MPHASIS LTD. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THE issue in both these stay applications are common, hence they are taken up together for disposal as per law. In one application total duty involved is Rs. 76,29,934/ - and in another application the duty involved is Rs. 11,05,440/ - besides penalty in each of the case.

(2.) THE appellants are an 100% EOU working under STP Scheme. They obtained in -bond Manufacturing Sanction Order and Private Bonded Warehouse Licence both bearing No. 11/93, dated 16 -4 -1993 valid up to 30 -5 -2008 to manufacture/develop and export of software. According to the department, the unit was working under the provisions of Notification No. 52/2003 -Cus., dated 31 -3 -2003 and Notification No. 22/2003 -C.E., dated 31 -3 -2003 and contravened the same. While the appellant claim that these Notifications are not applicable insofar as the facts of the case are concerned, as the inclusion are subsequent to the notification of in -bonding and the relevant notification when the goods were In -bonded was Notification Nos. 140/91 -Cus., and 1/95 -Cus., dated 4 -1 -95. The allegation against the appellant is that they had imported/procured capital goods duty free and installed the entire goods in the bonded premises for generation of electricity, maintenance of air -conditioning system, UPS system, GD Sets and modular furniture. All these capital goods were fixed in the bonded ground floor while modular furniture were kept in several floors of the building which were also bonded. The appellants have to let out a small portion of their premises for a short period to a non -EOU. Therefore, revenue is of the impression that as a portion of the building was let out to a non -EOU and the air -conditioning plant is also used by them, therefore, they should be denied the benefit of exemption. It is the contention of the appellants that they were not required to obtain any permission from the department, when a small portion of the premises is let out as there was no such condition under the notification under which the goods were bonded. However, subsequent amended Notification of 2003 is being invoked by the department to deny the benefit solely on the ground that a portion of the building was let out to the non -EOU without obtaining permission from the Asstt. Commissioner. The appellants took the stand that subsequent enacted notification will not have retrospective effect. It is their submission that the entire plant has been installed in the ground floor and therefore, its utility is for the entire building. If a small portion of the building is let out, that itself cannot be a ground to deny the benefit of the notification, as the plant installed in ground floor continues to be under the appellant's use for carrying on 100% EOU business. However, their plea has been rejected.

(3.) WE have heard both sides in the matter.