JUDGMENT
Archana Wadhwa , Member (J)
1. Revenue being aggrieved with the order passed by the Commissioner of Customs (Appeals) vide which he has set aside the Order-in-Original passed by the Asst. Commissioner of Customs, has filed the present appeal.
2. We have heard Shri A. Jayachandran, learned JDR for the appellant. Nobody has appeared on behalf of the respondent in spite of today’s notice of hearing having been sent to them well in advance.
3. As per facts on record, the respondent-importer imported one industrial cooling unit to be installed in their 100% Export Processing Unit and claimed the benefit of Notification No. 126/94 dated 3.6.94. The said notification grants exemption to the specified goods for use in the manufacture of export goods by 100% EOU. Item No. 1 of Annexure-1 attached to the said notification extends exemption to green house equipment, accessories etc. The respondents claimed the benefit under the said serial number. The benefit was originally extended to them by the customs authorities. However, subsequently, they were issued a show cause notice raising demand against them on the ground that the industrial cooling unit was not eligible for the full exemption benefit available to flori-cultural unit under the notification in question. During adjudication before the AC, the respondent claimed the benefit of alternative Notification No. 13/81-Cus. which extends the benefit to the capital goods used in flori-cultural unit. The AC vide his impugned order denied benefit of Notification No. 126/94 as also of Notification No. 13/81. The benefit of Notification No. 13/81 was denied by observing that the flori-cultural activities carried out by the respondents have not been done under the Customs Bond and as such, the conditions of the notification do not stand satisfied by the importers.
4. Being aggrieved with the above order of the AC, the respondents herein filed an appeal before the Commissioner (Appeals). He also did not find favour with the respondent’s contention that the subsequent Notification No. 67/96-Cus. dtd.3.9.96 amending earlier Notification No. 126/94 and incorporating cooling equipment for cold room as one of the items entitled for exemption, is to be treated as clarificatory and retrospective in application. However, the Commissioner (Appeals) extended the benefit of Notification No. 13/81 to the respondents and allowed their appeal. Accordingly, the Revenue being aggrieved with the said order has filed the present appeal.
5. After giving our careful consideration to the submissions made by learned JDR and after going through the impugned order of Commissioner (Appeals), we find that the appellate authority has observed that the benefit of Notification No. 13/81 was denied to the importers by the AC on the ground that the same was not originally claimed by them at the time of importation and secondly on the ground that the manufacturing operation was not carried in the Customs Bond. As regards the first objection of the Revenue, the Commissioner (Appeals) has observed that respondent claimed benefit before AC during adjudication proceedings and same being a legal plea can be raised at any point of time. We fully agree with the above reasoning of the appellate authority. Inasmuch as at the time of original importation, the respondents were extended the benefit of Notification No. 126/94, there was no occasion for them to claim the alternative benefit of Notification No. 13/81. It is only when the respondents were issued a show cause notice proposing denial of the benefit of Notification No. 126/94, they claimed the alternative benefit of Notification No. 13/81.
6. As regards the second reason by the Revenue for denying the benefit of Notification No. 13/81, the Commissioner has relied upon Ministry’s Circular No. 15/95-Cus. dt. 23.2.95 whereby physical supervision was dispensed with. He has, however, observed that the waiver of physical supervision by customs officers would not amount to say that manufacturing operation was not carried out in customs bond and so long as the other conditions are complied with, it can be said that manufacturing operation has been carried out in customs bond. Accordingly, following the Board’s circular he has extended the benefit to the respondents.
7. Revenue’s arguments in their appeal memorandum is that the Board does not have any power to relax the condition of the notification and circular issued by the Board removing the condition No. 2 of Notification No. 13/81 cannot be made applicable. However, we find that the said condition No. 2 of notification is only of procedural nature and as rightly observed by the Commissioner (Appeals) that merely because the manufacturing operations are not carried out in customs bond does not mean that the goods have not been used as capital equipment. All other substantive conditions of the notification stand fulfilled by the respondent. It is also well settled law that the circulars issued by the Board are binding on the authorities below who cannot be heard contrary to the same. Inasmuch as, there is no dispute that the Circular No. 15/95-Cus. dated 23.2.95 issued by the Board has dispensed with physical control/supervision of 100% EOU in Aquaculture, Horticulture and Floriculture, we find no infirmity in the view taken by the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.