ORDER

Shri Jeet Ram Kait

1. This appeal is filed by M/s Sri Kannapiran Mills Ltd against the order of the Commissioner whereby the Commissioner has held that the EPCG licence produced by the importer cannot be accepted for duty free clearance and the importer has been directed to pay the duty already assessed together with interest and other charges.

2. Since this is a covered matter, we take up the appeal itself with the consent of both the sides, by granting stay of the operation of the order.

3. This is the second round of litigation, as the case was remanded back for re-consideration earlier vide final order No. 500/2000 dated 20.4.2000. The brief facts of the case as contained in the order in original of the Commissioner is reproduced below :

M/s. Sri Kannapiran Mills Limited, Coimbatore (hereinafter called the importer) have imported two auto cone winders and filed Bill of Entry No.5 dated 16/1/98 for home consumption on 16/1/98 for clearance of the same under the provisions of OGL. The said goods were assessed to duty at Rs.58,87,028/- on 22/1/98. Since they were facing financial difficulties and it was felt that it would take some more time for the clearance for home consumption, the goods were allowed to be kept in warehouse under the provisions of Section 49 of the Customs Act, 1962 with a clear understanding that the importer would pay the duty as assessed with interest at the time of clearance of the goods for home consumption.

2. On 9/7/99, the importer produced an EPCG licence dated 7/7/99 under zero duty EPCG Scheme for the two auto coners imported in 1998 and requested to clear the two numbers of auto coners free of duty. It was also mentioned that as per para 6.6 of EXIM Policy that an EPCG Licence would be valid for the goods already arrived provided customs duty had not been paid on the goods and the goods have not been cleared from the Customs. After examining the matter the then Commissioner rejected the request for permission to clear the two auto cone winders covered by Bill of Entry No.5 on 6/1/98 under zero duty EPCG licence and issued letter no. VIII/48/17/99-Cus. Pol. Dated 24/1/2000.

3. Aggrieved by the above, the importer preferred an appeal before the Tribunal vide appeal no. 165/2000 and the Tribunal vide Final Order No.500/2000 dated 20/4/2000 observed that since the matter has not been considered in detail by the learned Commissioner sitting in quasi-judicial capacity and also since no personal hearing was granted to the importer before arriving at the decision, the matter was remanded to the learned Commissioner in view of the provisions of Sec.129 A(1) of the, to pass a speaking order sitting in adjudication proceedings in the matter after hearing the importer.

4. The appellants have come in appeal against the above order of the Commissioner on the ground that the order is contrary to the provisions of the Customs Act, and is without jurisdiction and is also arbitrary and capricious. It is the contention of the learned Counsel that the Commissioner completely disregarded the findings of the Honble Tribunal while remanding the case vide final order (supra). The learned Counsel submitted that the appellants are entitled to duty free exemption as per the EPCG licensing scheme and that the Commissioner has committed an error in rejecting the claim of the appellants relying on Sections 49 and 15 of the Customs Act. He pointed out that in this case, the goods were not cleared for home consumption and out of Customs charge was not given. Therefore, there was total confusion shown by the Commissioner in the interpretation of the various provisions of the Import Control Polices and the Notifications granting exemption. He submitted that the Commissioner has also not gone into the question of the purpose behind EPCG scheme. He pointed out that the Govt. of India has introduced such scheme and it is not open to the Commissioner to ignore the scheme and he is bound by the same. He has further argued that the Commissioner appears to think that EPCG scheme licence only covers the Licensing angle and has nothing to do with the payment of duty when the Scheme itself has mentioned as no duty is payable in respect of capital goods imported under the Scheme. He has contended that the Commissioner has failed to understand the para 6 of the scheme in the Exam Policy in its proper perspective. He submitted that the scheme is valid for the goods already shipped/arrived, provided the duty has not been paid and the goods have not been cleared from the Customs and hence if the duty has not been paid and the goods have not been cleared the provisions of the Scheme will be applicable. He submitted that in this case no duty has been paid and the goods have not been cleared and hence the Commissioners reference to Sections 15 and 68 of the Customs Act, 1962 is not correct. He pointed out that in this case, the licence was obtained after the import and before the clearance of the goods and no duty has been paid. Hence the appellants are entitled to clear the goods on the basis of the licence issued under EPCG scheme. He submitted that the Commissioner failed to take into consideration that there is a specific Customs Notification issued granting exemption to capital goods imported under the EPCG scheme, as per the Notification No. 29/97 dated 1.4.97 as amended from time to time and hence once the EPCG licence is available with the Appellants/importers, the Commissioner has no jurisdiction to refuse the clearance under the licence and refuse to extend the benefit of the Notification in question. He submitted that in this case the question of applicability of Section 15 of the Customs Act, will not arise because of the changed circumstances. He has contended that the various judgements cited by the Commissioner are totally irrelevant and the Commissioner has erred in not relying upon the judgements cited by the appellants and the Board Circular dated 5.5.98. The learned Counsel therefore prayed for setting aside the impugned order and allowing the appeal.

