1. The matter is before us for the 3rd time. The present impugned order has been passed pursuant to the order of remand [Order Nos. 9-10/2002-B dated 7-1-2002] by the Tribunal. But the contention of the appellant is that the order is not in terms of the remand instructions.
2. The appellant was an EOU and imported capital goods without payment of duty. Similarly, it procured indigenously some capital goods without payment of duty. It stopped production and the export by December 1992.
Thereupon, it was incumbent upon the appellant to discharge duty liability on the capital goods received without payment of duty, since it had not fulfilled the condition of the Letter of Permission (LOP).
The dispute in the present proceedings is in relation to the quantum of duty payable on capital goods, as well as whether duty of over Rs. 23 lakhs was required to be paid on consignment it had cleared from its factory under Bond on 23-12-92 for export.
3. The dispute with regard to the duty on capital goods is basically about valuation of the capital goods. The Customs authorities were all along valuing the goods at the original purchase price i.e. without allowing any depreciation. The appellant had all along been claiming depreciation and our remand order had directed that duty be determined after allowing depreciation. However, under the present impugned order also, duty demand has been made without allowing any depreciation. It is the contention of the learned Consultant for the appellant that denial of depreciation is contrary to the method of valuation to be followed in respect of old equipment, as well as the instructions of CBEC. Reliance is being placed, in particular, on Board Circular F. No.305/136/92-FTT, dated 5-6-92 as well as Circular No. 27/98-Cus. dated 21-4-98 and Circular No. 43/98-Cus. dated 26-6-98. The submission of the learned Consultant is that in terms of the circulars, depreciation up to 90% is allowable on straight line method. Learned SDR's objection to this is that depreciation is contemplated only in cases where the EOUs have obtained permission for de-bonding from the Board of Approval (BOP). The learned consultant has, however, submitted that since the LOP for functioning as an EOU has been cancelled, de-bonding has to follow, as non-duty paid capital goods cannot be used by units other than EOUs. It is admitted by both sides that if the depreciation is allowed on straight line method, the duty payable on the capital goods and is Rs. 7,19,291.75 for imported capital goods and Rs. 19,786/- for indigenously procured goods.
4. Depreciation is almost a rule of nature. Business accounting invariably provides for it. Thus, the appellant's claim for depreciation is in terms of common practice. Whether de-bonding of old equipment was in terms of permission or not, should not affect depreciation. Since LOP has been cancelled, the appellant cannot continue as EOU and has to de-bond the capital goods and pay customs duty. It is also noted that depreciation up to 90% on straight line method remains approved in the Circulars of the Board. In these circumstances, the duty payable by the appellant on the capital goods would be the amounts indicated above. Duty demand made in excess of the said amounts in the impugned order is not sustainable.
5. The second issue is the duty demand of Rs. 23,79,369/- in regard to the goods removed under bond for export. The direction in the remand order of this Tribunal on this issue is to be found in para 7. We may read that para : 7. The Revenue have also filed cross-objections in respect of part of the order under which the Commissioner has dropped the demand of Rs. 23,79,3697- pertaining to the goods cleared vide AR. 4 No. 3/92-93 dated 22-12-92. In this matter, the Commissioner held that since no suppression clause has been invoked in the show cause notice and the demand pertaining to these goods is beyond a period of six months, the same is time-barred. In the cross-objections of the department, it is argued that since in this case, the proof of export has not been furnished the duty payable on such goods is to be recovered under Rule 14A which at the relevant time provided that if the goods are not exported and proof of export is not furnished, full duty is payable on the goods in accordance with the provisions of law. In this case, the party did not submit the proof of export in respect of S.S. Cutlery claimed to have been cleared for export under bond. Though the party is claiming that in their letter dated 23-3-98 they had submitted the proof of export to the Range Office as well as the Divisional Office, yet, there is no supporting evidence forthcoming for this submission. It is, therefore, contended that in the absence of the proof of export, Central Excise duty amounting to Rs. 23,79,369/- is clearly recoverable under Rule 14A and the demand cannot be held time-barred, as there is no time prescribed to make a demand in the case of failure on the part of the noticee to furnish the proof of export. We have considered these submissions. We have already held that there is a continuous obligation for exporting the goods and no time-bar for the purpose of demand of duty would operate. The export of the goods under this AR.4 is also part of the same obligation. However, it is observed that under the proviso to Rule 12(1)(b), the Commissioner of Central Excise is empowered to allow rebate, even if all or any of the conditions laid down in any notification issued in this rule have not been complied with. We are of the view that on the principle of parity, these provisions can be made applicable to the export under bond also. Therefore, if the Commissioner of Central Excise is satisfied that goods are indeed exported, he may not demand duty even in the absence of the production AR.4. For this purpose, the case should be re-examined and appellants shall be afforded another opportunity to produce any collateral evidence to establish before the Commissioner that the goods under the impugned AR.4 have been exported.
It is clear from the above direction that the dispute was to be decided based on collateral evidence about the export, inasmuch as it was already noted that original documents about export were not available.
