MAVI INDUSTRIES LIMITED, Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE appeals are directed against the order passed by the Commissioner of Customs (i) demanding Customs duty of Rs. 61,24,18,364/ - from M/s. Krishna Filaments Ltd. (presently known as Mavi Industries Ltd.), a 100% Export - Oriented Unit, in terms of the bonds executed by them under Notification No. 53/97 -Cus dated 3.6.1997; (ii) demanding interest on such duty; (iii) holding the goods in question (capital goods, spares and raw materials totally valued at over Rs. 126 Crores) to be liable to confiscation under Section 111(o) of the Customs Act; (iv) determining redemption fine of Rs. 20 Crores to be paid by the Export -Oriented Unit under Section 125 of the Act in lieu of such confiscation; (v) imposing a penalty of Rs. 6 Crores on the Export Oriented Unit under Section 112(a) of the Customs Act and (vi) imposing penalties of Rs. 5 Crores each on Shri O.P. Agarwal (second Appellant) and Shri K.K. Agarwal (third Appellant) under Section 112(a) ibid. The learned Commissioner passed the order in a second round. During the course of adjudication of the case, an application filed by the EOU for extension of Letter of Permission (LOP) for 5 years was pending before the Development Commissioner. Therefore, before the learned Commissioner, the party contended that the demand of Customs duty on capital goods, raw materials etc. on the ground of non -fulfillment of export obligation and non -achievement of NFEP (Net Foreign Exchange Earnings as a percentage of Export) and E.P. (Export Performance) would not survive if LOP was extended by the Development Commissioner. They requested to await the results of their application for extension of LOP. As the adjudicating authority was bound to dispose of the case within 3 months prescribed by the Hon'ble High Court in judgment dated 17.12.2008 in Customs Appeal Nos. 64 to 66/2008, it passed the impugned order on 16.3.2009 without waiting for the Development Commissioner's decision on the EOU's application for extension of LOP. Subsequently, on 27.4.2009, the Development Commissioner granted extension of LOP for a period of 5 years effective from 1.4.2009. A copy of his order No. SEEPZE -SEZ/EOU/28/44/98 -99/Vol.II/4104 dated 27.4.2009 is available on record, which reads as follows :

(2.) The learned Counsel for the Appellants submits that it is not the case of the Revenue that the capital goods were not installed in the factory and not used in the manufacture of the export products. Again it is not the case of the Revenue that the raw materials imported and indigenously procured by the Appellant were not used in the manufacture of the export products. Therefore, according to the learned Counsel, the allegation of the department that the EOU violated condition No. 6(i) and (ii) of Notification No. 53/97 -Cus. is not sustainable. Condition No. 6 (iv) of the notification required the EOU to achieve the prescribed NFEP and EP within a period of one year from the date of procurement of raw materials or within such extended period as might be allowed by the Jurisdictional Assistant/Deputy Commissioner of Customs. It is submitted that, though the finished goods were exported by the Appellants, those exports were not enough to achieve NFEP and EP to the required extent. It was in this circumstance that the Appellant requested the Development Commissioner for extension of LOP. Now that the LOP stands extended for a period of 5 years effective from 1.4.2009, the Appellants are in a position to continue the operations of the EOU and to endeavour to achieve the requisite NFEP and EP through exports. The learned JCDR submits that the original period of 5 years allowed by the Development Commissioner for EOU operations had expired long back. Commercial production was commenced by the EOU on 27.4.1999 and, therefore, they were required to fulfill their export obligations within 5 years therefrom. This period expired on 26.4.2004. The Development Commissioner has extended the LOP for 5 years w.e.f. 1.4.2009. The learned JCDR, in this context, is concerned over the state of affairs of the EOU during the interregnum between 26.4.2004 and 1.4.2009. This concern of the JCDR stems from the fact that the Development Commissioner has extended LOP for 5 years w.e.f. 1.4.2009. Obviously, this aspect was not in the domain of the adjudicating authority when it passed the impugned order. We are of the view that the learned Commissioner of Customs should consider this aspect also and determine the status of the EOU prior to 1.4.2009. The other contentions of the learned Counsel, which we have already summarized hereinbefore, also shall be considered by the learned Commissioner. Considering the fact that the dispute had already been carried through several rounds of litigation before this Tribunal and the Hon'ble High Court, the adjudicating authority shall pass final order without unreasonable delay.

(3.) We, therefore, set aside the impugned order and allow these appeals by way of remand to the Commissioner for de novo adjudication of the dispute in accordance with law and the principles of natural justice. Needless to say that the Development Commissioner's order dated 27.4.2009 has to be considered and also that the Assessee's contentions with reference to condition No. 6 of Notification No. 53/97 -Cus. also have to be addressed on merits. The learned Commissioner is expected to pass final order within a period of three months from the date of receipt of a certified copy of this order, with the cooperation of the Appellants.