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2003 (7) TMI 199

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..... Parthasarathy) challenge the Commissioner's Order No. 65/2001, dated 13-12-2001 passed in adjudication of show cause notice No. 11/99-DRI, dated 2-5-2000. 2.The impugned proceedings pertain to capital goods imported under 100% EOU Scheme from Singapore and cleared through Custom House, Tuticorin under two Bills of Entry for Warehousing. The two importers/100% EOUs are M/s. E.T.K. Softech (P) Ltd., Ranipet and M/s. O.R.J. Electronic Oxides Ltd., Pudukottai, both licensed under Section 58 of the Customs Act to operate as private warehouses for goods imported by them. 3.Bill of Entry No. 109, dated 5-11-98 was filed jointly by M/s. Sundaram Finance Ltd. (SFL, for short) and M/s. E.T.K. Softech (P) Ltd. (ETKSL, for short) for clearance of capital goods which were declared to have been imported from M/s. International Product and Technology Inc. USA (IPTE, for short), and to be capable of manufacturing Iron Oxide (Electronic Grade), with a production capacity of 5,000 MTs per annum. The goods were imported, under 100% EOU Scheme, on the strength of permission given by the Development Commissioner, MEPZ, Chennai. They were one Venturi Scrubber, one Wet Oxidation Equipment (Absorber .....

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..... -97 through Chennai port. Statements of S/Shri S. Kannan, R. Raghavan, N.M. Parthasarathy and some others were recorded under Section 108 of the Customs Act in respect of the transactions relating to Bill of Entry No. 109. Similarly, statements of S/Shri V. Sundaram (Director of ORJEL), V.D. Loganathan (Sr. Manager, Bank of Madurai Ltd.), ORJ Jaffar Batcha (Managing Director of ORJEL), N.M. Parthasarathy and some others were recorded in respect of the transactions with regard to Bill of Entry No. 346. The capital goods installed in the premises of M/s. ETKSL and M/s. ORJEL were examined by Professor A.K. Lahiri, Deptt. of Metallurgy, Indian Institute of Science, Bangalore, who reported that the equipments were not capable of producing Electronic Grade Iron Oxide; that, in both Venturi Scrubber and Absorber, the alloy used therein had rusted; that the design of the equipments was not in conformity with the specifications furnished by the importer/supplier and that the imported machinery, lying idle without operation, could not take online support. Investigations further disclosed that it was Shri N.M. Parthasarathy who issued a bogus certificate of origin as though the imported good .....

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..... iction to adjudicate the case. According to them, the authority to adjudicate the show cause notice (No. 14/99) was with the Commissioner of Central Excise, Chennai-III within whose jurisdiction the EOU of M/s. ETKSL was situate. A similar objection had been raised on behalf of M/s. Bank of Madurai Ltd. who took the stand that only the Commissioner of Central Excise, Trichy within whose jurisdiction the EOU of M/s. ORJEL was situate was competent to adjudicate the show cause notice (No. 11/99). The jurisdictional question has been raised as a ground in some of the present appeals also. 8.By consent of both the sides, we took up the appeals for hearing on the jurisdictional issue. The chief arguments on the issue were made by Shri Lakshmikumaran, Counsel for M/s. SFL, who relied on the Tribunal's Larger Bench decision in Ferro Alloys Corpn. Ltd. v. CC (Appeals), Bhubaneswar - 1995 (77) E.L.T. 310 (Tribunal). Shri Sundar Rajan, Counsel for M/s. ICICI Bank Ltd., also argued likewise. Ld. Advocates pointed out that the EOUs had executed the requisite bonds before the respective Asstt. Commissioners in charge of the Central Excise Divisions concerned viz. Ranipet in the case of M/s. E .....

