V.K. Ashtana, Member (T)
1. This is an appeal against Order-in-Appeal No. C. Cus. 486/99, dated 6-8-1999 passed by the Commissioner (Appeals) wherein the present appellants’ appeal before her was rejected. In the attendant Order-in-Original No. 318/99, dated 28-6-1999 passed by Dy. Commissioner (Bonds), Chennai, the request of M/s. K.L.J. Plastics for conversion of exbond by the Bill of Entry for clearance under DEEC scheme after expiry of bond period had been rejected.
2. Heard Shri R. Sasidharan, ld. Advocate and Ms. L. Mythili, ld. Advocate for appellants and Shri S. Kannan and Shri S. Sankaravadivelu, ld. DRs.
3. The issue involved is whether the denial of coverting Bill of Entry importing 33 tonnes HDPE granules on 15-4-1997 and warehoused on 4-8-1995 was correct in law. This denial was on the ground that their application for conversion under DEEC scheme was received much after the expiry of the warehoused period on 3-8-1996, whereas the appellants had filed exbond Bill of Entry on 17-8-1995 for clearance for home consumption, which was not assessed. There was also no application for extension of warehousing and therefore the Asstt. Commissioner issued the first notice on 28-11-1996 under Section 72 requiring the appellants to pay duty. This was followed a reminder notice proposing action under Section 72 on 31-7-1997. In reply, the appellants on 12-8-1997 sought 6 months further time but no further action was taken on this request for some time. Meanwhile, the appellants procured a DEEC Advance Licence covering these goods and vide their letter dated 3-6-1998 they requested for change of exbond bill of entry for clearance without payment of duty under the DEEC scheme covered by the said advance licence. The Asstt. Commissioner (Bonds) on 4-6-1998 transferred the Bill of Entry to the concerned Assessment Group in the Custom House, where at the appraiser level, the Bill of Entry was assessed under the DEEC scheme but the Asstt. Commissioner of the Group withheld his final approval to this assessment. Instead on 19-11-1998, the AC (Bonds) again wrote to the appellants demanding duty and interest under Section 72(2) and this was followed by a detention order under the said section on 30-12-1998. After further correspondence, the Asstt. Commissioner (Bonds) vide his letter dated 16-2-1999 informed the appellants that since the notice had already been issued under Section 72 the goods could not be assessed under the DEEC scheme. The matter was thereafter remanded by the Commissioner (Appeals) to the Asstt. Commissioner which finally led to the issue of the Order-in-Original noted above rejecting the assessment under the DEEC scheme. As the appellants appeal was also rejected by Commissioner (Appeals) vide order impugned, they are before us in appeal.
4. Heard Shri R. Sashidharan, ld. Advocate and Ms. L. Mythili, ld. Advocate for appellants and Shri S. Kannan, ld. DR & Shri S. Sankaravadivelu, ld. DR for Revenue.
5. Ld. Advocate submits that since the notice under Section 72 was issued on 19-11-1998 much after the appellants’ request for conversion of the exbond Bill of Entry for assessment under the DEEC scheme (made on 3-6-1998), therefore the Hon’ble Supreme Court in the case of Pratibha Processors as in 1996 (88) E.L.T. 12 (S.C.) would apply in this case. Secondly, he submits that takeover notice was issued by the department only on 30-12-1998 and since assessee’s application for clearance under DEEC scheme was over 6 months before that i.e. 3-6-1998, therefore if the department had taken appropriate action to assess the goods under DEEC scheme during 6 months, then appellants would have got this clearance. Merely because the department sat over the issue for over 6 months, the benefit of convenience would lie with the appellants. In this connection, he cited the case of Priyanka Overseas Pvt. Ltd. v. U.O.I as in 1991 (51) E.L.T. 185 (S.C). Thirdly, ld. Advocate submitted that if on date, the department is willing to permit clearance on payment of duty, therefore they cannot deny clearance under DEEC scheme merely because the rate of duty would be NIL therein. Fourthly, he submitted that there is nothing under the DEEC scheme which disentitle them from the scheme merely because the goods have been remained in the bonded warehouse after the expiry of bonded period. Fifthly, he submitted that once the department had transferred the Bill of Entry to Group-7 for assessment under the DEEC scheme, the said scheme cannot now be denied to them. Sixthly, he submitted that in terms of para-7.17 of the Hand book of Procedure of EXIM Policy 1997-2000, there is no restriction from clearance of goods under the DEEC scheme on account of expiry of warehoused period because the goods under still customs custody can be cleared on Advance Licence issued subsequently . Ld. Advocate further submitted that any notice under Section 72 do not change the status of the appellants as the owners of the goods in customs bond. Since the goods having been confiscated they were entitled to clearance under the DEEC scheme.
