COMMISSIONER OF CUSTOMS Vs. MOTOROLA INDIA LIMITED

JUDGEMENT

(1.) This appeal under Section 130 of the Customs Act, 1962 (hereinafter referred to as the Act for short) has been filed against the order dated 12.05.2006 passed by Customs, Excise and Service Tax Appellate Tribunal, Bangalore (hereinafter referred to as 'the tribunal' for short). The appeal was admitted by a bench of this court vide order dated 20.06.2007 on the following substantial questions of law:

(2.) The factual background, in which the aforesaid questions of law arise for consideration in this appeal needs mention. The respondent is a leading manufacturer of pagers. The respondent imported components for manufacture of pagers under the Duty Exemption Entitlement Certificate scheme (hereinafter referred to as 'the scheme' for short) in terms of Notification No.30/97-Cus dated 01.04.1997 read with para 7.4 of EXIM Policy 1997-2002. The Licencing Authoirty had permitted the respondent to import quantities to the extent of 2% in excess of their actual requirement in respect of 13 out of 16 types of components towards wastage etc. during the process of manufacture of pagers. The respondent fulfilled the export obligation, however, it was not able to utilize some of the components imported under the scheme and closed down its messaging products division before April 2001. Due to the closure, some of the imported components were rendered obsolete and therefore, they were written off in books during the financial year ending 31.03.2001.

(3.) On receipt of specific intelligence input and on an enquiry being made, a summon dated 04.05.2001 was issued to the respondent to submit list of unutilized items which were imported under Customs Notification No.30/1997-Cus dated 01.04.1997. The respondent on 08.05.2001 submitted a list of unutilized items, which were imported under the Duty Exemption Entitlement Certificate scheme. The respondent on 23.05.2001, submitted another list of all unutilized items. The Directorate of Revenue Intelligence vide communication dated 30.05.2001 sought for information pertaining to complete stock list of unutilized components after due certification by the auditors of the respondent or an independent Chartered Accountant and to mention the account under which the provision for writing off has been made. The respondent by communication dated 26.07.2001 submitted a complete list of unutilized items pertaining to imports made under the scheme along with certificate of the auditor. Thereafter a show cause notice was issued to the respondent, requiring it to show cause as to why customs duty to the tune of Rs.96,17,498/- should not be demanded from it in terms of Notification No.30/1997-Cus dated 01.04.1997 as well as to show cause as to why duty free imported raw material be not confiscated and interest and penalty be not recovered from respondent. The Commissioner of Customs by an order dated 30.04.2002 held that the respondent is liable to pay duty to the extent of Rs.97,17,498/- as well as interest at the rate of 24% on the duty. The impugned goods were also confiscated under Section 111(o) of the Act and a penalty of Rs.20,00,000/- was imposed on the respondent under Section 112(a) of the Act. Being aggrieved, the respondent filed an appeal before the tribunal. The tribunal by an order dated 12.05.2006 inter alia held that the respondent had fulfilled its export obligation and it was not obligatory on the part of the respondent to account for the wastage permitted. Accordingly, the appeal preferred by the respondent was allowed. In the aforesaid factual background, the revenue has filed this appeal.