ORDER
S.S. Sekhon, Member (T)
1.1 Appellants have a manufacturing unit in the Kandla Free Trade Zone (hereinafter referred to as KFTZ). They had been granted Domestic Tariff Area (hereinafter referred to as DTA) sales permission by the Development Commissioner during the period 1993 to 1995.
1.2 On receipt of letter dtd. 14/8/96, from the said Development Commissioner, that the appellants had achieved added value addition to the tune of only 13.44 % & 13.2% for the year 1993-94 and 1994-95 while as per the norms of Exim Policy then, they were to achieve 20%, therefore they were not entitled to 25% DTA clearances for the year 1993-94 & 1994-95. They were therefore not entitled to the exemptions. Duty demands were therefore issued by the Assistant Commissioner of Customs KFTZ vide notice dtd 27/3/97.
1.3 The duty demanded vide order dtd 15/10/99 was confirmed in appeal vide order C-1/2701/2702/WZB/2000/ dtd 10/8/00, it was found and ordered-
a) The Commissioner’s order seems to be contradictory. The appellant had contended before the Commissioner that this value addition for the years 1992-93, 1993-94 and 1994-95 was of the order of 32.72%, 21.7% and 21.50% respectively. It relied for this purpose on statements showing the details of goods imported by it and utilised in the manufacture of exported goods, deriving the value addition, verified and stated to be correct by preventive officer of the Kandla Free Trade Zone and counter signed by the appraiser. The Commissioner has not questioned these statements and does not say why these statements are not acceptable. He has however, gone by a letter dtd 8/7/99 of the Development Commissioner of the Zone which shows the value addition for 1993 94 and 1994-95 to be around 13%, which was certified by the customs officers posted at the zone. He has relied upon another letter of the Asst. Commissioner of the Customs dtd 16/7/99 which confirms correctness of these figures after verification. It is contended by the advocate for the appellant that these two letters were not cited in the notice to show cause or made available to the appellant later in the proceedings.
b) In the light of the stand taken by the appellant before the Commissioner which prima facie find supports from the statements of which copies have been produced before us, we are of the view that the matter needs re-examination and in any event the documents upon which the Commissioner has placed reliance required to be made available to the appellant before the Commissioner adjudicates on the notice. We are also of the view that the Commissioner should give a finding on the other plea before us of limitation on the ground that the notice to show cause was issued before the period of 6 months specified in Sub-section (1) of Section 11A and does not invoke the proviso to that subsection.
c) For these reasons we allow the appeal and set aside the impugned order. The Commissioner shall, after making available to the appellant copies of the documents that he relies upon, referred to earlier, and give it an opportunity of being heard, pass orders in accordance with Jaw on merits as well as on limitation.
& the matter was remanded.
1.4 Commissioner in the present order dtd 6/2/02, found and held
The basic issue to be decided in the present proceedings is as to whether the noticee has achieved the value additions as prescribed in the Export & import Policy and thus was entitled for 25% clearance to DTA. In this connection, I have once again gone through the certificate supplied by the noticee and the letters of the Development Commissioner as well as the Deputy Commissioner of Customs, in charge of the KFTZ. The Development Commissioner, KFTZ, Gandhidham vide his letter dtd 8/7/99 has clearly spelt out that the percentage of 13.44% and 13.20% for the years 1993-94 and 1994-95 were worked out on the basis of information furnished by the noticee at the relevant time which were certified by the Chartered Accountant and countersigned by the Customs authorities of KFTZ. Not only that the Development Commissioner further continues to state that if the party is challenging its own figures, it is for them to prove the subsequent statements before the adjudicating authority through documentary evidence which shall be got verified through examination of records by a gazetted officer of the Customs.
Similarly, the Dy. Commissioner of Customs, KFTZ, vide his letter dtd 16/7/99 has categorically stated that the figures furnished were the same as furnished by the Development Commissioner vide his letter dtd 14/8/96 and that the required value addition has not been achieved.
In the present proceedings, the noticee has submitted written submission dtd 12/9/01. In the said submission the noticee has tried to mislead the department by stating that the said three certificates were not taken into account by the adjudicating authority. Infact, at the time of first adjudication all the three certificates were taken into consideration and references were made to ascertain the correctness of the above figures. Both the authorities i.e. the Development Commissioner, KFTZ and the Dy. Commissioner of Customs incharge KFTZ informed that the required value addition has not been achieved. Here I would like to refer letter dtd 31/12/96 (marked Annexure 3 of the submission made by the noticee) of the Development Commissioner, KFTZ, addressed to the party which clearly states that the value addition had been refixed at 21% with effect from 1/4/96. This aspect was never brought to the notice of the department and on the contrary the noticee had been contending that the value addition for the previous years prior to 1/4/96 was also 21%.
The second issue to be decided is of limitation. It is clear that the noticee has tried to mislead and suppress the correct value addition for the relevant period in order to avail the required DTA sales with the benefit of concessional notification. Thus, the proviso to Section 11A of the Act where the material facts have been suppressed is attached against the noticee to demand the duty on the goods which have been cleared availing the benefit of concessional rate of duty, although the same was not available to them.
As regards imposition of penalty, the noticee is liable for penalty for suppression of material facts with an intent to avail the benefit of notification granting exemption and thus evade the payment of duty.
& Ordered the confirmation of duty demand of Rs. 25,25,115/- under Section 11A of the Central Excise Act 1944 & imposed a penalty of equivalent amount under Section 11AC. Hence the appeal.
2.1 After hearing both sides & considering the material, it is found –
a) the demands in this case are, as per the period, of disputed clearances, in 1993-94 & 1994-95. Therefore the imposition of penalty under Section 11AC enacted in the year 1996 cannot be upheld; more so when the notice dtd 27/3/94 does not invoke any penalty proposal under Section 11AC. The imposition of penalty under Rule 173Q read with Section 11AC as arrived & ordered in the order impugned, cannot be upheld in view of the settled position by the following decisions –
AVDEL India Pvt. Ltd.
Trib. Del Freelex India Pvt. Ltd.
And nothing contrary shown. Penalties are to be set aside.
b) Instructions on the issue of notice and adjudication in case of FTZ/EOU have been issued which have been followed (see CBEC Circular No. 122/95/CUS dtd 28/11/95 & 1996(81) ELT T21) & ; Mami Tiling Co.(P) Ltd.; Gujarat Tex Spic Ltd. They should have been followed by the Commissioner before re-adjudicating the case, especially when a show cause notice issued by the DGFT authorities on non fulfilment of value addition norms & consequent violation of Exim Policy norms has been settled & proceedings dropped by the Adll. Director General of Foreign Trade vide an order No. 3/170/95-96/ELA 11/3 dtd 1/4/93. In light of this decision, the DTA sales permissions granted by the Development Commissioner would be valid or not invalid was to be arrived at by the Commissioner, in consultation with the Development Commissioner. Since that has not been done, the matter is to be remitted back to the Commissioner to get the same verified & determine the issue anew thereafter
c) Commissioner cannot sit on judgment on the validity or otherwise if the DTA permissions granted by the Development Commissioner.
d) The issue of limitation can than be re-appreciated & is left open, if required to be redetermined.
3. Order is set aside & allowed as remand in above terms.
(Pronounced in Court on 13/1/2006)