5. Shri S. Arumugam, the learned DR appearing on behalf of the respondent reiterated the findings of the Commissioner as contained in paras 6 & 7 of the order which are reproduced below :

6. I have given my careful consideration to all the facts in this case. The importer here has imported two auto cone winders and filed Bill of Entry No.5 dated 16/1/98, as per the provisions of Section 46 of the Customs Act, which requires that the importer of any goods should make entry thereof by presenting to the proper officer Bill of Entry for home consumption or warehouse in the prescribed form. In this case, the importer has filed only Bill of Entry for home consumption under Section 46 of the Customs Act, and not Bill of Entry for warehousing. Subsequently because of the difficulties experienced by him he was allowed to store the goods in warehouse pending clearance in terms of Section 49 of the Customs Act. For ease of reference Section 49 is extracted below:

"Section 49 - Storage of imported goods in warehouse pending clearance:- Where in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act, and accordingly the provisions of Chapter IX shall not apply to such goods."

(Emphasis supplied)

7. It is clear from the above that though physically goods were allowed to be deposited in a warehouse, the goods are not warehoused goods for the purpose of the Customs Act.

6. We have considered the rival submissions in this case. We find that while remanding the case earlier vide final order No. 500/2000 dated 20.04.2000, the Tribunal referred to another for final order passed by this Tribunal bearing No. 170/2000 dated 27.01.2000 in the case of CCE vs. Raghunath International (P) Ltd, in appeal No. C/1112/98 arising out of order in appeal No. 790/98 dated 23.07.98. The facts in that case are similar to the facts in the present case and we find no reason to depart from the findings arrived at by this Tribunal, per Shri CNB Nair, Member(Tech) in that order. The extract from this order is reproduced below :

2. The respondent M/s. Raghunath International imported a consignment of betel nuts in December, 1995. The goods were in the negative list under the import Policy and the importer was not able to produce a licence for the import. Accordingly, the goods were confiscated (with redemption fine) and penalty imposed. This order was taken up by the respondent in appeal and during the pendency of the appeal, the importer produced a quantity based advance licence No. 0082610 dated 27.2.97 for duty free clearance of the goods. The Commissioner (Appeals) ordered for clearance of goods against this licence. The Revenue has now submitted that as the goods had already been assessed and confiscated by the Customs authorities, the Commissioner was not correct in allowing the clearance of the goods under the provisions of para 65 of EXIM Policy 1992-97. Thus, the issue involved in this appeal is scope of para 65 of the EXIM Policy 1992-97. This para provided that "goods already imported/shipped/arrived in advance but not cleared from Customs may also be cleared against the duty free licence issued subsequently". It is clear from the para that any time before the clearance from Customs, the importer could seek clearance of the goods already landed against a duty free licence issued subsequent to the import. In the present case, the goods had not been cleared out of Customs charge. Therefore, the party was entitled to clearing the same against the duty free licence. This being the position; there was no error in the order of the Commissioner (Appeals). The same is accordingly confirmed and the appeal fled by the Revenue is rejected.

