M/S. Morteo Transfreight Reefer, ... vs Commissioner Of Central Excise, Raigad

(Arising out of Order-in-Appeal No. YDB/255/RGD/2010 dt. 20.5.2010 passed by the Commissioner (Appeals) Central Excise, Mumbai Zone-II)

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 : No 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?

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M/s. Morteo Transfreight Reefer, Container Ltd. : Appellant

VS

Commissioner of Central Excise, Raigad : Respondent

Appearance

Shri S.P. Mathew, Advocate for Appellant

Shri M.K. Msarangi, Joint Commissioner (A.R) for respondent

CORAM:

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

Date of hearing : 24/07/2015 Date of decision : 24/07/2015

ORDER NO.

Per : P.S. Pruthi

This is an appeal against the order of Commissioner (Appeals) upholding the adjudication order.

2. The case relates to import of goods by the appellant who are an 100% EOU. The goods were imported free of duty under Notification No. 13/81-Cus dt. 9.2.1981 under the EOU Scheme. Their EOU project did not take of and, therefore, the appellants sought to transfer the goods to another EOU in terms of the provisions of EXIM Policy. Permission was granted by the office of the Development Commissioner to the transferee M/s. Trans Freight Containers vide their letter dt. 14.5.1999 to purchase the capital goods imported by the appellant. The permission was granted subject to conditions attached. A request was made by the appellant to the Assistant Commissioner to accord them permission in terms of the above said letter of Development Commissioner. From the records it is clear that no action was taken on this letter and neither permission was allowed nor was it rejected. Thereafter a show cause notice dt. 1.5.2002 was issued demanding duty of Rs.24,75,807/- from the appellant in respect of the goods imported by them in 1995 and in 1996 for failure to observe the conditions of Notification No.13/81. It was also proposed to confiscate the goods under Section 111(o) of the Customs Act. Penalty was proposed under Section 112 of the Act. In adjudication proceedings, Additional Commissioner confirmed the demand of duty under proviso to Section 28(1) of the Act and appropriated the amount of Rs.13,25,000/- paid on 23.03.2002. In his Order he observed that liability to duty arises for violation of conditions of Notification No. 13/81. He did not agree to confiscation of goods under Section 111(o) but at the same time imposed penalty under Section 112. The appellant preferred an appeal before the Commissioner (Appeals) challenging the amount of duty demand. The claim is that relevant date for ascertaining rates of duty is the actual date of payment of duty i.e. 26.3.2002. Accordingly, the duty works out to Rs. 12.40,260/-. The Commissioner did not agree on this point. The second issue before the Commissioner was whether the penalty could be imposed under Section 112 when the goods were not held liable to confiscation under Section 111(o) of the Act. However Commissioner upheld confiscation when this point was not in appeal before him.

3. Heard both sides.

4. We find that the case has not been dealt with appropriately right from the time of issue of show cause notice for the following reasons:

(i) The computation of duty demand does not appear to be correct as the prevailing rates of duty have not been considered.

(ii) No finding has been given on the permission granted by the Development Commissioner allowing transfer of the capital goods from the appellant to the transferee.

(iii) The show cause notice demanded duty under proviso to Section 28(1) and the demand was clearly time barred Commissioner in his order, although referring to violation of Notification No. 13/81, does not mention that in terms of the Bond executed by 100% EOU there is no time limit for demand of duty. However he still proceeds to confirm the duty under Section 28(1) of the Act. Further, the Additional Commissioner while holding that the goods are not liable to confiscation under Section 111(o) proceeds to impose penalty under Section 112 of the Act.

(iv) The Commissioner (Appeals) passed an Order regarding confication when this was not a ground in the appeal memorandum before him.

5. For all the above reasons, we find that this is an appropriate case for remand on all issues except point (iv) above.

6. As regards point (iv) in para 4 above, that is the issue of penalty, we find that once the goods are held not liable to confiscation, the question of penalty does not arise under Section 112 of the Act. Accordingly, we set aside the penalty.

7. Penalty is set aside. The matter is remanded to the adjudicating authority for fresh consideration on other issues.

(Dictated in court)

(Ramesh Nair) Member (Judicial)

(P.S.Pruthi) Member (Technical)

SM.

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