VISHAL FOOTWEAR LTD Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) IN this case, the Customs duty demand of Rs. 80,65,374/ - has been confirmed against M/s. Vishal Footwear for contravention of the provisions of Notification No. 339/85 -Cus., dated 21 -11 -1985 as amended and Notification No. 133/94 -Cus., dated 22 -6 -1995, Central Excise duty of Rs. 1,13,394/ - has been confirmed in terms of Notification No. 5/86 -Cus., dated 20 -1 -1986, penalty of Rs. 5 lakhs has been imposed on M/s. Vishal Footwear Under Section 112 of the Customs Act, 1962, penalty of Rs. 20,000/ - under Rule 173Q of the Central Excise Rules, 1944 has been imposed; further a penalty of Rs. 25,000/ - has been imposed on the Managing Director of the company under the provisions of Customs Act and penalty of Rs. 5,000/ - under the provisions of Central Excise Act. Imported goods valid at Rs. 2,18,98,263/ - have been ordered to the confiscated Under Section 111(o) of the Customs Act, 1962 with option to redeem the same on payment of a fine of Rs. 12 lakhs.

(2.) THE brief facts of the case are that M/s. Vishal Footwear which was a unit in the NOIDA Export Processing Zone, approved for manufacture and export of leather footwear, was allowed to import capital goods and raw materials etc. free of duty for manufacture and export of final products in accordance with the provisions of Notification 339/85 -Cus. and Notification 133/94 -Cus. They were also entitled to procure capital goods and raw material, etc. indigenously without payment of Central Excise duty under Notifications 5/86 and 126/95. The importer could not implement and start commercial production within the period stipulated in the letter of approval issued by the Development Commissioner in the Ministry of Commerce. Extension of the period on validity was sought from time to time and latest extension was granted till 30th September, 1996 and subsequently revalidated upto 31 -3 -1999.

(3.) THE Department issued a show cause notice dated 31 -1 -1997 proposing recovery of both Customs and Central Excise duty on the ground that conditions of Customs and Excise Notifications had not been fulfilled as the unit had not commenced manufacture and export of final products in the manufacture of which goods imported duty free and goods obtained indigenously free of duty, were utilised. The demands were confirmed by the Adjudicating authority whose order is in challenge before us.