We observe from the EPCG licence No. PCG 2135/63 dated 7.7.99 that the goods are for value of Rs. 1,51,86,060/- and the invoice No. 97-18195 dated 31.10.97 is mentioned in the above import licence. Therefore, though the EPCG licence has been obtained after the goods have arrived, this EPCG licence covers the consignment not only for the purpose of regulating the import but also it covers that the goods will be cleared duty free. As per para 6.6 of the Policy, the goods already shipped/arrived in advance, but not cleared from the Customs can be cleared against duty free licence issued subsequently. Further as per the Notification No. 29/97-Cus dated 01.4.97 as amended issued under Section 25 of the Customs Act, 1962, there is exemption of the goods from the whole of the duty of Customs leviable thereon which is specified under the first schedule to the Customs Tariff Act, 1975 and also from so much of additional duty leviable thereon under Section 3 of the said tariff Act, as is in excess of the amount calculated at the rate of 10% of the value of the goods, available. Under para 2(1) of the above exemption Notification there are certain conditions to be fulfilled according to which goods can be allowed duty free clearance and one of the conditions under para 1(1) is that the goods imported are covered by valid licence issued under Export Promotion Capital Goods (EPCG) Scheme, in terms of Import and Export Policy Permitting import of goods free of duty and said licence is produced for debit by proper officer of the Customs at the time of clearance. There are other conditions also which the importer has to satisfy and there is no dispute that they are not willing or able to fulfil those conditions before the clearance of the goods. The issue involved in the present case is not that of rate of duty and date from which the duty is liviable. The question is whether EPCG licence having been produced later, but before clearance of the goods out of Customs charge, whether the importers are required to pay customs duty. The answer to this query would be that they are not required to pay any customs duty but only the CVD at the rate of 10% is required to be paid as per the Exemption Notification No. 29/97 dated 1.4.97 issued under Section 25 of the Customs Act, 1962. In view of the above legal position, and following the ration of the final order passed by this Tribunal bearing No. 170/2000 dated 27.1.2000, in the case of CC Chennai, vs. Raghunath International (P) Ltd., we set aside the impugned order and allow the appeal with consequential relief, if any.

(Order pronounced in open Court on 15/05/2001.)

Concurring Order by Shri S.L. Peeram

I agree with the findings arrived at by my Ld. brother for allowing the appeal by granting waiver of pre deposit. The matter was heard from both the sides after granting waiver of pre deposit as the goods were still in Customs Custody suffering demurrage and matter was shown to be covered directly by the judgment of the Tribunals final order No. 170/2000 dated 27.1.2000 in the case of CC Chennai Vs. Raghunath International Pvt. Ltd. and also in the case of Arthanari Loom Centre Vs. CC, Trichy by Final Order No. 574/2001 dated 27.4.2001 passed by this Division bench. In the Arthanari Loom Centre, the same Commissioner had disregarded the remand order passed in the present cases which was followed in Arthanari Loom Centres case. The Tribunal after noting the very findings has recorded in the present case, disagreed with the Commissioners finding and held in paras 6 and 7 as follows:-

6. The present appeal is against above findings of the Ld. Commissioner. We have heard Shri S.S. Radhakrishnan, Advocate for the appellant and Shri Sudarshan, DR for the department. After considering the material and statements made we find-

(a) In the paper book the appellants have submitted the evidence of payment of duty and other charges to customs on Bill on Entry No 703/18.6.99. Vide letters dated 14.9.99, 1.10.99 i.e. the goods have paid the duty, fine and penalty on that date. Section 47(1) of the Customs Act provides as follows-

"47. Clearance of goods for home consumption.- (1) Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption."

