REGENCY CERAMICS LTD. Vs. COMMISSIONER OF CUSTOMS, HYDERABAD

JUDGEMENT

(1.) M /s. Regency Ceramics Pvt. Ltd., the appellant were granted permission by Secretariat of Industrial approvals, Ministry of Industry to set up 100% EOU for the manufacture of ceramic floor and wall tiles. During 1985 -86, they imported various machinery without payment of duty under Notification No. 13/81 dated 9 -2 -81 and started their operations. As the appellant experienced certain difficulties in fulfilling their export obligation, they approached the Govt. of India for withdrawal from the EOU scheme and to permit them to sell the goods locally after completion of the debonding formalities. The Govt. of India accepted their request for debonding subject to the condition that the export obligation should be completed in the course of five year i.e. up to the end of 1991. They also permitted the appellant to export only 30% of their annual production and the balance of 70% for domestic consumption. The appellant filed a writ petition before the High Court of A.P. on 6 -1 -87, and the High Court directed the Customs Authorities to allow clearances of the finished goods subject to the condition that the appellant pays Rs. 25 lakhs per quarter towards customs duty on the finished goods liability and appropriate excise duty till the disposal of the writ petition.

(2.) AS the appellant could not complete the export obligation, by the end of 1991, the Govt. of India granted extension by another two years up to 1993. The appellant completed 30% of Export obligation by October, 1993. The Assistant Collector of Customs, Kakinada passed an order dated 30 -12 -93 determining duty on the imported machinery as Rs. 2,60,20,094/ - and interest payable at Rs. 32,24,500/ - in terms of Section 61(2) of the Customs Act, 1962. He issued a corrigendum dated 31 -12 -93 for adjustment of the deposit of Rs. 2.10 crores paid by the appellant against the duty and interest liability of the appellant. The Assistant Commissioner in his order held the date of debonding as 7 -1 -87 when the appellant was permitted to sell their products in Domestic Tariff Area (DTA). The appellant appealed to the Collector (Appeals) who decided that the date of debonding cannot be 7 -1 -1987, merely because the appellant was permitted to sell in DTA from that date and that the interest has to be levied till the goods are de -bonded and that the appellants can seek waiver of interest by approaching the Central Board of Excise and Customs. With the above observations, he remanded the matter to the Assistant Commissioner with a direction to re -determine duty payable along with interest. The above order of the Collector (Appeals) dared 6 -1 -95 was challenged by the Department in the CEGAT. In the mean time, the Assistant Commissioner passed the de novo OIO dated 14 -3 -1997, finalising the assessment on the imported goods. In the said order, the Assistant Commissioner took the date of debonding as 31 -12 -93 which is actually the date of completion of export obligation by the appellant, and on this basis demanded customs duty of Rs. 1,63,11,254/ - and an amount of Rs. 2,22,69,102/ - towards interest. He further directed that the amount of Rs. 2.10 crores paid by the appellant be adjusted against the duty and interest payable and accordingly demanded balance interest of Rs. 1,75,80,356/ -. The appellants filed an appeal against the ACs order dated 14 -3 -97. However, the Commissioner (Appeals) in its Order dated 5 -10 -98, rejected the appeal of the appellant. Thereafter the appellants appealed to CEGAT, Chennai. The CEGAT Chennai in final order No. 939/99 dated 5 -5 -99 remanded the matter to the Commissioner (Appeals) for de novo consideration. The CEGAT Chennai in its final order dated 802/2000 dated 26 -6 -2000 [2000 (121) E.L.T. 384 (T)] rejected the appeal filed by the department against the Order dated 6 -1 -95 passed by the Commissioner (Appeals). The Commissioner (Appeals) in his OIA No. 1/01, dated 22 -1 -01, rejected the appellants claim on various grounds. The appellant aggrieved over the OIA dated 21 -1 -01 has come before this Tribunal in appeal.

(3.) THE short point before us is whether the appellant is liable to pay interest on the duty paid on the capital goods till the date of debonding of their EOU i.e. 31 -12 -1993, though by that time, they had paid an amount of Rs. 1.75 crore towards the duty amount which is higher than the duty liability determined and amounts to Rs 1,63,14,254/ -.