Madras High Court
The Commissioner Of Customs vs M/S.Soumag Eletronics Limited on 11 March, 2021
CMA.Nos.820 and 990 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.03.2021
CORAM :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Ms.Justice R.N.MANJULA
Civil Miscellaneous Appeal Nos.820 and 990 of 2018
and C.M.P.No8065 of 2018 in C.M.A.No.990/2018
The Commissioner of Customs,
Chennai-II Commissionerate,
“Customs House”,
No.60, Rajaji Salai,
Chennnai – 600 001. ...Appellant in
C.M.A.No.820/2018 &
Respondent in
C.M.A.No.990/2018 &
Vs
M/s.Soumag Eletronics Limited,
No.12, Flat “B”, Chitharanya,
Kader Nawas Khan Road,
Greams Road, Chennai – 600 006. ...Respondent IN
C.M.A.No.820/2018 &
Appellant in
C.M.A.No.990/2018 &
Civil Miscellaneous Appeal filed under Section 130 of the
Customs Act against the impugned order of the Hon'ble Tribunal in Final
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CMA.Nos.820 and 990 of 2018
Order No.42229/2017 dated 09.08.2017 on the file of the Customs, Excise
& Service Tax Appellate Tribunal, Chennai.
For Appellant : Mr.V.Sundareswaran
Senior Standing Counsel
For Respondent : Mr.Hari Radhakrishnan
COMMON JUDGMENT
(Delivered by T.S.Sivagnanam,J)
The revenue is the appellant in C.M.A.No.820 of 2018 and the
assessee/importer is the appellant in C.M.A.No.990 of 2018.
2.Both the appeals have been filed under Section 130 of the Customs
Act, 1962 [hereinafter referred to as “the Act”] challenging the order passed
by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal
Bench, Chennai ['the Tribunal' for brevity] in Final Order No.42229/2017
dated 09.08.2017.
3.The appeals were admitted on 27.04.2018 on the following
substantial questions of law:
“C.M.A.No.820/2018 was admitted on the following
substantial questions of law:
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CMA.Nos.820 and 990 of 2018
(i) Whether the tribunal was justified in holding
that the production of “installation” certificate of the
goods imported free of duty under the “Project Import
Regulations, 1986” is only directory and not mandatory?
(ii) Whether the conclusion of the tribunal that the
production of “sale invoices” for having sold the
computerized PCB in-circuit Tester for test bench for
Ticket Office Machines would tantamount to discharge of
the obligation to produce the proof of installation.
(iii) Whether the tribunal failed to appreciate that
the failure to clear the “validator” imported vide Bill of
Entry No.5668 dated 24.10.2009, the imported goods
namely computerized PCB in-circuit Tester for test bench
for Ticket Office Machines vide Bill of Entry No.5219
dated 25.01.2009 cannot be installed.
(iv) Whether the tribunal committed an error in
concluding the charging of ware house interest for the
uncleared goods relating to Bill of Entry No.5668 dated
24.10.2009 is unsustainable since the provision of
imposing interest was only introduced by Finance Act,
1995 with effect form 26.05.1995.
(v) Whether the Tribunal was correct in applying
the provisions under Section 27 (relating to claim for
refund of duty) of the Customs Act, 1962 for the
levy/charge of interest under Section 61 of the Customs
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CMA.Nos.820 and 990 of 2018
Act, 1962 (delayed clearance of goods from warehouse).
C.M.A.No.990 of 2018 was admitted on the following
substantial questions of law:
(i) Whether remission of duty on the goods can be
denied on the ground that the Revenue had auctioned the
goods?
(ii) Whether the Hon'ble Tribunal had erred in
confirming demand in respect of goods imported vide bill
of entry No.5668 dated 24.10.1989 on the ground that no
evidence was produced by the appellant for having
abandoning the goods?
(iii) Whether duty demand is sustainable in view of
the provisions of Section 68 of the Customs Act, 1962
which excludes duty liability on goods where the title to
the goods is relinquished?”
3.We have heard Mr.V.Sundareswaran, learned Senior Standing
Counsel appearing for the revenue and Mr.Hari Radhakrishnan, learned
counsel appearing for the assessee/importer.
4.The revenue is aggrieved by the findings rendered by the Tribunal in
paragraphs 6 and 8. The finding rendered by the Tribunal in paragraph 6 is
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CMA.Nos.820 and 990 of 2018
with regard to the compliance of the requirements in respect of a project
import and whether the assessee had fulfilled his obligations. The original
authority and the first appellate authority held that the installation certificate
as required under Regulation 7 of the Project Import Regulations, 1986 have
not been produced, it goes without saying that the assessee has not installed
the machinery and therefore not entitled for any benefits which would
accrue to them.
5.The revenue would vehemently contend before us certain facts
stating that there was difficulty in even serving notices on the assessee,
there was change of address, the Management was taken over by a different
set of persons and all these factors were taken into consideration while
demanding duty from the assessee under Section 18(7) r/w. 28(2) of the Act.
Before the Tribunal, the assessee has produced certain records which was
considered by the Tribunal, it took note of the decision of the Bangalore
Tribunal in the case of Creative Industries P. Ltd. vs. C.C. & C.Ex. (A-II),
Hyderabad [2008 (228) ELT 379 (Tri.-Bang.)], wherein it was held that
non-production of installation certificate is only a procedural requirement
and not a condition determining the eligibility of the impugned goods for
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CMA.Nos.820 and 990 of 2018
the benefit of concessional rate of assessment. The Tribunal further noted
that the said decision was affirmed by the High Court Of Andhra Pradesh as
reported in 2012 (282) ELT 349 (A.P). The Tribunal also referred to the
decision of the other Tribunal which also held that the installation certificate
is only a procedural requirement. The Tribunal after considering the
documents placed, was satisfied that the assessee has produced proof to
establish installations and therefore, it was held that the Department cannot
sustain the demand of merit rate of duty in respect of goods imported vide
Bill of Entry No.5219 dated 25.01.1989. For such reasons, the assessee
succeeded before the Tribunal.
