M.V. Ravindran - (1.) THIS appeal is filed by the Revenue against Order -in -Original No. 18/2006, dated 25 -4 -2006. Relevant facts that arise for consideration are on verification of their records and also physical verification of the goods, it was noticed that certain capital goods have become obsolete and were no longer used for the development of software, for which they were imported. Also, warehousing period of certain bonded goods had expired and the unit had not obtained extension of the warehousing period for certain capital goods as required under Section 61 of the Customs Act, 1962. The duty liability on the said obsolete/time expired bonds and ineligible goods put together works out to Rs. 27,36,259/ - and interest on the same works out to Rs. 1,01,671/ -. The duty was calculated at the rate applicable on the date of expiry of warehousing period after allowing the depreciation. On pointing out this omission, the assessee volunteered and paid the duty amount of Rs. 27,36,259/ - and interest of Rs. 1,01,671/ - totaling to Rs. 28,37,930/ -, in respect of the capital goods imported duty -free under Notification No. 140/91 -Cus., dated 22 -10 -1991 vide TR -6 challan dated 8 -3 -2006. 1.1 The adjudicating authority after considering the submissions made by the assessee before him, who had waived the issuance of show cause notice, held that the customs duty liability and the interest thereof in respect of capital goods needs to be confirmed and appropriated the amounts already paid by the appellants before issuance of show cause notice. In the said impugned order, the adjudicating authority has held the goods are liable for confiscation but in his discretionary power did not confiscate the goods and did not impose any fine in lieu of confiscation and also did not impose any penalty on the respondent holding that the respondent having paid the duty along with interest before issuance of show cause notice on being pointed out.
(2.) LEARNED Departmental Representative on behalf of the Revenue would submit that the adjudicating authority having held the goods are liable for confiscation has erred in not confiscating the said goods and imposing fine in lieu of such confiscation and also has erred in not imposing penalty under Section 112(a) of the Customs Act, 1962. She reiterates the grounds of appeal taken in the said appeal memorandum. It is her submission that the respondent herein unfulfilled the conditions of Notification No. which amply proved that the department's contention was correct and duty and interest was paid only after the detection of violation by the Department and it was not voluntary. It is her submission that under the circumstances, mere payment of duty along with interest by the importer before the issuance of show cause notice cannot be a strong ground for non -imposition of penalty. It is her submission that provisions of Section 112(a) of the Customs Act, 1962 would be applicable as the adjudicating authority has held that the goods are liable for confiscation. Learned counsel appearing on behalf of the respondent would reiterate the findings of the adjudicating authority.
(3.) WE have considered the submissions made by both sides and perused the records. 4.1 There is no dispute on the facts inasmuch as both sides agree that the respondent being a STP under 100% EOU scheme had procured various capital goods on which customs duly was foregone by the department; they became obsolete and no more can be used for development of software meant for export and the assessee failed to obtain extension of warehousing period. As the warehousing period had expired, the duty liability on time expired bond and ineligible goods was worked out by the departmental authorities along with interest and informed to the respondent -assessee. The respondent -assessee discharged the same as was directed. 4.2 In view of the above factual matrix, the findings of the adjudicating authority for not confiscating the capital goods and non -imposition of penalty needs to be read, which is as under: 8. I find that M/s. RBIL had failed to seek and obtain extension of warehousing period in terms of Section 61 of Customs Act, 1962, in respect of the goods imported by them without payment of duty. Goods covered by these bonds had become obsolete and therefore were not being used for the development of software meant for export. Therefore, I find that these goods are deemed to have been removed from the warehouse under Section 72(1)(b) read with Section 72(1)(d) of Customs Act, 1962 and the party is therefore liable to pay the customs duty amounting to Rs. 27,36,259/ - and interest amounting to Rs. 1,01,671/ - under the said Section. These goods are also liable for confiscation in terms of Section 111(j) and 111(o) of the Customs Act, 1962 as the party failed to comply with the condition of obtaining extension of warehousing period and also failed to properly account for the goods. In coming to this conclusion, I rely upon the judgment of the Hon'ble Supreme Court, in the case of Kesoram Rayon ( : 1996 (86) E.L.T. 464 (S.C.)) in which it is held that - "Goods are improperly removed from a warehouse under the terms of sub -section (1) .........if they have not been removed from the warehouse on the expiration of the permitted period or its permitted extension [Clause (b)]. In all such cases the Customs officer is empowered to demand and the importer shall pay the full amount of duty chargeable on the goods and interest, penalties, rent and other charges thereon. If payment as demanded is not made, it is recoverable by sale of other goods of the importer in the warehouse." 9. It is noticed that M/s. RBIN vide letter dated 1 -3 -2006 had admitted the lapse. Further, M/s. RBIL had voluntarily paid the duty of Rs. 27,36,259/ - and interest of Rs. 1,01,671/ -, which was credited to the Government account vide TR -6 challan, dated 9 -3 -2006. This amount of Rs. 28,37,930/ - is liable to be appropriated towards the duties and interest (worksheet attached as Annexure -1), under Section 72 of the Customs Act, 1962 read with Section 61 ibid, on account of deemed removal/failure to properly utilize the said goods for the specified purpose for which they were imported. The impugned goods become liable for confiscation under Section 111(o) of the Customs Act, 1962 for violation of the provisions of Notification No. 140/91 -Cus., dated 22 -10 -1991 (Now Notification No. , dated 31 -3 -2003) read with the provisions of Section 61 of the Customs Act, 1962. M/s. RBIL also render themselves for penal action, However, taking into consideration the fact of payment of full duty together with interest, I am inclined to take a lenient view as regards confiscation of the impugned goods and also regarding imposition of penalty. 4.3 It can be seen from the above reproduced paragraphs that the adjudicating authority has used his discretionary power to come to reasoned conclusion not to confiscate the goods, relying upon the judgment of the Hon'ble Supreme Court. In our view, the confiscation of the goods is a discretionary power and which has been invoked by the adjudicating authority cannot be called in question in the facts and circumstances of this case. Since there is no confiscation order of the capital goods, non -imposition of penalty under Section 112 of Customs Act, 1962 also seems to be correct. 4.4 In our view, the impugned order is correct, legal and does not suffer from any infirmity. Revenue's appeal is devoid of merits and is rejected. (Operative portion of this order was pronounced in open Court on conclusion of hearing);