Decided on January 05,2015

Khanna Paper Mills Ltd. Appellant
C.C. Respondents


R.K.Singh, Member (T) - (1.)STAY application alongwith appeal has been filed against order -in -Original No. 04 -06/CUS/ASR/2014 dated 31.3.2014 in terms of which a customs duty demand of Rs. 5,03,30,930/ - along with interest was confirmed and the impugned imported waste paper collectively valued at Rs. 4,23,23,896/ - was order to be confiscated and as the goods were not available for confiscation redemption fine of Rs. 4,23,23,896/ - was imposed under Section 125 of Customs Act, 1962.
(2.)THE facts, briefly stated are as under.
"The appellants had imported waste paper at concessional rate of duty under Notification No. 21/2002 -CUS dated 01/3/2002 as amended. The condition of the exemption was that the waste paper was to be used in the manufacture of the paper/paperboards/newsprint."

The appellants had pleaded that the impugned goods were destroyed in fire in their factory and therefore the said goods could not be used for the intended purpose and as the circumstances were beyond their control, they should not be visited with the impugned liability. The adjudicating authority did not accept their pleading and so the impugned demand was confirmed alongwith the redemption fine as above.

(3.)DURING the hearing the appellants essentially stated that
"I. As the impugned goods were destroyed in fire in their factory, it was impossible for them to use them for the intended purpose.

II. That the destruction happened in fire is not in doubt as is evident even from the impugned order which has not imposed any penalty on them.

III. The extended period is not invokable in their case as there has been no willful mis -statement or suppression of facts.

IV. As the goods are not available for confiscation, the redemption fine can not be imposed.

V. The appellants cited the following judgments in there favour:

(i) Vamsahara Paper Mills v. CC, Visakhapatnam,, 2009 (247) ELT 751 (Tri. -Bang.),

(ii) Sami Labs Ltd. v. CC. Bangalore, : 2007 (216) ELT 59 (Tri -Bang.),

(iii) CC, Bangalore v. Sami Labs Ltd.,, 2012 (278) ETL 601 (Kar.)

(iv) Indian Seamless Steel and Alloys Ltd. v. Union of India : 2003 (156) ELT 945 (Bom.)

(v) Commissioner of Customs, Trichy -I v. Frontier Aban Drilling (India) Ltd. : 2010 (254) E.L.T. 63 (Mad.)

(vi) Union of India v. Customs & Excise Settlement Commission Kolkata - : 2010 (254) ELT 647 (Bom.)"

4.(1) The Ld. AR on the other hand contended that there is no equity in taxation laws and as the condition of the notification has clearly not been fulfilled in as much as the impugned goods have not been used for the intended purpose, the condition of exemption is not satisfied and hence the impugned duty and fine are clearly chargeable. He cited the following judgments to stress the proposition that exemption notifications are to be construed strictly and that there is no time limit for demanding duty on goods cleared under a bond.

"(a) Mediwell Hospital And Health Care Pvt. Ltd. v. Union of India : 1997 (89) E.L.T. 425 (S.C.),

(b) Bombay Hospital Trust v. Commissioner of Customs, Sahar, Mumbai : 2005 (188) E.L.T. 374 (Tri. -LB),

(c) Sarabhai M. Chemicals v. Commissioner of Central Excise, Vadodara - : 2005 (179) E.L.T. 3 (S.C.)"

4. (2) The ld. AR also cited the judgment in the case of Western Tobacco Ltd. v. Commissioner of Central. Excise, Bhopal : 2011 (263) E.L.T. 578 (Tri. -Del.) where -in CESTAT held that when the notification specifically requires utilization of goods for discharge of export obligation, the appellants failure to discharge export obligation on the ground that goods were destroyed and therefore could not have been so utilized is not a valid ground for non recovery of the differentially duty.


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