CX - Short and cryptic order by Tribunal - If amendment to LOP is to be treated as retrospective in nature as per Assessee, then Tribunal, as last fact finding Authority, should have discussed as to whether that argument has any merit - Order set aside and matter remanded: HC
By TIOL News Service
MUMBAI, MAR 23, 2016: THE appellants set up an 100% Export Oriented Unit (EOU). As per the Letter Of Permission dated 19.11.1997, the appellants were granted permission to manufacture recycled granules, garbage bags of plastics and plastic sheets. As per the LOP, the appellants were allowed to import plastic waste/scrap. The imported plastic waste/scrap received without payment of duty is to be used in the manufacture of specific goods as per the LOP.
Show-cause notice was issued to the appellants demanding duty on the ground that the appellants had not manufactured garbage bags of plastics instead the appellants had manufactured plastic bags which were used as a packing material by the textile manufacturer.
The demand is for period prior to 25.8.2003. There is no demand thereafter as the competent authority allowed the appellant to manufacture plastic bags.
As the adjudicating authority confirmed the demands and imposed penalties and the Commissioner (Appeals) upheld the same, the appellant filed an appeal before the CESTAT.
The Bench disposed of the appeals on 27.03.2014 and we reported this order 2014-TIOL-2828-CESTAT-MUM thus -
Cus - Appellants, an EOU, were granted LOP dated 19.11.1997 to manufacture recycled granules, garbage bags of plastics and plastic sheets by importing plastic waste/scrap without payment of duty - Demand of Customs Duty of Rs.93.92 lakhs confirmed as appellant manufactured plastic bags used as packing material by textile manufacturer- Another demand of Excise Duty of Rs.2.49 lakhs confirmed in r/o raw material indigenously procured without payment of duty - Demand of Excise Duty of Rs.38.37 lakhs also confirmed in r/o clearance of finished goods manufactured out of duty free material - Penalties imposed - Contention of appellants that LOP amended on 25.8.2003 to allow manufacture of plastic bags : HELD -As appellants had not fulfilled conditions of Not. No.53/97-Cus dated 3.6.1997 and Not. No/1/95-CE dated 4.1.1995, demand of Customs Duty of Rs.93.92 lakhs and Excise Duty of Rs.2.49 lakhsfor the period prior to 25.8.2003 upheld - As a manufacturer is entitled to clear goods without payment of duty to 100% EOU, demand of Rs.38.37 lakhs is not sustainable and set aside - Penalties imposed is also reduced to be equal to the above mentioned duties which are upheld - Appeals disposed of : CESTAT [para 8, 9, 10]
Aggrieved, the appellant has filed appeals before the Bombay High Court.
The High Court after hearing the submissions made by both sides [the appellant inter alia furnishing a clarification from 'All India Plastics Manufacturers Association', who have clarified that there would be no difference between the garbage bags of plastic and plastic bags & both are covered under Heading 3923 and fall under the same ITC HS Code - and the counsel for the Revenue submitting that the Appellant is indulging in is a mere play of words] observed thus -
+ In respect of imported goods, duty free procurements were undertaken by relying upon the Notification No.53/97-Cus and in respect of indigenous raw material, duty free procurements were undertaken by relying on the Notification No.1/95-CE.
+ There are conditions set out (in the notifications) but we do not see any material referred in the Tribunal's order, which would indicate specific terms and conditions of this Notification being violated. + If these were indeed Notifications, terms and conditions of which have been referred so also of the license in favour of the Assessee, then we do not see how the Tribunal could have dismissed the argument of the Assessee in the manner done by it and in a single paragraph. + If the Letter of Permission dated 19 November 1997, under which permission to set up 100% export oriented unit for manufacture and export of garbage bags of plastic, enables the Appellant/Assessee to import plastic waste/scrap without payment of duty and to use the same in manufacture of specified goods as per the Letter of Permission, then, demand of duty on the ground that the Appellant has not manufactured garbage bags of plastic but plastic bags which are used for packaging textile materials must be clarified and with proper reasoning.
+ The Assessee relied upon the modification or amendment to the Letter of Permission on 25 August 2003, whereby it was allowed to manufacture plastic bags. The contention was that upon this amendment the above referred demand cannot be sustained. If the amendment is to be treated as retrospective in nature as per the Assessee, then we expected the Tribunal as last fact finding Authority to discuss as to whether that argument of the Assessee has any merit. It should have been clarified whether the Letter of Permission would govern the acts and transactions or deals in the present case or the substantial Notifications. We do not find in para 8 of the Tribunal's order any reference made to the relevant and germane material including terms and conditions of the Notifications, the Letter of Permission, its amendment and thereafter the effect of the same, inasmuch as, whether it can be termed as retrospective or otherwise. We are, therefore, not assisted in any manner by such a short and cryptic order of the Tribunal.
Holding that the Tribunal's order dated 27.03.2014 cannot be sustained, the same was set aside and the matter was remanded.
The appeals were allowed.
(See 2016-TIOL-574-HC-MUM-CX)