6.Before us, the revenue seeks for arguing the factual aspect with a
view to impress upon the scope that no installation had taken place. Per
contra, there were evidences by way of invoices raised in the name of the
Northern Railway produced by the assessee before the Tribunal and as well
as before this Court.
7.In our considered view, the Tribunal has taken a decision on
appreciation of facts placed before it by way of documents and in this
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CMA.Nos.820 and 990 of 2018
appeal filed under Section 130 of the Act, we are required to decide the
substantial questions of law and not to re-appreciate the factual finding
unless it is shown that the finding is utterly perverse. We are not inclined to
classify the impugned finding as being utterly perverse. Therefore, no
grounds have been made by the revenue to interfere with the said finding.
Accordingly, the appeal is dismissed as no substantial questions of law
arises for consideration.
8.The other finding which the revenue is aggrieved is in paragraph 8
which speaks about the interest liability. The Tribunal was of the view that
the charging of interest was introduced only with effect from 26.05.1995 by
the Finance Act, 1995 and therefore, no interest can be demanded from the
assessee.
9.The learned counsel for the assessee would argue that the demand
for interest as in the order-in-original dated 18.11.2004 is under section
28(2) of the Act and no such interest can be demanded under the said
provision.
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CMA.Nos.820 and 990 of 2018
10.In our view, the contention does not merit acceptance because if
such an argument is accepted, it would be misreading the order-in-original.
The order-in-original confirms the demand of Rs.1,47,65,239/- under
section 18(7) read with section 24(2) of the Act, i.e. because the bill of entry
was provisionally assessed under section 18(2) and subsequently merit rate
of duty had been demanded under section 28(2). Therefore, the Deputy
Commissioner of Customs never relied on section 28(2) of the Act to levy
interest. Reading further makes the issue clearer because the adjudicating
authority says that apart from the merit rate of duty, the importer is also
liable to pay admissible interest for the said differential duty from the date
of payment of duty on the importation. Therefore the demand for interest is
a separate demand. We find that the interest was never quantified in the
order-in-original. It appears that the assessee did not seriously contest this
issue before the first appellate authority but when the matter came before
the Tribunal, it appears that some argument was advanced and the Tribunal
presumably noting section 28AA of the Act, held that the interest liability
can arise only from 1995.
11.In our considered view, the Tribunal committed an error in making
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CMA.Nos.820 and 990 of 2018
such an observation as it is never the case of the revenue that interest was
demanded under section 28AA of the Act. Before us, the revenue would
refer to section 61 of the Act. Such contention was never raised at any
earlier point of time. Therefore, in our considered view the revenue cannot
be aggrieved by observations made by the Tribunal in paragraph 8 of the
impugned order because demand of interest under section 28AA was never
an issue. Therefore, the appeal filed by the revenue is dismissed and the
substantial questions of law are left open.
12.The assessee is aggrieved by the finding rendered by the Tribunal
in paragraph 7 of the impugned order which pertains to the demand of duty
with regard to the goods which were not cleared. At the time of
adjudication, the assessee appears to have taken a stand that though bill of
entry was filed and the goods were bonded, they did not clear the goods as
the Management took a decision that they do no require the equipment.
Subsequently, the assessee took a different stand stating that they never filed
a bill of entry and with that stand they pursued the matter under the Right to
Information Act and ultimately went before the Central Information
Commission and on direction issued by the Central Information
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CMA.Nos.820 and 990 of 2018
Commission the Customs Department gave a reply to the assessee that there
are no records available.
13.In our considered view, the contention advanced by the assessee
deserved to be out rightly rejected. As rightly pointed out by the Tribunal,
the assessee had filed a double duty bond undertaking and it will be too late
in the day for them to state that they have never filed bill of entry. One
more argument which was pressed into service before us by referring to the
project import license stating that they never had a project import license for
the product validator. If that was the case, the bill of entry would not have
been entertained and the goods would have been right away confiscated and
other proceedings would have followed on that, per contra, the goods were
allowed, bill of entry was allowed to be filed and the goods were examined
and a double duty bond was executed and the goods were bonded.
Therefore, the Tribunal was right in holding that the contentions raised by
the assessee was wholly not tenable. Therefore, we find no grounds to
interfere with the finding passed by the Tribunal. In the result, the appeal
filed by the assessee is dismissed and the substantial questions of law are
answered in favour of the revenue.
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CMA.Nos.820 and 990 of 2018
14.Accordingly, both the appeals are dismissed. No costs.
Consequently, connected miscellaneous petitions is closed.
(T.S.S.,J.) (R.N.M.,J.)
11.03.2021
Index: Yes/No
Internet:Yes/No
Speaking Judgment/Non speaking Judgment
cse
To
1.The Commissioner of Customs,
Chennai-II Commissionerate,
“Customs House”,
No.60, Rajaji Salai,
Chennnai – 600 001.
2.Customs, Excise & Service Tax Appellate Tribunal,
No.26, Sashtri Bhavan Annexe Buildig,
Haddows Road, Chennai-6.
https://www.mhc.tn.gov.in/judis/
CMA.Nos.820 and 990 of 2018
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
cse
C.M.A.Nos.820 and 990 of 2018
11.03.2021
https://www.mhc.tn.gov.in/judis/
