PIERRE COLSUN INC. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THESE two appeals are filed by the appellants against the Order -in -Original No. 14/2003 -Cus. Adjn, dated 26 -6 -2003 passed by the Commissioner of Customs, Bangalore.

(2.) SHRI V.M. Doiphode, learned Advocate appearing for the appellants pleaded that the DRI Officers of Bangalore searched the appellants premises on 25 -11 -2002 and on scrutiny of the records, they found that the appellants were issued an EPCG Licence No. 07500381, dated 19 -11 -99 by the JDGFT, Bangalore for import of capital goods of CIF value of Rs. 1,08,89,667/ - for manufacturer and export of ready -made garments. The Licence was used to import capital goods and spares by availing exemption under Notification No. 29/97 -Cus., dated 1 -4 -97 as amended. The appellants had imported capital goods valued at Rs. 32,83,791/ - within the stipulated period of two years from the date of issue of licence while during the entire period of export obligation, they were required to import goods for a minimum value of Rs. 1 crore within two years from the date of issue of licence or such extended period as allowed by the licensing authority. The appellants have not met the export obligation of 15% laid down for the first block of two years which has expired on 18 -11 -2001. Extension of the same has also not been granted. The appellants have removed capital goods, namely 5 sets of Brother Model DB2 -B -101 -3 Single Needle Lockstich machines from their premises to M/s. Lisa Enterprises, Bangalore who were using the same and proprietor of M/s. Lisa Enterprises admitted that the machines were sold to him for Rs. 1 lakh to set off the dues of M/s. Pierre Colsun. M/s. Lisa Enterprises, Bangalore was not endorsed on the said licence as a supporting manufacturer as required under Condition No. 6 of the Notification No. 29/97. Therefore a show cause notice was issued to the appellants, M/s. Pierre Colsun Inc, proposing to confiscate the capital goods under Section 111(o) of the Customs Act, 1962 and demanding customs duty and interest thereon and also proposing penalty on them under Section 112 of the Customs Act, 1962. The second appellants, Shri Suraj Mohan Munglani, Managing Partner of M/s. Pierre Colsun Inc. was also required to show cause for imposition of penalty on him under Section 112 of the Customs Act, 1962. The case was adjudicated by the Commissioner of Customs, Bangalore who confiscated the capital goods but allowed M/s. Pierre Colsun Inc. to redeem the same on payment of fine of Rs. 5 lakhs and he also gave an option to M/s. Lisa Enterprises to redeem the goods on payment of fine of Rs. 10,000/ - for the machines seized from their custody. He confirmed the duty demand and interest and imposed penalty of Rs. 2 lakhs on M/s. Pierre Colsun Inc. and penalty of Rs. 75,000/ - on Shri Suraj Mohan Munglani, Managing Director of M/s. Pierre Colsun Inc. under Section 112 of the Customs Act, 1962.

(3.) THE learned Advocate pleaded that the Licence No. 75000381 was issued to the appellants on 19 -11 -99 under 0 duty EPCG Scheme and they cleared the goods imported under said licence under Bill of Entry Nos. 3456 and 3457 both dated 27 -11 -99 and Bill of Entry No. 52414, dated 29 -11 -99. Three installation certificates dated 15 -2 -2001 issued by the Chartered Engineers and Chartered Accountants were filed by them before the Deputy Commissioner of Customs on 20 -2 -2001. Five machines were sent to M/s. Lisa Enterprises, Bangalore, vide delivery Challan No. 348, dated 8 -2 -2001 with a remark machines sent for repair and for fitting special attachments and adjustment. However, there were some disputes with M/s. Lisa Enterprises and they retained the machines for some time but these were not sold to them. On 25 -11 -2002, the appellants had written a letter to EPCG Committee, New Delhi for extension of time to fulfil export obligation under EPCG Scheme and also agreeing to pay 5% customs duty. On 25 -11 -2002, search was conducted by DRI at their premises. They informed DRI about their letter sent for extension of fulfilment of export obligation and for changing 0 duty to 5% under EPCG scheme. On 28 -11 -2002, capital goods imported under EPCG were seized. On 17 -1 -2003, the EPCG Committee decided to convert their licence into 10% duty licence and the Jt. Director of DRI was informed about it. On 27 -1 -2003, Jt. DGFT, Bangalore informed the appellants to furnish original EPCG licence with enclosures to take further action as per their H.Q.s decision. However, despite their correspondence with the DRI, original licence was not returned to them for modification and the case was adjudicated by the Commissioner. The licence was returned to them only after adjudication of the case on 8 -9 -2003. Then immediately they submitted the licence for amendment to the Jt. DGFT, Bangalore. He therefore, pleaded that since licence has been permitted to be amended from 0 duty to 10% duty under EPCG Scheme, therefore the order of the Commissioner requires to be set aside and the case to be sent back for re -adjudication. He relied on the decision of Mumbai Bench CESTAT in Order No. CI/2416, 2417/WZB/2003, dated 28 -10 -2003 and also in Order Nos. CI/3092 to 3095/WZB/2003, dated 9 -12 -2003 where the cases were remanded back on identical situation.