ORDER
Archana Wadhwa, Member (J)
1. Vide the impugned order the Commissioner confirmed the following duties on the following goods.
[I] Customs Duty of Rs. 29,13,498/- in respect of imported capital goods, such as, machinery etc. required for use in the Ruia Aquaculture Farms Ltd. set up by the applicants as detailed in Annexure “I” to the show cause notice.
[II] Customs Duty of Rs. 33,87,022/- in respect of imported raw material as detailed in Annexure “II” to the show cause notice.
[III] Central Excise Duty of Rs. 21,57,047/- in respect of indigenously procured capital goods as detailed in Annexure “III” to the show cause notice.
In addition he has imposed penalty of Rs. 63,00520/-(Rupees sixty three lakhs five hundred twenty only) under Section 114A of Customs Act, penalty of Rs. 21,57,047/- (Rupees twenty one lakhs fifty seven thousand forty seven only) (equal to the Central Excise duty demand) and penalty of Rs. 8 lakhs (Rupees eight lakhs only) on Shri Sharad S. Ruia and Shri Kamal S. Ruia, Director of M/s. Ruia Aquaculture Farms Ltd. and penalties of Rs 4 lakhs (Rupees four lakhs only) each on the Directors under Rule 209A of the Central Excise Rules 194 and penalties under Section 112(a) of the Customs Act, 1962.
2. As per the facts on record M/s. Ruia Aquaculture Farms Ltd. (hereinafter referred to as RAFL) were granted approval for setting up 100% EOU by Secretariat of Industrial Approvals, with certain terms and conditions. Under Condition No. 12 of the licence granted, M/s. RAFL was required to enter into a legal agreement with the Development Commissioner, SEEPZ, Mumbai binding themselves to fulfill the required Export obligation in order to avail the benefits (Exemption from Customs & Central Excise duties) available to them under 100% EOU Scheme. Such legal agreement was entered into by them on 19.11.1992.
3. Subsequently, M/s. RAEL imported various capital goods without payment of duty in terms of Notification No. 188/93-Cus. dt. 27.12.1993 and 196/94-Cus. dt. 8.12.1994.,various raw materials were also imported free of duty in terms of the provisions of above notifications. Indigenous capital goods were procured by them without payment of duty in terms of Notification No. 57/94 dt. 1.3.1994, 1/95-CX dt. 4.1.95 and 10/95 dt. 23.2.95.
4. As per the allegations in the present case, the said appellant initially commenced production for test purpose but abruptly stopped their manufacturing/cultured activity in their licensed premises and never exported even a single consignment out of India in pursuance to the above terms granted by the Secretariat for Industrial Approvals, Ministry of Industry or Legal Agreement dt. 19.11.1992. Inasmuch as, the appellant failed to fulfill their export obligation, investigations were conducted by the Revenue and proceedings initiated for denial of the benefit of notification, under which the capital goods or raw materials were imported free of duty or the capital goods were procured indigenously without payment of duty. Accordingly, notice was issued to them for denial of the benefit and confirmation of demand.
5. During the course of adjudication proceedings that the appellant accepted that no exports have been made by them and no foreign exchange realized. However, they contended that failure on their part to export the Prawns and/or Shrimps, was on account of wide-spread decease called “while spot virus” which completely destroyed the corps; that the said fact was addressed by them in their letters dt. 14.6.1996 and 16.8.1996 addressed to the Development Commissioner, SEEPZ, Mumbai, that the Hon’ble Supreme Court in the case of S. Jagannath v. Union of India also put a ban on Aquaculture Farms- their supporting agency namely, Marine Products. The export of Development of Authority announced a Crop of Holiday as could be seen from the Circular dated 12th July 1996 of MPEDA. As such, they contended that non-fulfillment of export obligation was not on account of any mala fide or lapse on their part but was on account of circumstances beyond their control.
