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TMI Blog2008 (9) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... a-5.1 of Foreign Trade Policy 2002-03 and the imports were governed by the exemption Notification No. 55/2003 dt. 1-4-2003. (b) A Public Notice No. 42(RE-2003)/2002-2007 dt. 28-1-2004 was issued by DGFT enabling "import of spares including Refractories, Catalysts and Consumables" under EPCG licences. (c) The appellant-company filed their applications to DGFT and got 5 EPCG licences under 5% EPCG Scheme issued to them. (d) The appellant-company imported furnace oil and filed 7 bills of entries for a total quantity of 8000 MTs claiming the said furnace oil as consumables covered under EPCG scheme in pursuance of the licences issued to them and cleared the same paying concessional customs duty availing the benefit of Notification No. 55/2003. The imported fuel was used for generating electricity. (e) On the basis of intelligence that the appellant-company has wrongly availed the exemption for fuel as consumables, the officers of DGCEI commenced investigations on 9-2-2005. The appellant-company deposited a sum of Rs. 2.11 crores (approx.) in March, 2005 with the Kandla Customs House under protest during the course of investigation. (f) While investigations by the DGCEI author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and that the licences have been issued under the EPCG scheme 5% basis and the Notification No. 55/2003 governing the import was also mentioned. (e) The letter of Jt. DGFT dt. 8-4-2005 addressed to the DGCEI authorities also holds that EPCG licences have been issued on the basis of the certificate from the independent Chartered Engineer certifying the furnace oil as consumable. (f) Therefore, the allegation and finding that the appellant-company has furnished wrong/incorrect information and mis-lead the DGFT authorities is incorrect. (g) At the time of import, to the customs authorities, valid licences have been produced; the imported goods have been correctly declared and the goods have been assessed and duty paid. Under these circumstances, there is no misdeclaration whatsoever to the customs authorities. (h) Once a licence is issued unless the licence is cancelled by the DGFT authorities, the customs authorities are bound to follow the terms of the licence and to grant the benefit of the Notification No. 55/2003. (i) He relies on the following judgments :- (a) M/s. Indian Hotel Co. Ltd. v. CCE, Mumbai [2006 (204) E.L.T. 439 (Tri.-Mum.)] (b) CCE, Jalandhar v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities have been submitted for our perusal, after the hearing was over.) (f) The notification issued under the Customs Act has to be strictly interpreted. In this case, the condition has been violated and therefore demand of the duty is in order. 6. We have carefully considered the submissions from both sides. Para 5.1 governing EPCG scheme, the relevant portion of Notification No. 55/2003 dt. 1-4-2003 and the relevant portion of Public Notice No. 42 dt. 28-1-2004 are reproduced. Para 5.1 governing EPCG scheme: "5.1. The scheme allows import of new capital goods including CKD/SKD thereof as well as computer software systems at 5% customs duty subject to an export obligation equivalent to 5 times CIF value of capital goods to be fulfilled over a period of 8 years reckoned from the date of issuance of licence over a period of 8 years." Notification No. 55/2003 dt. 1-4-2003 : "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table annexed hereto from so much of the duty of Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate from the independent chartered engineer on the performa annexed to appendix 9 certifying the end use of capital goods sought for import for its use at pre-production, production or post-production stage for the product undertaken for export obligation. For the cases wherein duty saved amount is above Rs. 50 crores, the applicant may apply to DGFT Headquarters directly with a copy endorsed to the concerned RLA. In such cases, based on the recommendations of Head quarters EPCG Committee/approval of competent authority the concerned RLAs will issue the EPCG licence accordingly. 5.3.1 The Licensing Authority, after issue of EPCG licence on the basis of certificate from the Independent Chartered Engineer (CEC) furnished by applicant shall forward a copy of licence along with copy of CEC to concerned jurisdictional Central Excise Authority. 5.3.2 The licence holder (whether registered with Central Excise authority or not) shall produce to the concerned licensing authority a certificate from the jurisdictional Central Excise authority confirming installation of capital goods at the factory of the licence holder or his supporting manufacture(s)/vendor-(s) within six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. 7.3 No amendment to Customs Notification No. 53/2003 was carried out, during the relevant period, consequent to issue of Public Notice No. 42 dt. 28-1-2004. SI. No. 4 of the table to the customs notification, refers to "spare parts of goods at SI. No. 1, 2, 3 as actually imported and required for maintenance of capital goods so imported, assembled or manufactured". This does not refer to fuel meant for running the machinery and the wordings cannot be construed to convey that the fuel is included in the said term. Similarly SI. No. 5 of the table to the customs notification refers to spares for the existing plant and machinery of the licence holder. This term also cannot be construed as including fuel. 7.4 The Id. Jt. CDR pointed out that the Notification No. 53/2003 has subsequently been amended specifically permitting import of fuel. The period involved in the present case is prior to that amendment. 7.5 The import under EPCG scheme has two aspects. One is the licensing angle and the other is the duty exemption. The powers and responsibilities of by the customs authorities and DGFT authorities run parallel. Action to suspend a licence or cancel a licence or actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown that the appellant has preferred any refund claim of the amount paid by them. 7.8 The certificate given by Shri Deepak C. Shah, the Chartered Engineer is in the nature of an opinion. This cannot lead to any presumption of mala fide on the part of the certifying authority especially in the absence of any evidence to corroborate such intention on his part. The certificate as well as the application clearly indicated that the import of the fuel is for used to produce electric power and therefore, there is no warrant for imposition of penalty on Shri Deepak C. Shah as well as on the appellant company. 