All the same, the appellant's claim regarding export has been rejected by the Commissioner upon a finding that original documents were not available. The grievance of the appellant is that this course was not open to the Commissioner. Nor was it just, inasmuch as the appellant had produced collateral evidence to establish the export.
6. During the hearing, we have gone through the evidence produced with the help of learned consultant and the learned SDR. The evidence produced by the appellant is in the nature of AR-4 No. 3/92-93 dated 23-12-92 and the RGI entry to show that the export consignment was sealed by revenue authorities and removed under bond from the factory.
AR-4 mentioned the container No. as 3289679. The appellant has referred to Combined Transport Liner Bill of Lading which also mentions an endorsement "Shipped oh Board dated 25th January 1993 for S.S.S.M. Pvt.
Ltd." This document also mentions the same container number. In addition, there is a mention of GR No. AC 219760 dated 21-10-92. The shipping bill mentions GR number AC 219787 dated 21-10-92, invoice No.3 dated 22-7-92 and LC No. 159265. The FOB value mentioned in the shipping bill is US $ 82105 and Indian Rs. 23,11,189.20. The contention of the learned consultant is that since the container number in the Bill of Lading and the GR number are the same as the container sent from the factory, it should be accepted that the goods cleared from the factory were placed on board the vessel. With regard to the difference in GR numbers mentioned in the Bill of Lading as well as shipping bill, the submission of the learned consultant is that the correct number is the one mentioned in the shipping bill and this position will be clear from the fact that connected banking correspondence of the Reserve Bank of India mentioned this GR number and the same amount as mentioned in the shipping bill. The additional evidence produced by the appellant with regard to export is in the nature of banking transaction in relation to the goods. Letter dated 7-5-93 of the Reserve Bank of India mentions granting permission to the appellant for receiving US $ 39865 in connection with the shipment. The appellant has also produced telex from the Chemical Bank Private Ltd., New York to the State Bank of India stating that customer has agreed to pay US $ 39865 now and the balance will be paid directly by Seneco Delco Corporation (buyer) to M/s. Khabros Steel India Ltd. outside of the Letter of Credit after inspection of the material within 60 days. Learned consultant has also pointed out that it was in regard to this part payment offer that RBI granted permission to receive the amount. This communication of the Chemical Bank, New York has also got one discrepancy. Learned SDR has pointed out that the value mentioned for the consignment is US $ 52105 and not US $ 82105 as figuring in other documents. To this, the learned consultant would answer that this is only a typographical error inasmuch as the other particulars like LC numbers all tally. Learned SDR would, however, contend that the collateral evidence is not sufficient for confirmation of export in view of the discrepancy already noted as well the fact that, earlier, there was case of filing false papers against the appellant.
7. As already noted, the original papers relating to exporter are not available. The appellant had contended that these had been submitted before the jurisdictional authorities and the authorities disowned receipt. It is in this context that Tribunal directed to determine the dispute based on collateral evidence. Clearly, it was improper on the part of the Commissioner to reject the claim after merely noting that original papers are not available. As already discussed, the documents produced satisfactorily bring out that goods were cleared under bond and they were placed on board of the vessel. Subsequent banking correspondence with the Chemical Bank, New York (purchaser's bank) and the RBI and SBI (seller's bank.) indicate that payment was in relation to the same goods. In these circumstances, we feel that duty demand made on the disputed export consignment was not justified.
8. The last issue is the quantum of fine and penalty to be imposed. The liability to these remain confirmed by our previous order and that order has become final since the appellant had not challenged that order. As we have already noted, the current duty liability on the appellant is less than Rs. 8 lakhs. It is also on record that the appellant had carried out manufacture and exported during the period of its functioning as an E.O.U. There is no evidence of clandestine manufacture or sale of the goods in the domestic market without payment of duty by unauthorised use of non-duty paid capital goods or imported raw materials. In view of this, we are of the opinion that penalty of Rs. 2 lakhs (rupees two lakhs) and an equal amount towards fine would be sufficient in the facts of the case.
9. That brings us to the last issue, which is the liability to pay interest. The submission of the learned Consultant is that it is well settled that when goods are confiscated, redeeming of the same would be on discharge of duty liability in terms of Section 125(2) of the Customs Act. Therefore, the question of interest liability cannot arise. He has relied upon the Apex Court's judgment in the case of Commissioner of Customs (Import), Mumbai v. Jagdish Cancer & Research Centre . It is the contention of the learned SDR that judgment of the Hon'ble Supreme Court could not apply to the present case since the imported goods were originally cleared against bond.
10. We are not able to agree with the Revenue on this. Upon confiscation, goods belong to the Government and liabilities for fine and duty arise only if a person who has been given the option to redeem the goods exercises it. Therefore, the question of interest cannot arise in the case of confiscated goods. The demand for interest under the impugned order is also not sustainable.
11. In view of what is stated above, we confirm the duty liability, fine and penalty as indicated above. The appeal is ordered in these terms.