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..... 0 to 2562/94 [Madras Electro Castings Pvt. Ltd. Ors. v. Commissioner of Customs, Madras]. Counsel for M/s. ETKSL filed a counter to the written submissions filed by the SDR. In this counter, the Counsel submitted that the Revenue had not questioned the applicability of the Larger Bench decision in Ferro Alloys Corporation (supra) to the instant case and that none of the judgments cited in the written submissions was applicable to the case. Counsel for M/s. ICICI Bank Ltd. also filed a counter to the written submissions of the SDR. In this counter, it was only submitted that no case on facts had been made out against them. Copies of the submissions filed by the advocates were issued to the SDR and his rejoinder thereto was taken on record. In the rejoinder, which was received in the form of written submissions dated 27-9-2002, ld. SDR cited the Tribunal's order in Rakesh Kumar Bhagat v. Commissioner of Customs - 2002 (144) E.L.T. 468 and claimed that the said order, wherein the Larger Bench decision in Ferro Alloys Corporation (supra) had been taken note of, strengthened the department's stance in the present case. Further, reliance was placed on the Tribunal's decision in Ram N .....

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..... s may permit an importer to execute a General Bond binding himself in such amount as the officer may approve to satisfy demands of duties etc. on the imported goods and discharge penalties incurred for any violation of the Act/Rules/Regulations in respect of the goods. Condition No. 6 of the CustomPs Notification (13/81 or 53/97) requires the importer/EOU to execute a bond in such form and for such sum and with such security or surety as may be prescribed by the Asstt./Dy. Commissioner of Customs, binding himself to fulfil the export obligation and other conditions stipulated in the notification as also to meet any demand of duty leviable on the imported goods in the event of the goods not being shown to the satisfaction of the Asstt./Dy. Commissioner of Customs to have been used in the manufacture of articles for exportation out of India. 11.The bonds executed by the importers (100% EOUs) in this case purported to serve the purposes of Section 65 of the Act, Section 59(2) of the Act and Condition No. 6 of the Customs Notification. These were taken on record by the Asstt. Commissioners of Central Excise having jurisdiction over the EOUs. This was done so for minimizing inconvenie .....

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..... n to M/s. ETKSL and M/s. ORJEL to import capital goods. But the goods imported by these EOUs were found to be incapable of producing Iron Oxide (Electronic Grade). Thus misdeclaration and violation of the basic condition of import were found against both the importers, which attracted enforcement of the bond executed under Section 59 of the Customs Act. Incidentally, the conditions of the Customs Notification were also found to have been violated. This violation warranted enforcement of the bond executed under Condition No. 6 of the Notification. These events in the first instance happened within the jurisdiction of the Asstt./Dy. Commissioner of Customs at Tuticorin port and gave rise to a cause of action for the department to invoke the bonds. Hence the show cause notices which could be adjudicated upon by the Commissioner of Customs, Trichy. In any case the Central Government's Notification No. 27/97-Cus. (N.T.), dated 7-7-97 (as amended), which we have noted from the Tribunal's judgment in Rakesh Kumar Bhagat cited by the SDR, clinched the jurisdictional position. That Notification, which was issued under Section 4(1) of the Customs Act, appointed the Commissioner of Customs, T .....

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..... authorities in Orissa had jurisdiction to initiate such proceedings when the goods had already been assessed to duty by the Customs authorities at the port of import (Calcutta) and, secondly, whether Sodium peroxide was covered, under the notification, as a consumable used for the manufacture of 'Charge Chrome'. The Bench answered the first question in the affirmative, holding that the Asstt. Collector exercising control over the EOU had jurisdiction to demand the duty leviable on such goods as were not proved to his satisfaction as having been used in the manufacture of the export product. The Bench, however, noted that the view taken by it on the jurisdictional question was contrary to the view taken by a coordinate Bench earlier in the case of Collector of Central Excise Customs v. Ferro Alloys Corporation Ltd. [1992 (61) E.L.T. 689]. The jurisdictional issue was, therefore, referred to a Larger Bench. The Larger Bench endorsed the view taken by the referring Bench. Nevertheless, the decision in Ferro Alloys Corporation cannot be applied in the instant case so as to oust the jurisdiction of the Commissioner of Customs, Trichy as it cannot change the jurisdiction subsequently c .....

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