M/S. Artek Organic Industries Ltd vs Commissioner Of Customs, Mumbai

[Arising out of Order-in-Appeal No. 483/2006/MCH/AC/EPCG/05 dtd. 10/10/2006 passed by the Commissioner of Customs (Appeals), Mumbai-I]

For approval and signature:

Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

M/s. Artek Organic Industries Ltd. : Appellants

VS

Commissioner of Customs, Mumbai. : Respondent

Appearance

None for the Appellants Shri M.K. Sarangi, Dy. Commissioner (A.R.) for the Respondent

CORAM:

Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 14/8/2015 Date of decision /2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in-Appeal No. 483/2006/MCH/AC/EPCG/05 dated 10/10/2006 passed by the Commissioner of Customs (Appeals), Mumbai-I wherein Ld. Commissioner (Appeals) upheld the Order-in-Original No. S/10-EPCG-01/2005 dated 30/11/2005 passed by Asstt. Commissioner of Customs (EP), Mumbai and rejected the appeal filed by the appellant.

2. The fact of the case is that the appellant M/s. Artek Organic Industries Ltd. was issued a EPCG License No. 03500235 dated 6/9/1996 by DGFT under exim Policy 1992-97 for import of capital goods valuing Rs. 2,49,62,610/- at concessional rate of duty against prescribed export obligation of Rs. 9,98,50,440/- within stipulated period of five years. But during this period of five years appellant though imported the capital goods worth Rs. 2,57,51,728/- but failed to fulfill the condition laid down. Hence the appellant were issued demand notice dated 12/1/1999 for a demand of Rs. 5,84,564/- + interest and another notice for demand of Rs. 58,45,643/- + interest @ 24% on 6/1/2003 for the amount of duty saved. Again reminder letter dated 17/7/2003 was also issued to the appellants. Failure on the part of the appellant to reply the Show Cause notice, the bank guarantee submitted for the duty saved amount of Rs. 58,48,000/- was encased on 14/2/2005 vide Cash No. 267 towards duty saved. The Original Authority in the impugned order had confirmed the demand of duty foregone with interest and encased the bank guarantee and confirmed the demand of Rs. 1,17,97,068/- and interest @ 24%. Aggrieved by this order, appellant filed appeal before the Commissioner (Appeals) who vide impugned order rejected appeal, therefore appellant is before us.

3. The appellant company went into liquidation and the Honble High court has appointed Official Liquidator who appeared before this bench and submitted status report regarding the assets of the appellant company. Shri Dwivedi Ld. Advocate appeared on behalf of the Director Shri Rajendra Khandelwal, Managing Director of the appellant company.

3.1 No argument on merit was made on behalf of the appellant.

4. On the other hand, Shri M.K. Sarangi, Ld. Dy. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.

5. We have considered the submissions and perused the record. We find that as regard the demand of Custom duty confirmed by the Original Authority and upheld by the First Appellate Authority is not under dispute for the reason that it is admitted fact that appellant imported capital goods under EPCG license, however failed to fulfill the export obligations. On going through the appeal memo, we find that the appellant made ground on technical issues as below:-

(a) Hearing fixed on 16/6/2006, 29/6/2006 and 10/8/2006; they have not received hearing intimation of 10/8/2006.

(b) The Customs Authority ought to have issued notice with the word forwarded on behalf of the President of India and in absence of the same the whole proceedings is null and void.

(c) In the Bill of Entry exemption was claimed under Notification No. 115/95 however notice indicated clearance of the goods under Exemption Notification 28/97 which is wrong.

(d) The interest was demanded @ 24% whereas the show cause notice indicates the interest @ 15%.

(e) Appeal is pending before the Addl. DGFT for extension of the export obligations period. Appellate authority ought to have waited till the proceedings of the DGFT are finalized.

(i) As regard the hearing intimation, we find that the hearing was earlier given on 16/6/2006, 29/6/2006 which were not availed by the appellant. And as regard non-receipt of intimation of hearing on 10/8/2006, it is bold submission by the appellant without any evidence. In this position, we do not find that there is any violation of principles of natural justice.

(ii) As regard the notice does not have words forwarded on behalf of the President of India. It is undisputed fact that the bank guarantee has been executed by the appellant to the President of India and in our considered view, it is not necessary that specific show cause notice indicating the words forwarded on behalf of the President of India is required to issue therefore the said ground is not tenable.

(iii) As regard Bill of Entry wherein exemption was claimed under Notification No. 115/95 however notice indicated clearance of the goods under Exemption Notification 28/97. We find that merely by mentioning wrong notification i.e 28/97 the appellant could not be exonerated from fulfilling the export obligations which has not been discharged by the appellant for which bond and bank guarantee has been executed. It is undisputed facts that export obligations as prescribed in the notification under which the Bill of Entry was filed has not been fulfilled.

(iv) We find that though the show cause notice indicates interest at the rate of 15%, demand of interest has been confirmed at the rate of 24%. We are of the view that interest has to be paid in accordance with the Section 28AA or 28AB of the Customs Act read with notification applicable on the relevant time. On going through the rate of interest at the relevant time, we find that in terms of Section 28AA or 28AB read with notification, the rate of interest on custom duty was varying from time to time. Therefore applied rate of 24% is not correct.

(v) As regard the contention of the appellant that their appeal for extension of period for export obligation is pending before the DGFT. Firstly the said proceeding has no bearings in the present case. Secondly, after lapse of long time the appellant could not produce any order by which period of export obligations has been extended. Moreover the fact is not under dispute that the appellant has failed to fulfill the export obligations and subsequently unit of the appellant was wound up and was not working therefore even though the period is extended the export obligation have never been fulfilled.

7. In view of the above undisputed position, we are of the considered view that demand confirmed, upheld and encased through bank guarantee is legal and proper and the same is maintained. As regard the interest, the Adjudicating Authority is directed to verify the rate of interest applicable during the period from the date of import till the appropriation of bank guarantee i.e. the date of recovery of custom duty and accordingly the interest should be re-quantified. The appeal is disposed of in above terms.

(Order pronounced in court on __________)

P.S. Pruthi Member (Technical) Ramesh Nair Member (Judicial)

saifi

6 C/38/07