8. In the light of the above, appeal No. C/13/2007 by M/s. Shah Alloys Ltd. is partly allowed by setting aside the penalty. The appeal of Shri Deepak C. Shah is allowed by setting aside the penalty imposed upon him. (Pronounced in Court on................. ) Sd/- (M. Veeraiyan) Member (Technical) Dated 15-2-08 9. [Conta per : Archana Wadhwa, Member (J)]. - I have gone through the order proposed by Ld. Member (Technical) and find that the issue of limitation, which was strongly contested before us by the ld. Advocate appearing for the appellants does not stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was also fully disclosed. The said certificate clearly mentions the product to be imported as 'Furnace Oil' and use for generation of 'electric power' from captive power plant. As such, it is seen that nothing has been suppressed by the appellant from the DGFT authorities. The ld. Commissioner has invoked the longer period of limitation on the ground that the onus of technical certification was shifted to the Chartered Engineer based upon which the licencing authority had to issue the EPCG licences. As such, he has observed that for a major departure, a system was put in place, where faith was reposed in trade for the purpose of issuing EPCG licences and in the present case such licences were issued on the basis of certificate by the independent Chartered Engineer. Inasmuch as the certificate of Chartered Engineer is not in accordance with the Notification No. 55/2003-Cus., he has held the appellant to be guilty of suppression, so as to invoke the longer period. 12. I am of the view that production of certificate is only a pre-requisite condition for issuance of licence by the DGFT authorities and does not absolve them from their responsibility to check and verify the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f my above discussion, I set aside the impugned order on the ground of limitation itself. As the appeals are being allowed on time-bar, the merits of the case and other pleas raised by the appellant are not being discussed. Sd/- (Archana Wadhwa) Member (Judicial) Dated 13-3-08 DIFFERENCE OF OPINION Whether the order proposed by ld. Member (Technical) confirming demand of duty, but setting aside penalties on both the appellants is required to be followed or the appeals are to be allowed in toto, as held by Member (Judicial)? Sd/- Sd/- (M. Veeraiyan) (Archana Wadhwa) Member (Technical) Member (Judicial) Dated 20-3-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. The appellant filed reply contending, inter a that the show cause notices were time On 30-11-2005 a fresh common show cause notice was issued invoking proviso to sub-section (1) of Section 28 under which - in cases of non-levy or short levy etc. of customs duty by reason of collusion or wilful mis-statement or suppression of facts, notice can be issued within a period of five years as against the normal period of one year and six months as the case may be. The appellant contested the show cause notice contending, inter alia, that the condition precedent for invoking the larger period of limitation was not satisfied and, therefore, the proviso to Section 28(1) could not be invoked and as such, show cause notice should be dropped being time-barred. The Commissioner of Customs by the order under appeal rejecting the case of the appellant confirmed the duty demand of Rs. 2,11,47,947/- as being short-paid differential duty along with interest and appropriated the amount already paid by the appellant, as stated above. He also imposed penalty of equal amount on the appellant and penalty of Rs. 10,000/- on the Chartered Engineer, Shri Deepak C. Shah, on whose certificates licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant was not being discussed. 21. Shri M.J. Thakore appearing for the appellant submitted that both Member (Judicial) and Member (Technical) set aside the penalty holding that there was no suppression or mala fide on the part of appellant; the only point of difference is whether the duty demand is fit to be confirmed or dropped as being time-barred. Shri Thakore submitted that the learned Member (Technical) upheld confirmation of duty demand on the ground that there was no corresponding Customs Notification in accordance with the amended Trade Policy, but he did not go into the question of time-bar, that is, applicability of proviso to sub-section (1) of Section 28 of the Customs Act. Counsel submitted that there is no express finding in the order of the learned Member (Technical) on the point of limitation unlike the order of learned Member (Judicial), but by upholding the demand, on merit, the learned Member (Technical) impliedly rejected the plea of limitation, and thus the point of difference is whether the impugned duty demand is time- barred as held by learned Member (Judicial) or is not time-barred as impliedly held by learned Member (Technical). Counsel laid e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /03-Cus. and, therefore, no licence could be obtained for import of the goods, they applied for licence. The submission is totally misplaced. In the facts of the case, as indicated above, there does not appear to be any misdeclaration or misstatement and suppression of facts. Even if it be assumed that there was suppression etc. it was before the DGFT. That, in my opinion, would not be relevant to invoke the larger period under proviso to Section 28(1) of the Act, for, misdeclaration, suppression of facts etc., if any, must be before the Customs authorities. Under Section 46 of the Customs Act, the importer of any goods is required to submit a bill of entry to the proper officer, meaning thereby, an officer of the Customs who is assigned the functions of proper officer by the Board or the Commissioner of Customs. In the bill of entry, he is required to make relevant entries of the goods imported for home consumption or ware-housing in the prescribed form. Proviso to Section 28(1) refers to misstatement or suppression of facts etc. by the importer or his agent or employee at the time of import. The Customs Act nor any other law requires the importer to make any declaration of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on same facts and for the same cause of action, especially when the facts are known to the Department. As stated above, the show cause notices issued earlier were not withdrawn when the fresh show cause notice was issued; they were simply dropped by the same impugned order while confirming the second show cause notice. 27. Section 28 lays down that when any duty has not been levied or has been short levied or erroneously refunded, or when any interest payable has not been paid etc., the proper Officer may in the case of any import by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; or in any other case, within six months from the relevant date, serve notice on the person chargeable with the duty. In terms of proviso, where duty has not been levied or has been short levied etc. by reason of collusion or any wilful misstatement or suppression of facts by the importer/exporter or his agent or employee, the notice can be served within five years from the relevant date. The relevant date has been defined in Section 28(3) to mean, in case of non-levy of duty, the date on which the goods are c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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