Therefore, the goods were permitted clearance for home consumption, only after the importer has paid the import duty. If import duty is not paid, as assessed, the goods cannot be said to have had an order, permitting cleared for home consumption, also known on the customs out of charges order. Such an order is given on the first check of bill of entry, by the Cashier and on second check by the Shed Appraiser. Since in the present case no order could have been passed before or on 14.9.99 and 1.10.99 when the amounts as determined were paid, the goods cannot be said out of customs charge before that date. The goods are therefore, pending clearance on 1.10.99. In the facts of this case, the amendment to the licence is dated 2.8.99, which covers the 24 machines under import by description. Following the provisions of para 6.6 of the EPCG:-

"Para 6.6 - Clearance of goods from Customs - The licence issued under this scheme shall be valid for the goods already shipped/arrived provided customs duty has not been paid and the goods have not been cleared from Customs."

We have found, therefore no reason to deny the benefit of EPCG licence and import rates of the duty in the present case.

(b) We cannot agree with the findings of the Ld. Commissioner, that the goods are out of customs charge, as soon as assessments are finalized. That would not be in conformity of section 47 (1) provisions of the Customs Act (supra).

(c) We find that section 49, provides for such specific cases, when the Assistant Commissioner of Customs is satisfied on the application of importer that the goods cannot be cleared within a reasonable time; the goods pending clearance, are permitted to be kept as a deposit in a warehouse. When a case is made out of permission granted under section 49, undoubtedly the rate of duty would be, as arrived at by the Ld. Commissioner i.e. the date of noting of the B.E. However, the proper officer having found the goods for home consumption, are fit for deposit/storage under section 49, then duty on the same could not have been recovered. Therefore, we fail to appreciate, the reasoning of the Ld. Commissioner. We find that in the case of Sri Kannapuran Mills Ltd. (2000 (125) ELT 1110 (Tribunal) in similar situation, the South Zonal Branch, Chennai held as follows -

"as per para 6.6 of the EXIM Policy, under which these goods have been imported goods having already arrived, provided Customs duty has not been paid and goods have not been cleared from Customs out of charge. In this case, the very letter impugned admits that the goods are still under Customs custody or in fact a bonded warehouse where they have allowed to be kept under Section 49 of the Customs Act. The position obtained on facts is that though the goods have been initially assessed to Customs duty under home consumption Bill of Entry, however, thereafter, they were allowed to be kept in a Customs bonded warehouse and the duty has not yet been paid on them. Therefore, on this ground it appears that the EPCG licence cannot be rejected."

Following the same, we find no merits in the imposition of liability of confiscation under section 111 (d) as arrived at and redemption fine therefore cannot be held. Since licence under EPCG scheme is available, we cannot upheld the levy and payment of duty as arrived at in the impugned order.

(d) We find that invoking of Section 111 (o) in the facts of this was not called at all since no goods have been cleared on a conditional exemption. The invocation of the confiscation under Sec. 111(m) is not called for since the quantity and the values declared on the B.E. have not been found fault with. Moreover, fixation of a redemption fine, without determining the margin of profit as in this case, cannot be upheld. The confiscation under Sec. 111(d), (m) & (o) is arrived at is set aside.

(e) In view of the findings, imposition of no penalty under section 112(a) is called for. Especially, as we find no reasons for imposition of penalty under Section 112(a), for the reasons of misleading the Tribunal, if at all the Tribunal has been mis-led. The order of fine, penalty and duty are therefore required to be set aside and goods under import can be cleared on EPCG scheme.

7. In view our findings, this order is set aside and appeal is allowed. Pronounced in the Court on 27.4.01.)

As can be seen from the above findings, the bench has clearly answered all the doubts raised by the Commissioner in the present matter and the findings recorded by the Commissioner were on the same lines. Therefore, the findings arrived at by this bench in the case of Arthanari Loom Centre would answer all the points raised by the Commissioner and hence, there is no need to differ on the findings recorded by the Tribunal. Therefore, the impugned order is required to be set aside by allowing the appeal. Ordered accordingly.

(Pronounced in open Court on 15.05.2001.