Commissioner of Customs vs Trilux Electronics

K.L. Manjunath, J.—The legality and correctness of the order passed by the CESTAT, Bangalore, in Appeal No. C/156/04 vide Final Order No. 463/2006, dated 16-2-2006 is called in question in this appeal raising the following substantial questions of law:

Whether the Tribunal was right in holding that the duty on capital goods is payable only on clearance from the Bonded Ware House ?

Whether irrespective of the clearance from the bonded premises, the respondent are eligible for benefit of the Notification in spite of nonfulfillment of the conditions therein as held by the Tribunal?

Whether the Tribunal was right in concluding that penalty was not imposable for the reason that the non-fulfillment of export obligation was beyond the control of the unit?

Whether the Tribunal was right in setting aside the duty and penalty in spite of the fact that the export obligation was not fulfilled by the Respondent?

The facts leading to this case are as herein under:

The respondent-assessee is having a customs licence bearing No. 25/97 dated 16-5-1997. The same has been obtained by the assessee in order to manufacture the car stereo and to export manufactured items under the provisions of the erstwhile Notification No. 13/81 which has been superceded by the notification No. 53/97 dated 3-6-1997. When the premises of the respondent-assessee was inspected, it was noticed that the assessee has availed the exemption in respect of the imported materials on which a duty of Rs. 29,92,794/- had to be paid by utilising the imported materials claiming exemption of duty. Though the assessee had manufactured, had not exported the same thereby failed to fulfill its obligation which resulted in negative Net Foreign Exchange and as a result show cause notice was issued calling upon the assessee why penalty should not be levied.

The assessee filed detailed reply stating that imported material on which exemption was claimed by the assessee has not been mis-utilised by it and that it had actually manufactured the goods but, unfortunately on account of failure of the foreign buyer in not lifting the material from the assessee, assessee could not export the same and it was lying in the warehouse. On account of breach of contract, the assessee initiated arbitration proceedings against the buyer which resulted in awarding of compensation to the assessee. It is the case of the assessee that, later after obtaining permission he exported the manufactured items to Dubai, earned foreign exchange. Therefore, it was contended that there is no negligence on the part of the assessee in not fulfilling the obligation and that it was beyond the control of assessee. Under the circumstances, he requested the Original Authority to close the proceedings.

The Original Authority did not consider the reply sent to the show cause notice. Accordingly, he passed an order levying penalty and also directed the assessee to pay the duty.

The assessee being aggrieved by the order, filed an appeal before the Commissioner of Appeals which appeal came to be rejected and thereafter, the second appeal was preferred before the CESTAT.

When the matter was heard by the CESTAT, a representative of the Revenue made a submission that the matter may be remanded to the Original Authority for computation of duty payable by the assessee in terms of the order passed in 2006 (106) ECC 63 . The Tribunal based on the submissions of the representative of the Revenue remanded the matter in order to recompute the duty payable by the assessee in respect of the raw-materials in terms of the order passed in Natural Stones Exports Limited v. CCE and Ors. directions were also issued by the Tribunal. The order of remission dated 28-2-2006 is called in question in this appeal.

The main contention of the assessee before the Court is that the appeal filed by the Revenue is not maintainable since the order has been passed by the Tribunal on the submission of the representative of the Revenue. In the circumstances, he contends that since it is a consent order, no appeal would lie.

Per contra, learned Counsel for the respondent-assessee contends that the judgment in Natural Stone Exports Limited has been questioned by the Revenue before this Court and therefore, the Revenue can question the order passed by the Tribunal. As a matter of fact, the appeal filed by the Revenue against the judgment in Natural Stones has also been dismissed by this Court in the year 2008 for non-prosecution. According to the learned Counsel for the assessee, the Revenue has not filed an application for restoration of the aforesaid appeal.

Even otherwise, we of the opinion that, if an order is passed based on the consent and the matter is remanded at the instance of the Revenue that the Revenue cannot maintain an appeal. Therefore, we have to dismiss the appeal only on the ground of maintainability. Accordingly, the appeal is dismissed.