ORDER
Moheb Ali M., Member (T)
1. This appeal is filed by the Commissioner of Customs, New Customs House, Mumbai against the order passed by the Commissioner of Customs, Mumbai in his order No. BRI/BZO/a/19/95-5/10-18/ABC/6511/B dated 30.8.96 issued on 18.9.96.
2. Briefly the facts are as follows :-
M/s. Bhawana Exports, Bombay imported 297.440 M.T. of Crude Naphthalene valued at Rs. 47,79,826/- under DEEC scheme. The said goods were cleared duty free under Notification No. 203/92 Cus. dated 19.5.92 vide DEEC No. 133858 dated 4.4.94 and the advance licence No. 0322441 dated 29.3.94. They however sold away 236.722 M.T. out of the imported material to one M/s. Rasayano, Mumbai, even before the export obligation is fulfilled. The sale was done through their supporting manufacturer M/s. Gandhar Petrochemical Ltd. M/s Gandhar Petrochemical Ltd. received full payment for this quantity from M/s Rasayano, Mumbai. These facts were corroborated by various statements recorded. Such a sale of imported goods cleared under duty free advance licence, contravenes provision (vi) of Notification No. 203/92 Cus. dated 19.5.92 as the sale of imported goods was done without fulfilling the export obligation cast on the importer. The final product to be exported in the case is H-Acid. It was alleged in this show cause notice that M/s Bhawana Exports, M/s Rasayano and M/s Gandhar Petrochemicals, Baroda had conspired to evade customs duty of Rs. 21,34,956/- on 236.722 M.T of Crude Naphthalene and therefore liable to penalties under Section 112 of the Customs Act, the goods themselves are liable to confiscation under Section 111(d) and (o) and the duty is demandable under Section 28(1) of the Act.
3. After hearing the parties concerned the Commissioner passed the impugned order as set out in para 1. The Commissioner in the order cited held (a) the show cause notice be discharged; the duty already paid towards the demand in the show cause notice be appropriated (b) No interest can be demanded from the importer as the enabling Section 143A of the Customs Act 1962 has not been notified, (c) The importer has fulfilled a part of export obligation east on him under the advance licence in question; that the importer has 18 months to discharge his export obligation and that period has not expired, when the impugned goods are sold away; that the licensing authority is the proper officer to demand duty and interest if the advance licence holder has not fulfilled the export obligation as per para 128 and 129 of the Hand Book of Procedures 1992-97; that there was no case for confiscation of the goods by the Customs authorities under Section 111(d) and 111(o) of the Customs Act and no penalty under Section 112 of the same Act can be imposed.
4. The impugned order was challenged by the department on the following grounds:-.
a) The Commissioner should have held the goods liable to confiscation and in fact should have confiscated the goods under Section 111 (o) inasmuch as the duty free goods had been sold in violation of condition VI and VII of Notification No. 203/92-Cus. and the persons concerned should have been penalised under Section 112 of the Customs Act.
b) The Commissioner’s finding that the licensing authority is alone empowered to take action in cases where export obligation have not been discharged by the importer under para 128 and 129 of Hand Book of Procedures 1992-97 is erroneous and should be set aside. The benefit of duty free clearance was extended by customs and that they were empowered to enforce the conditions set out under Notification No. 203/92 as decided by the Apex Court in the case of M/s. Sheshank Sea Foods Pvt. Ltd. v. Union of India 1996 (88) ELT 626 SC.
c) The ratio of the Apex Courts’ decision in the case of Agricultural and Processed Food Products v. Oswal Agro Furane Ltd as reported in 1996(85) ELT 3 (SC) decided on 30.4.96 squarely applies to the issue of payment of interest on the duty evaded in this case and that the Commissioner ought to have taken the Apex Courts’ decision into consideration. The Revenue therefore prayed that the Tribunal should decide whether the Commissioner’s order is legal and proper and that it should pass appropriate orders under Section 129 B of the Customs Act and pass such order as deemed fit and proper.
5. The respondent is represented by ld. Advocate Shri Nitin Kantawala who submitted that the respondents have in their letter (copy filed) addressed to the Assistant Commissioner, Custom House, informed that they have deposited the duty and interest on the consignment as per details mentioned in the said letter (Annexure-I to this order) and that their DEEC book should be logged accordingly. They have not advanced any further arguments. The DR reiterated the contentions raised in the appeal memorandum.
6. Heard both sides.
7. The Revenue’s case that the goods (236.722 MTs) are liable to confiscation as they were sold away without fulfilling the export obligation and the persons concerned are liable to penal action is well covered by the ratio of Apex Court in M/s Sheshank Sea Food’s decision as cited Supra. The Apex Court is categorical that the Customs Department has jurisdiction to take action against any violation of the provisions of Notification No. 203/92-cus. dated 19.5.92 irrespective of action proposed/taken by the licensing authority. Further the court held that the Customs Department is empowered to conduct investigation into the circumstances of import as connected matters. We observe that the Commissioner’s contention that no investigation can be conducted during the currency of export obligation period is contrary to the decision of the Apex Court. The goods are liable to confiscation under Section 111(o) of the Customs Act as the conditions of Notification No. 203/92 are contravened and the persons concerned are liable to penal action under Section 112 of the Customs Act. In so far as the Commissioner’s contention that no interest is chargeable on the duty evaded, we observe that the ratio of the Supreme Court decision in Agricultural & Processed Food Products Pvt. Ltd.’s case cited supra is applicable to the facts and circumstances of the case. Interest is chargeable at 18% in such cases.
8. The order of the Commissioner is contrary to the decisions of the Supreme Court in the above cited cases. The order of the Commissioner is set aside and the appeal of the Revenue is allowed by way of remand with directions that the Commissioner should readjudicatc the case applying the ratio of the judgments of the Apex Court. While adjudicating the case afresh the Commissioner may take into consideration the contention that the respondent deposited the duty involved and the interest worked out at 24% per annum as per their averment before us.
9. The appeal is allowed by way of remand.