Case: M/S. Afloat Textiles (India) Limited & Another Vs. The Union of India & Others

J.P. Devadhar, J.1. Rule, returnable forthwith. By the consent of the parties both the matters are taken up for final hearing.2. Since common order passed by the CEGAT, Mumbai dated 22/4/2003 is challenged in these two petitions, the same are being heard together and are disposed of by this common Judgment.3. The basic issue in these petitions are, whether the CEGAT, Mumbai was justified in confirming the order of the Commissioner of Customs without deciding the issues canvassed before it. It is also contended that passing of the order after four months of hearing has seriously prejudiced the case of the petitioners, because, vital documents which go to the root of the matter has not been considered in the impugned order passed by the Tribunal.4. In the year 1993, the petitioners were granted three Quantity Based Advance Licenses under the Duty Exemption Scheme contained in Chapter VII of the Export-Import Policy for April, 1992 to March, 1997. The said licences carried an obligation to export Stainless Steel Flanges with permission to import duty free stainless steel plates as per value addition prescribed under the input output norms. Under the policy, it was open to the petitioners to first import raw materials and manufacture and then export or make prior exports and then import the raw materials without payment of duty. However, duty free imports were subject to the conditions laid down in the Notification No.204/92-cus dated 19th May, 1992.5. Petitioners had opted for the second option and had effected prior exports as permissible under the Scheme. On 26.11.1994 the factory premises of the petitioners were searched by the officers of the Central Excise/customs and certain documents and goods were seized. During the course of investigation, statements of various parties, including Mr. K.L. Dingra, petitioner in Writ Petition No.3064 of 2003 were recorded. In those statements, it was admitted by Mr. Dingra as well as several other parties that the raw materials imported by the petitioners were sold before the export obligations under the licences were fulfilled. By a show cause notice dated 9/5/1995, petitioners were called upon to show cause as to why the benefit of Notification No.204/95 - Cus. Dated 19/5/1992 should not be denied to them and Customs duty amounting to Rs.1,17,83,881/- should not be recovered from them. The petitioners were also called upon to show cause as to why the goods seized under the panchanama should not be confiscated and penal action should not be taken against them under the provisions of the Customs Act.6. By an order in original dated 4/6/1996 the Commissioner of Customs (Import) confirmed the demand of duty of Rs.1,17,83,881/- by holding that the conditions set out in Notification No.204/92-Cus dated 19/2/92 have been violated by the petitioners. It was held that the duty free goods were sold without fulfilling the export obligation and even the export proceeds have not been realized and, therefore, the entire seized goods are liable for confiscation. The petitioners were given an option to redeem the goods on payment of redemption fine and penalty of Rs.1 crore against the Company and Rs.10,00,000/- on Mr. K.L. Dingra, Vice President of the Company were also levied. Challenging the aforesaid order, petitioners, filed appeals before CEGAT, Mumbai and by the impugned order dated 22/4/2003 the Tribunal upheld the order in original dated 4/6/1996 passed by the Commissioner of Customs. Challenging the above orders, these petitions have been filed.7. Mr. V.S. Nankani, learned Advocate appearing on behalf of the petitioners submitted that the order passed by the Tribunal suffers from serious infirmities. Firstly, he submitted that the impugned order has been passed after four months of hearing the appeal, as a result whereof several documents relied upon by the petitioners have been omitted to be considered by the Tribunal. Secondly, Mr. Nankani submitted that during the pendency of the appeal, the licensing authorities had certified that the petitioners have fulfilled the export obligation and the agreement executed by the petitioners have been redeemed in terms of para 126 of the Handbook of Procedure, 1992-97. These facts were brought to the notice of the Tribunal by way of additional grounds. However, the Tribunal failed to consider these important documents and passed the impugned order. Thirdly, it was submitted that the findings given by the Tribunal to the effect that the petitioners have not produced any material to show that they have fulfilled the export obligations and that the export proceeds have been realized is factually incorrect. It was submitted that the petitioners had produced the orders passed by the licensing authorities to show that the export obligation has been fulfilled and all the licence conditions have been fulfilled. It was submitted that since the Tribunal totally lost sight of the above materials placed before it, the impugned order is liable to be quashed and set aside.8. Mr. A.J. Rana, learned Senior Advocate appearing on behalf of the respondents, on the other submitted that in the present case, in view of the clear admission on the part of the Vice President of the petitioners to the effect that the