R.K.K.R. STEELS LTD. Vs. CC

JUDGEMENT

(1.) THE appellants had imported raw materials under eight Value Based Advance Licences (VABALs, for short) issued (in May and June 1993) by the competent authority in terms of the EXIM Policy 1992 -97 and had cleared the goods without payment of duty under Notification No. 203/1992 -Cus. dated 19.5.1992 issued by the Central Govt. as part of the Duty Exemption Entitlement Certificate Scheme (DEEC Scheme for short). The clearance of the goods was made under three Bills of Entry filed in July and November 1993. The final product (torsteel) was exported in discharge of export obligation under the said scheme. Most of these exports were made by the party before obtaining, and in anticipation of, the respective VABALs. A few exports were made after obtaining the respective licences. Barring these few, all exportations had taken place before the corresponding importations. Eventually, in 1995, the Department found that, in violation of condition v(a) of the above Notification, input stage credit had been obtained by the party in respect of the goods manufactured and exported by them in discharge of export obligation under the scheme. On this basis, a show -cause notice was issued to the party on 30.10.1995 seeking to deny them the benefit if the Notification and recover duty of nearly Rs. 28.00 lakhs on the imported raw materials under Section 28(1) of the Customs Act. The notice invoked the larger period of limitation under the proviso to Section 28(1) ibid on the basis of alleged wilful mis -statement/suppression of facts by the party. The show -cause notice also proposed to hold the above goods to be liable for confiscation under Section 111(o) of the Customs Act as also to impose penalty on the importer under Section 112(a) and 114(i) of the Act. The proposals in the show -cause notice were contested. The adjudicating authority confirmed the demand of duty (with interest @ 24%) against the party and imposed on them a penalty of Rs. 1.00 lakh under Section 112(a) of the Act. Hence the appeal by the assessee.

(2.) HEARD both sides. It was submitted by learned senior counsel that, before the issuance of the show -cause notice, the appellants had received a demand notice dated 12.9.1995 from the Assistant Commissioner and the same had been complied with. The demand was to expunge input stage credit of Rs. 12,10,448/ - taken in respect of the final products exported under the DEEC Scheme. This amount was worked out on the basis of a formula mentioned in the Assistant Commissioner's demand notice. The entire amount was paid in cash by the appellants on 10.10.95 and this fact was promptly communicated to the Assistant Commissioner in a letter, wherein it was also indicated that the payment was "under protest". These facts were also mentioned in the letters sent in reply to the show -cause notice. The adjudicating authority noted these facts, but refused to extend the benefit of exemption to the imported goods on the ground that no interest was paid (on the amount of Modvat credit reversed) in terms of the "General Amnesty Scheme" announced by the Central Govt. in Circular No. 605/140/95 -DBK dated 3.1.1997. Learned Counsel argued that the Amnesty Scheme was not applicable to the appellants inasmuch as they had reversed the entire amount of Modvat credit as demanded by the Assistant Commissioner. In this connection, it was pointed out that the reversal of credit was made on the basis of the formula mentioned in the Assistant Commissioner's demand notice, which was not different from the formula prescribed under the Amnesty Scheme. According to learned Counsel, the provision (under the Amnesty Scheme) for payment of interest on the amount of reversed Modvat credit from the date of export to the date of reversal of credit was not applicable to the appellants' case where the entire amount of credit had been reversed in due compliance with the demand notice dated 12.9.1995 issued by the Department. It was also pointed out that the said demand notice had not sought to levy interest on the Modvat credit amount. In the circumstances, according to learned Counsel, it was not justifiable on the part of the adjudicating authority to deny the benefit of exemption to the appellants in respect of the inputs imported under the DEEC Scheme. He also challenged the demand of duty on the ground of limitation. According to him, the entire demand raised in the show -cause notice dated 30.10.95 for the period of imports (July - December 1993) was time -barred inasmuch as the larger period of limitation under the proviso to Section 28(1) of the Customs Act was invoked without stating any valid ground. The show -cause notice alleged "wilful mis -statement/suppression of facts by the importer". It did not specify as to which facts were wilfully mis -stated or suppressed by the appellants. In order to invoke the proviso to Section 28(1) ibid, it was incumbent on the Department to make specific allegation of facts constituting one or more of the elements [collusion, wilful mis -statement of facts, suppression of facts] mentioned in the said proviso. Otherwise, it would have to be held that the larger period of limitation was invoked without any basis. In this connection, learned Counsel relied on the following judgments of the apex Court:

(3.) LEARNED SDR submitted that, on merits, all the points raised by learned senior counsel were already covered against the assessee by the decision of this Bench in the case of MRF Ltd. v. Commissioner of Customs, Chennai (Final Order No. 212/2006 dated 29.3.2006 in Appeal No. C/169/2002). She relied on the Hon'ble Supreme Court's judgment in Bharti Telecom Ltd. v. Commissioner of Customs , to contend that the reversal of Modvat credit effected by the assessee in 1995 was liable to be treated as a reversal of credit under the Amnesty Scheme and therefore the benefit of Notification No. 203/92 would not be available to them inasmuch as they did not pay interest in terms of the said scheme. The reversal of credit (without payment of interest) in compliance with the earlier demand notice issued by the Assistant Commissioner would not ipso facto render the Amnesty Scheme inapplicable to the assessee. As they deliberately defaulted payment of interest under the said scheme, they should be held to have incurred liability by breach of condition v(a) of the above Notification. On the limitation issue, learned SDR endeavoured to make out a case that the allegation, in the show -cause notice, of "wilful mis -statement/suppression of facts by the importer" was sufficiently specific and hence it could not be said that the larger period of limitation was invoked without any basis.