Commr. of C. Ex. vs J.C.T. Electronics Ltd.

Ajay Kumar Mittal, J.—This order will dispose of two appeals, CEA Nos. 113 and 114 of 2010, the question of law and fact being common therein.

The facts have, however, been taken from CEA No. 113 of 2010.

This appeal filed u/s 35G of the Central Excise Act, 1944 [for short "1944 Act") at the instance of the Revenue has arisen out of order dated 6-11-2009, (Annexure A-1) [2010 (261) E.L.T. 267 (Tri. - Del.)] passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short "the Tribunal"] wherein the following substantial question of law has been claimed for determination by this Court:

Whether the goods imported in terms of Notification No. 13/97-Cus., dated 1-3-1997 and successor Notification No. 25/99 dated 28-2-1999 under the concessional rate can be used in any other factory other than the factory registered under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods), Rule 1996 and as per the procedure set out in these Rules?

Briefly noticed, the controversy arose in the following circumstances:

M/s. J.C.T. Electronics Limited (hereinafter to be referred to as ''Respondent'') is the manufacturer of colour picture tubes and is registered with the Central Excise Department under Rule 3 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 (for short "the 1996 Rules") so as to enable it to import various inputs/raw material at the concessional rate of duty. The Respondent is liable to pay excise duty under the provisions of Chapter sub-heading No. 5840.11 of the Schedule to the Central Excise Tariff Act, 1985. In order to avail the concessional rate of duty, the Respondent has been executing bonds from time to time as required under Rule 4(3) of the Rules wherein an undertaking has been given by it to observe all provisions of 1996 Rules, 1944 Act and the Custom Act, 1962 (for short "1962 Act") as also the notifications issued thereunder.

The Respondent imported various items vide different bills of Entry under Notification No. 13/97-Cus. and 25/99-2000-Cus. read with 1996 Rules. An audit was carried in the record of the Respondent when it was found that the Respondent had not used the whole quantity of various goods imported at the concessional rate of duty but had removed certain imported items from its factory premises to another unit at Vadodara thereby, violating the provisions of the 1996 Rules and causing loss of custom duty to the exchequer to the tune of Rs. 12,83,298/-. Two notices were, thus, served on the Respondent for recovery of the amount of custom duty along with interest and penalty.

The Additional Commissioner (P&V), i.e. the adjudicating authority, confirmed the demand raised vide show cause notices, by order dated 30-1-2004, Annexure A-1 u/s 28 of the 1962 Act read with Rule 8 of the 1996 Rules, and ordered the recovery of the duty by enforcing the Bond executed under Rule 4 of the 1996 Rules. The Respondent was also held liable to pay interest u/s 28AB besides the penalty of the equal amount, u/s 114A of the 1962 Act.

The confirmation of the demand gave rise to an appeal by the Assessee before the Commissioner (Appeals), Central Excise, Chandigarh. The submissions made on behalf of the Respondent found favour with the appellate authority which, consequently, accepted the appeal and set aside the order of the adjudicating authority, vide order dated 30-7-2004, Annexure A-2. The Revenue took the matter in appeal before the Tribunal. After hearing the counsel representing the two sides and examining the record, the Tribunal did not feel inclined to interfere with the findings returned by the first appellate authority. The appeal was, therefore, dismissed vide order dated 6-11-2009, Annexure A-3. It is how the Revenue is in appeal before us.

The issue that arises for consideration by this Court in this appeal is, whether the Respondent-Assessee was entitled to the concessional rate of duty on the imported goods which had been utilized in the premises of its factory other than the one registered under the 1996 Rules and as per the procedure set out in these Rules?

The Commissioner (Appeals), while upsetting the order of demand passed by the adjudicating authority, considered various factors. The significant of all, that was contended on behalf of the Assessee was that though the goods were purchased for use in the manufacture of colour picture tubes at their Mohali Unit, but due to closure of that unit, the Assessee-company was not able to use the inputs and as such the same were diverted to their unit in Vadodra for the same purpose. This was done after giving proper intimation to the Appellant-Department and the latter had never raised any objection to that being so done. The Tribunal also, while adjudicating the controversy held that the only failure on the part of the importer was that it did not use the imported inputs in the factory premises registered with the Jurisdictional Assistant Commissioner, in terms of Rules 3 and 4 of the 1996 Rules and instead used the same for the intended purpose, in another unit of its factory with the approval of the Appellant-Department. If the observations of the Tribunal are squeezed to be zeroed down, it would come to be noticed as under:

In such circumstances, we find that the Assessee cannot be denied a substantial benefit for its failure to follow a procedural condition condoned by the department. We do not find any reason to interfere with the impugned order and dismiss the appeals filed by the revenue as devoid of merit.

In view of the circumstances noticed above, we find that the concurrent findings of fact returned by the two appellate authorities are based on record and appreciation of all relevant considerations. No error or perversity could be pointed out in the approach adopted by the appellate authorities, which may warrant interference by this Court. No substantial question of law arises in this appeal. We find no ground to interfere with the orders impugned in the appeals. The appeals are consequently dismissed.