6. The above plea of the appellant was not accepted by the adjudicating authority who confirmed the demands, confiscated the goods and imposed penalties. The said order is impugned before us.
7. Shri Naresh Thacker the Ld. Advocate appearing for the appellants reiterated the said grounds and submitted that on account of the practical difficulties, exports could not be made. In any case the imported capital goods as also feed and vitamins in the shape of raw materials were used by them in the manufacture and/or Development prawns. As such, he submitted that substantial condition of the notification as regards the use of the imported goods stands fulfilled and failure on their part to export the goods should be condoned.
8. After hearing the Ld. DR appearing for the Revenue, we find that under the various notifications involved, exemption to specified goods were granted from payment of duty for their use in an integrated aquaculture farms and export of farm products by 100% EOU. Condition 2 of Notification No. 188/93-Cus. dt. 27.12.93 is to the following effect “the importer uses the goods for the purposes of production of aquaculture products and exports out of India hundred per cent or such other percentage, as may be fixed by the said Board of aquaculture products produced from the goods for a period of 10 years or such extended period as may be specified by the said Board.
Similarly Condition 3 of Notification No. 196/94 is to the same effect Notification No. 57/94-CE dt. 1.3.94 granted exemption to the various excisable goods brought into a 100% Export Oriented Undertaking subject to the condition that such undertaking would exports out of India 100% or such other percentage as may be fixed by the Board, of articles manufactured wholly or partly from the same goods for the period stipulated by the Board or such extended period as may be specified by the Board. Thus, it is seen that the various exemptions were available to the appellant subject to fulfillment of condition of export. Admittedly, the appellants have not undertaken any exports. The reasons for their failure may be on account of unforeseen circumstances and beyond the control of the appellant, but the same cannot absolve the appellant from their responsibility to pay the duty. There is nothing in the said notifications to suggest any relaxation in the conditions of the same in case of unforeseen circumstances. No such relaxation can be granted by us. Thus it become clear that the benefit of the notifications would be available to the appellant only on fulfillment of the conditions of the same.
9. If the appellant would have imported capital goods or the raw materials in dispute without the availability of the said notification, they would have paid the duty on the same. Special concession was given only in those cases where the final products would require to be exported and earn foreign exchange. The conditions in the notification being post import condition and being continuing conditions, the benefits of the notification can be denied on non-fulfillment of such condition. As such, though we may have sympathy with the appellant, but we cannot relax the condition of notification and extend the benefit to them.
10. During the course of arguments a query was put to the appellant at to why they have not approached the Development Commissioner for lowering of the percentage of export or for extension of time, he could not give a satisfactory answer and sought time to file written statements. Time was granted to file the submissions by 30.11.05 however the same have not been filed. In any case we note from the impugned order that as per Deputy Development Commissioner’s letter dt.25.8.2000 not only has the appellant not only made any export at all, they have not even filed their actual Performance Report/quarterly Performance Report to the Development Commissioner. It is also seen from the impugned order that the appellant had addressed certain letters in the year 1996 to Development Commissioner about the problems being faced by them on account of certain ‘virus’ affecting their produce and requesting for reducing their export obligation and value addition condition. It seems that they did not get any response to their above request. As such, we are of the view that the adjudicating authority has rightly concluded that it is not a mere case of short fall in exports as compared to obligation fixed but a cross violation of the terms of the agreement as also the conditions laid down in the relevant notifications. As such we hold that in the absence of any evidence on record to indicate that any further relaxation was granted to the appellant by Development Commissioner either with regard to the quantum to be exported or with regard to the time period, the benefit of notification have to be denied to them and various duties are required to be confirmed. We order accordingly.
11. However, in the peculiar circumstances of the case and in view of the fact that the export obligation was not made by the appellant on account of peculiar circumstances beyond their control, we find no justification for confiscation of the goods or for imposition of penalties on the appellants. The same are accordingly set aside.
12. The appeals are disposed of in above terms.
