JUMBO BAGS LIMITED Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we are inclined to dispose of the appeal itself finally. Accordingly, after dispensing with predeposit, we take up the appeal.

(2.) THE appeal is against an order passed by the Commissioner (Appeals) dismissing the assessee's appeal (filed against an adverse order of the original authority) on the sole ground of non -compliance with Section 129 E of the Customs Act. During the material period the appellants were a 100% EOU. They had obtained advance permission from the Development Commissioner -in -charge of MEPZ for clearance of their products to the Domestic Tariff Area (DTA) to the extent of 50% of the FOB value of exports. They added the value of 'deemed exports' to the value of physical exports and, on this basis, they effected DTA clearances. The Department found that these clearances exceeded 50% of the value of physical exports and, accordingly, in a show -cause notice dated 4.4.2001, asked the party to pay duty on the excess DTA clearances for the period 1999 -2000 in terms of the proviso to Section 3(1) of the Central Excise Act without availing the benefit of Notification No. 2/95 -CE. This demand was to the extent of over Rs. 11 lakhs. The show -cause notice also proposed to impose a penalty on the party under Rule 173Q of the Central Excise Rules, 1944. These proposals were contested. In adjudication of the dispute, the original authority confirmed the demand of duty against the EOU and imposed on them a penalty of Rs. l.65 lakhs. The appeal preferred by the party against the decision of the said authority was allowed by way of remand by the Commissioner (Appeals). In his order, ld. Commissioner (Appeals) directed the lower authority to consult the Development Commissioner and take fresh decision. Pursuant to this direction, the Joint Commissioner of Customs, in a letter dated 29.10.04, sought certain clarifications from the Development Commissioner -in -Charge, MEPZ. The Development Commissioner, in his reply dated 7.2.05, clarified that the permission granted by him to the EOU for the period 1999 -2000 was to effect DTA sales upto 50% of the FOB value of 'physical exports'. He has also mentioned maximum value of DTA sales so permitted, at Rs. 205.8 lakhs. It was also clarified that the above permission was given on the basis of the application filed by the EOU accompanied by a certificate of their Chartered Accountant as also of the Bond Officer. The Development Commissioner further stated that he had no objection to the Customs proceeding against the unit for "recovery of applicable duties". After obtaining this clarification of the Development Commissioner, the Joint Commissioner of Customs adjudicated the case afresh and confirmed the above demand of duty against the EOU and imposed on them a lesser penalty (Rs. 1.5 lakhs). It was against this order of the Joint Commissioner of Customs that the EOU preferred appeal to the Commissioner (Appeals) and the latter passed the impugned order.

(3.) IT appears from the records that the Appellate Commissioner required the appellant to predeposit the entire amount of duty under Section 129 E of the Customs Act. The appellant, however, paid only an amount of Rs. 2 lakhs. They had paid a little over Rs. 43,000/ - during the course of original adjudication. The appellant, after making the predeposit of Rs. 2 lakhs applied to the Appellate Commissioner for modification of his direction for predeposit. Ld. Commissioner (Appeals), without passing separate order on the modification application, chose to dispose of the appeal itself. In the impugned order, however, he examined the grounds raised in the modification application and took the view that the payments already made did not suffice the purpose of Section 129 E ibid. Hence the dismissal of the party's appeal for non -compliance with Section 129E.