises. Huge Customs/Excise Duty on the goods imported/procured duty free have been demanded. The demand of duty on warehoused goods can be made under the following four circumstances, they are as follows: (a) Where any warehoused goods are removed from a warehouse in contravention of Section 71; (b) Where any warehoused goods have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the STPI authorities were an interested party. It is surprising that Show Cause Notice had been issued to STPI also. Proviso to Section 3 is reproduced below: "Provided that for taking out of capital goods from one unit to another unit in a special economic zone or to other export oriented undertaking or Electronic Hardware Technology Park (EHTP) unit or Software Technology Park (STP) unit, as the case may be, no permission of the said officer shall be essential and the capital goods may be taken outside the unit after giving intimation to the said officer". 17. The above proviso was inserted w.e.f. 20-5-2005 by amendment to Notification 50/2005-Cus., dated 20-5-2005. The point is that in terms of the above amendment, even permission of the officer for transfer of goods from EHTP Unit to STP Unit or vice versa has been dispensed with. We also take note of Circular No. 7/2006-Cus., dated 11-1-2006 which deals with simplified procedure for inter unit transfer of manufactured goods and also sharing of goods between EOU/STP Units belonging to the same owner. A certain amount of relaxation in procedure has been attempted by issue of amendment to the original notification and also issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
