MAVI INDUSTRIES LIMITED, Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are applications for waiver of pre -deposit and stay of recovery in respect of duty, fine and penalties. M/s. Mavi Industries Limited had imported both capital goods and raw materials after getting registered as a 100% Export Oriented Unit (EOU) and obtaining the requisite warehouse licence. Under the EOU scheme, they had to discharge export obligation in relation to the imported goods. They had 5 years to achieve this in relation to the capital goods, from the date of installation. The capital goods imported by them were worth over Rs. 120 crores and raw materials worth over Rs. 5 crores. These imports were made in 1997 -98 and the provisions of the EXIM Policy 1997 -2002 were applicable. During 1999 -2001, the EOU could export their finished goods worth Rs. 7.45 crores including deemed exports. They could not make any further exports. The unit was shut down in September, 2000. Later on, on the ground of breach of conditions of Notification No. 53/97, whereunder the goods were imported duty -free, the customs authorities issued a show -cause notice to the party and two of their Directors, for recovery of duty on the capital goods and raw material imported by them, and also for confiscation of the goods and imposition of penalties. These proposals were contested. In adjudication of the dispute, the Commissioner of Customs confirmed the demand of duty against the EOU, ordered confiscation of the capital goods with option for redemption against payment of fine and also imposed penalties on the EOU and the Directors. Aggrieved, appeals were filed with this Tribunal and those appeals were disposed of against the appellants. The matter was taken up before the Hon'ble High Court which remanded the case to the Commissioner. The present proceedings are against the order passed by the Commissioner in the remanded proceedings.

(2.) AFTER hearing both sides and considering their submissions, we note that the main appellant (EOU) can legitimately claim the benefit of departmental custody of the confiscated capital goods and accordingly waiver of pre -deposit is liable to be granted in respect of the duty with interest demanded in respect of such goods which are admittedly in the custody of the department vide Section 129E of the Customs Act. Condition No. 6(i) of the above Notification also appears to be offering support to the argument advanced by the learned Counsel with regard to capital goods. Insofar as raw materials are concerned, it appears from the records, exports (both physical and deemed) worth Rs. 7.45 crores were made by the assessee out of raw material worth Rs. 5.84 crores. It has been argued that, as the department has not alleged that any raw material was diverted and as it is not their case that any unutilised raw material was found in the factory, the demand of duty on the raw material is not sustainable. It has been claimed that the entire raw material was utilised in the manufacture of the finished goods and such goods were exported or cleared to DTA. We find from the records that, in their reply to show -cause notice, the EOU contended that there was no stock of raw material left unutilised. The impugned order does not seem to contain any rebuttal of this claim of the EOU. In this scenario, we are inclined to grant waiver of pre -deposit and stay of recovery in respect of duty demanded on raw material also.

(3.) IN the above scenario, we are not in a position to grant full waiver of pre -deposit of the penalty imposed on the main appellant, EOU. We direct them to pre -deposit an amount of Rs. 25 lakhs under Section 129E of the Customs Act within a period of 4 weeks and report compliance on 16/04/2010. There will be waiver of pre -deposit and stay of recovery in respect of the penalties imposed on the Directors of the company inasmuch as we have not, prima facie, come across any specific finding against them, which is required for such penalties under Section 112(a) of the Act.