Judgment:
1. This appeal arises from Order-in-OriginalNo.22/2001-CAU dated 16.3.2001 passed by Chief Commissioner of Customs, Chennai. The appellants were functioning under EPCG Scheme and it was alleged that they had not complied with the terms of the said scheme in exporting the final product Maleic anhydride manufactured by them in terms of the scheme. It was alleged that they had cleared portion of the goods by exporting under DEEC Scheme which was not mentioned in any of the shipping bills that the exports were made under export obligation under EPCG Scheme. The second allegation against the appellants are that on detailed investigation and scrutiny it was found that the appellant had paid to the supplier of the machinery technical know-how fees which had not been added to the assessable value. On this two points show cause notice was issued. However as pointed out by the consultant that the show cause notice does not refer to Section 28 of the Act but refers only to Section 111(m) and 111 (o) of the Customs Act. However the Chief Commissioner has proceeded to order for confirming of demands in terms of Section 28 of the Customs Act for adding the know-how/basic engineering fees in the assessable value in terms of proviso to rules of Customs Valuation (Determination of Price of Imported Goods). There is a imposition of penalty under Section 114(A) of the like sum of duty computed to Rs. 3,09,37,018. The benefit of exemption Notification No.160/92 dated 20.4.92 has been denied and have confirmed duty demand of Rs. 4,36,37,340 alongwith 24% interest. The goods which were imported under EPCG licence has been ordered for confiscation under Section 111 (o) and Section 111(m) of the Customs Act. However, the goods have been allowed to be redeemed on payment of fine of Rs. 25.00 lakhs under Section 125 of the Act and a personal penalty of Rs. 5.00 lakhs has been imposed under Section 112(a) of the Customs Act.
2. The appellants have raised the following grounds against the impugned order: (i) That Section 28 of the Customs Act was not invoked and, therefore, demands cannot be confirmed under the said Section by invoking larger period.
(ii) That appellants were functioning in both EPCG Scheme and DEEC Scheme and that they had cleared portion of the export obligation by exporting the final product to M/s. Lurgi and they are required to compute for the same.
(iii) They also contend that in respect of technical know-how fee it was due to bona fide belief it was not declared and they contend that in any event the service charges are post-operative charges and they are not required to be added in the assessable value to an extent of DM16.00 lakhs. In this regard, they relied on the following judgment:Tata Iron and Steel Co. Ltd. v. CCE & CC, Bhubaneshwar, 2000 (68) ECC 367 (SC) : 2000 (116) ELT 422 (SC) 3. It is their grievance that all the points and grounds have not been considered by the Chief Commissioner including the judgment cited and, therefore, the matter has to go back for re-determination. They further pointed out that mandatory penalty under Section 114A is not imposable as the said Section came into force on 28.9.96 while the import had taken place during August 1992. In this regard the following judgment had been relied: a. CCE v. Elgi Equipments, 2001 (74) ECC 284 (SC) : 2000 (128) ELT 52 (SC)Universal Electrodes Pvt. Ltd. v. CCE, 4. They also submitted that the interest is no liable to be charged for the reasons that the company has been declared as sick unit by DGFT and they are not presently functioning. Consultant submits that the bank guarantee for Rs. 3.5 crores was also executed to DGFT to given assurance for export obligation which is required to be off set when demands are made. He submits that the demands have not been properly computed and therefore he seeks for remand of the matter. It is his further submission that there is a Notification No. 59/87-Cus dated 1.3.87, as amended by Notification No. 151/92-Cus. Dated 26.3.92 which gives concessional rate of duty on the imported machinery. It is his further submission that the department has not given the benefit of export notification then the customs notification could be given effective and duty liability has to be worked out in terms of the said notification. It is his submission that the plea for benefit has to be considered afresh and duty computation is not correct.
5. SDR submits that notwithstanding Section 28 has not been invoked by the Commissioner and the goods are liable for confiscation for non-fulfilment of the notification. She relies on the judgment rendered by the Apex Court in the case of CC (Import), Mumbai v. Jagdish Cancer & Research Centre, 2001 (77) ECC 12(SC) : 2001 (132) ELT 257(SC) wherein the show cause notice for confiscation and for imposition of fine was upheld and it was held that demand of duty can be confirmed under Section 125 of the Customs Act when the goods have become confiscable for non-fulfilment of the terms of the notification and the party is required to pay duty while clearing the goods. She also refers to Section 125 of the Customs Act wherein goods can be confiscated for non-fulfilment of the export obligation and for recovery of duty thereon.
6. Consultant submits that even in terms of Apex Court judgment duty has to be recovered from the seized machines and not from the party as Section 28 has not been invoked.
7. SDR further proceeded to argue and files a report received from the Commissionerate with regard to the points raised. She submits that as in the nature of the case she has no objection for remand of the matter for re-computation of duty and she feels that Section 114A is not invocable in view of the judgment cited. The matter has to be re-looked in the light of the submissions made and by the complaints with regard to non-inclusion of service charges.
8. On a careful consideration we notice that the Commissioner has proceeded to invoke Section 111(o) and 111(m) for confiscation of goods on the allegation of non-fulfilment of export obligation. There is no reference of Section 28 raising demands for the alleged mis-declaration in the show cause notice. The allegation that they had suppressed and not given information on technical know-how is alleged. The plea raised by the consultant has to be gone into afresh as to whether the demands can be confirmed under Section 28 irrespective of its invocation in the show cause notice. SDR pointed out to the Apex Court judgment for confirming of demands including duty under Sub-Section (2) of Section 125. This has to be re-examined after hearing the appellant. We have also gone through the records and notice that the appellant claim for non-inclusion of service charges in the light of the judgment as noted above has not been considered. Their contention is that the service charge are post-operative charges which has been included in the assessable value which according to the consultant is not required to be included. This aspect of the matter is required to be examined afresh. Further invocation of Section 114A and imposition of penalty is not justified. The import had taken place much earlier to the date of promulgation of the Section. In terms of the citations referred to by the consultant the matter is required to be re-adjudicated on this point. On the aspect of concessional rate of duty on the imported machinery under EPCG Scheme and DEEC Scheme they are entitled to the benefit of Notification No. 59/87-Cus dated 1.3.87, as amended by Notification No. 151 /92-Cus. dated 26.3.92. The points raised that the concessions are available to the import of machines are in terms of notification and is required to be re-examined as there is no finding on this aspect. Consultant also pointed out that bank guarantee for Rs. 3.5 crores is still pending with the DGFT and their pleas are required to be re-considered. We hold that the appellants shall be granted with effective hearing and be heard on all the points raised by them and re-determine the issue by passing the order expeditiously. Thus, the impugned order is set aside and matter remanded back to the original authority for de novo consideration.