M/s. Himachal Join Venture vs Commissioner Of Customs

The appellant herein was awarded a contract for civil and hydro mechanical works for head race tunnel and associated works of Prabhati Hydro Electric Project Stage 2 on 11.09.2002. To execute the said award the appellant had to import the plants and machineries. Accordingly, appellant applied for EPCG License in the year 2003. The said License bearing No. 0530137207 was issued to the appellant on 14.10.2004 under Notification No.097/2004-Cus dated 17.09.2004. The license was issued subject to the condition of fulfilling the export obligation and such other conditions as prescribed in the said Notification during the validity period of the said license. The appellant, accordingly, utilized the said EPCG License / authorization for duty saved value of Rs.9,56,320.82 for import of capital goods i.e. head race tunnel.

The Department observed that the export obligation period expired on 13.10.2012 during which the appellant was required to complete the export obligation worth Rs.76,50,566.56. As per the condition the appellant was required to furnish the prescribed documents for the same within 3 months from the expiry of the block years else to pay the custom duty with applicable interest amount equal to unfulfilled portion of export obligation. Noticing the non-compliance of the said conditions that a show cause notice No.1140817 dated 25.03.2013 was served upon the appellant proposing him to be declared as a defaulter to be not entitled for the benefits of EPCG authorization. Fiscal penalty was also proposed to be imposed under section 11(2) of Foreign Trade (Development and Regulation) Act 1992. The said proposal was initially confirmed vide Order-in-Original No.40/2014 dated 21.03.2004. The appeal thereof was rejected vide the Order-in-Appeal No.316/2019 dated 30th August, 2019. However, on the technical ground of not being filed within the stipulated period of limitation, the said order has been assailed vide the present application.

I have heard Shri Ankur Jain, learned Advocate for the appellant and Shri Ravi Kapoor, Departmental Representative for the Department.

It is submitted on behalf of the appellant that neither the impugned Show Cause Notice nor the impugned Order in original was received by the appellant at the appropriate time. The passing of the Order-in-Original came to the knowledge of the appellant only after the recovery proceedings were initiated against him. There after the appellant approached the Department requesting to provide the copy of the said O-I-O which was finally received by the appellant only on 06.01.2017. The said facts were duly informed to Commissioner (Appeals) while preferring appeal dated 20th March, 2017 against the said O-I-O. However, Commissioner (Appeals) has considered 14.12.2015 as the date of receipt of said O-I-O instead of 06.01.2017. The said finding is prayed to be set aside merely because the Order-in-Original was not received back undelivered from the postal authority, hence, the service thereof upon the appellant cannot be presumed nor it can be the conclusive proof to hold the same as the date of receipt. The reasoning of Commissioner (Appeals) is alleged to be based upon assumptions and presumptions.

4.1 It is further submitted that the Department has not produced any proof of service of either Show Cause Notice or the Order-in-Original upon the appellant. Otherwise also all the documents of the appellants were recording its Principal Office at Bangalore and Branch Offices in Himachal Pradesh and New Delhi. Bill of entry was also filed at Bangalore address. Hence there was no specific reason to issue Show Cause Notice at Delhi Address and even the notices of personal hearing at Delhi address. The recovery letters were rather sent to Bangalore address. Irrespective Delhi Office was closed by the appellant but there was no need to convey the said closure once the Bangalore address was the intimated address. The order purely on technical grounds is therefore prayed to be set aside. Appeal is prayed to be allowed.

Per-contra, it is submitted by ld. D.R. that the appellant has been a habitual defaulter. He had defaulted in complying with the conditions of the EPCG authorization and the relevant Notification. The Show Cause Notice was well in their notice. They had intentionally avoided to appear before the adjudicating authority despite knowledge of the said proceedings. The appeal before Commissioner (Appeals) was an afterthought. Hence the plea of limitation has wrongly been raised. Impressing upon the correctness in the order under challenge, appeal is prayed to be dismissed. In rebuttal, ld. Counsel placed on record several correspondences being made by him with the Department.

After hearing and perusing the entire record of this appeal and the set of documents filed at the stage of rebuttal, I observe and hold as follows:-

The EPCG authorization was issued in favour of the appellant way back in the year 2004. Under the said authorization, appellant imported a machine by saving a custom duty of Rs.9,56,32,082/- which was against the license value of Rs.76,50,566.56. However, it is apparent that the completion of export obligation was never brought to the notice of the concerned Department during the time stipulated in the Notification No.097/2004-Cus dated 17.09.2004, as is apparent from the letter dated 21.04.2015 as produced by the appellant. Perusal of this letter, in addition, clarifies the acknowledgment of the appellant about receiving the Show Cause Notice dated 25.03.2013 on 30.03.2015. Hence the appellant’s own document is sufficient to falsify the appellant’s submission that Show Cause Notice was never received by the appellant. By the time of reply dated April 21, 2015 even the O-I-O dated 21.03.2014 was passed.

Further perusal of the correspondence placed at the time of arguments, it gets revealed that appellant had regularly been corresponding with the concerned Department even after the admitted date of communication of the O-I-O i.e. 14.12.2015 asking for issuance of EODC and submitting compliances thereof. However, Department has not produced any document as a response to these communication reflecting that the impugned show cause notice and the impugned O-I-O was already been passed against the appellant. No doubt the onus was of the Department to prove the service of the O-I-O upon the appellant. As per section 128 of Customs Act, the period of 60 days for filing the appeal has to reckon from the date of communication of the said order to the assessee/ the person aggrieved of by the said decision. As observed above, there is no cogent evidence about the proof of service, nor there is cogent explanation as to why the O-I-O was served upon Delhi address despite that the address mentioned by the appellant for its registered office was that of Bangalore. I further observe that there is no denial about the date of receipt of recovery proceedings and receipt of O-I-O by the appellant on 6th January, 2017. Commissioner (Appeals) is observed to have been silent about any cogent reason for not considering 6.01.2017 as the date of receipt. Accordingly, matter is remanded back to the Commissioner (Appeals).

However, irrespective of the above observations, the law has already been settled by Hon’ble Apex Court in the case of Singh Enterprises vs. CCE, Jamshedpur reported in 2008 (221) E.L.T. 163 (S.C.). In accordance whereof the Commissioner (Appeal) has no authority to condone the delay of more than 90 days from the date of communication of the order assailed before him. There is no infirmity in the order under challenge but in view of the above discussion and keeping in view that the appeal before Commissioner (Appeals) was filed well within the period of 90 days from 6th January, 2017, the date of communication of Order-in-Original to the appellant, the matter is remanded back to Commissioner (Appeals) directing him to rehear the matter after condoning the delay of 28 days and to adjudicate denovo on the merits of the case.

As a result, the order under challenge is hereby set aside. Appeal stands allowed by way of remand.

[Order pronounced in the open Court on 22.12.2021]