6. Ld. DR on the other hand submitted that the issue is no longer res integra as the same has been decided by the Hon’ble Supreme Court in the case of Kesoram Rayon as in 1996 (86) E.L.T. 464 (S.C). He submits that the Hon’ble Supreme Court has in the said judgment considered in detail the effect of the expiry of the bonded period on goods bonded under the customs bond and have ruled that on the expiry of the said bonded period, the goods would be deemed to have been improperly removed from the bonded warehouse and hence as per Section 15(2), the rate of duty which would be applicable on such goods would be the rate prevailing on the date of expiry of the said bonded period as the goods were deemed to have been improperly removed on that date. He submits that these facts are identical to the facts of present case wherein also the bonding period expired on 3-8-1996 and since there was no application for extension of warehousing period which had led to the first notice issued under Section 72 on 28-11-1996, therefore as on 28-11-1996 and further on 31-7-1997. When the reminder notice under Section 72 was sent, the status of extended period was that in terms of Hon’ble Supreme Court judgment in Kesoram Rayon (supra), the expiry of the bonded period on 3-8-1996, the goods were deemed to have been improperly removed from the warehousing period and the rate of duty would be applicable as on 3-8-1996 . Since the appellants’ request for change to DEEC scheme was almost a year later 3-6-1998, therefore the goods already having been deemed to be improperly removed such a request was not maintainable and had been rightly rejected by the Customs authorities. He therefore submits that full duty alone would be applicable on these goods and therefore notice under Section 72 for securing this duty after disposal of the said goods was correct in law.
7. We have carefully considered the rival submissions and records of the case.
8. We cannot accede to ld. Advocate’s submissions that notice under Section 72 was issued much after their request for conversion of the ex-bond Bill of Entry for assessment under DEEC scheme without duty, because, as per the case records, while such a request for DEEC scheme was made by appellants on 3-6-1998, the first notice under Section 72 of Customs Act, 1962 was given them on 28-11-1996, followed by another on 31-7-1997.
9. We also cannot find that the ratio of Pratibha Processors (supra) applies to the facts of this case. Simply because it was held therein that DEEC scheme was given after expiry of Bond period therefore no interest was chargeable, it does not mean that the Hon’ble Apex Court considered the question of availability of DEEC scheme to Bonded goods after expiry of Bond period and issue of notice under Section 72 of Customs Act, 1962. Instead, we find that the Hon’ble Apex Court held that when no duty is payable, interest thereon is also not payable even though goods were cleared after the expiry of Bonded period. The Hon’ble Apex Court had thus ruled on the question of leviability of interest and not on whether DEEC scheme had been correctly allowed or otherwise. As against this, the issue in dispute before us is whether DEEC scheme could be legally allowed or not? Therefore, the facts and issues in dispute being totally different, ratio of Pratibha Processors (supra) is not applicable to this case.
10. We are also unable to accept that the ratio of Priyanka Overseas Pvt. Ltd (supra) is available in this case. In that judgment, the issue before Hon’ble Apex Court was that goods were not released by Customs as redemption fine was not paid even though all other compliance was done by the importer under Section 68(a) of Customs Act, 1962. The Hon’ble Apex Court had ruled that in such a situation rate of duty would apply as on the date of the said compliance by importer . Whereas, in instant case, there is no full compliance and assessment to duty . Also, there is no redemption fine involved. Hence the facts stand distinguished.
11. It is also not correct to say that as on date since Customs may allow clearance of goods on duty payment, they should also allow without duty. This submission begs the dispute itself i.e. whether duty free clearance could be allowed.
12. We cannot also accept ld. Advocate’s argument that the DEEC scheme does not disentitle them from its benefit merely because bond period has expired. The DEEC scheme and the provisions relating to storage of goods under Customs Bond are originating from two different statutes and are independent of each other. The DEEC scheme cannot be used to override the provisions of Customs Act, 1962, with respect to expiry of bond period. Though an advance licence issued after bonding of goods could be used to de-bond them, as per para 7.17 of the Hand Book ibid, the EXIM policy nowhere says that this could be done even after the Bonding period has expired. Therefore, that situation is to be dealt with only under the provisions of Customs Act, 1962.
13. This was exactly the route taken by the Hon’ble Apex Court in their judgment in Kesoram Rayon (supra). In this case, the court had considered a situation where the bonded period had expired and the question arose as to what was the rate of duty to be applied. In the instant case before us the question is whether such duty (on such expiry of bonded period) would be ‘NIL’ (under DEEC scheme) or as per the Customs Tariff Act? In such a situation, the Hon’ble Apex Court had ruled, that on expiry of bonded period, the goods have to be treated as having been “improperly removed from the bonded warehouse”; and that the rate of duty would be that which was payable on the date of such improper deemed removal from the warehouse. In the case before us, the bonding period expired on 3-8-1996. The notice for duty payment under Section 72 ibid was issued first on 28 11-1996 and then on 31-7-1997. Therefore, the goods were deemed to have been improperly removed on 3-8-1996 and the rate of duty applicable would be on that date. There was no advance licence available on record on that date, hence ‘NIL’ duty thereunder was not available to the importer. Once the goods have been deemed to be already improperly removed, the customs authorities correctly denied any further request for removal at a later date under the DEEC scheme.
14. In view of the aforesaid analysis, we find no merit in this appeal and the same is rejected.