imported goods have been sold in the open market before the export obligations were fulfilled, it was amply clear that the petitioners have violated the conditions of the Exemption Notification No.204/92 and, therefore, no fault can be found with the order passed by the authorities below. Mr. Rana further submitted that when the petitioners have violated the conditions No. VI & VII of Notification No.204/92, the issuance of certificate by the licensing authorities in the year 2001 to the effect that the petitioners have fulfilled the export obligation, does not in any way affect the right of the Customs authorities to initiate action against the petitioners. It was submitted that since the petitioners had sold the goods in the open market in clear violation of the conditions set out in the Exemption Notification No.204/92 there is no infirmity in the order passed by the authorities below and, therefore, there is not merit whatsoever in these petitions and the same are liable to be dismissed.9. We have heard Counsel on both sides. In the present case, the Commissioner of Customs had confirmed the duty demand to the tune of Rs.1.17 crores and confiscated the seized goods and had also levied penalty of Rs.1 crore on the Company and Rs.10,00,000/- on Mr. K.L. Dingra, Vice President of the company inter alia on the ground that the conditions No. VI & VII of Notification No.204/92 have been violated. In the memo of appeal as well as in the written submissions, it was contended by the petitioners that there is no violation of conditions No. VI because the MODVAT credit taken on the inputs used in the manufacture of the respective products has already been reversed and as a result thereof, the grievance of the department to the extent that condition No. VI has been violation does not survive. As regards violation of condition No. VII of Notification No.204/92 is concerned, it was the contention of the petitioners that in view of the order passed by the Licensing authorities to the effect that the export obligation under the Quantity Based Advance Licence have been complied with by the petitioners and the agreement executed by the petitioners have been redeemed, the order passed by the Commissioner of Customs do not survive.10. Whether the certificate issued by the Licensing authority in the year 2001 to the effect that the export obligation has been fulfilled by the petitioners would have bearing on the findings given by the Commissioner to the effect that conditions set out in Notification No.204/92 was an issue raised in the appeal and the same was required to be answered by the Tribunal. The petitioners in the memo of appeal as well as in the written submissions have submitted that in view of the reversal of MODVAT credit, there is no violation of condition No. VI of Notification No.204/92 and in view of the findings given by the licensing authorities there is no violation of condition No. VII of Notification No.204/92. However, there is no clear finding recorded by the Tribunal on these issues. In these circumstances, the grievance of the petitioners that the belated judgment delivered by the Tribunal after four months from the date of hearing without considering the material facts on record has led to the miscarriage of justice seems to be justified.11. The Apex Court in the case of Standard Radiation Pvt. Ltd. V/s. Commissioner of Central Excise [143 E.L.T. 24 (S.C.)], has held that the Tribunal being the last fact finding authority is expected to discuss the facts in detail and not cursorily and come to briefly stated conclusions on that basis. In the present case specific plea is raised and canvassed before the Tribunal by adducing material and additional ground has been raised in that behalf. However, there is no clear finding recorded by the Tribunal on these issues at all. In these circumstances, we are of the opinion that the impugned order passed by the Tribunal is liable to be quashed and set aside. Accordingly, we quash the impugned order dated 22/4/2003 passed by CEGAT, Mumbai. The matter is remitted back to the CEGAT, Mumbai with directions to rehear the matter and dispose of the same on merits within three months from the date of receipt of Writ of this Court. All rival contentions are kept open.

Decision reasoning: 1[ds]10. Whether the certificate issued by the Licensing authority in the year 2001 to the effect that the export obligation has been fulfilled by the petitioners would have bearing on the findings given by the Commissioner to the effect that conditions set out in Notification No.204/92 was an issue raised in the appeal and the same was required to be answered by the Tribunal. The petitioners in the memo of appeal as well as in the written submissions have submitted that in view of the reversal of MODVAT credit, there is no violation of condition No. VI of Notification No.204/92 and in view of the findings given by the licensing authorities there is no violation of condition No. VII of Notification No.204/92. However, there is no clear finding recorded by the Tribunal on these issues. In these circumstances, the grievance of the petitioners that the belated judgment delivered by the Tribunal after four months from the date of hearing without considering the material facts on record has led to the miscarriage of justice seems to be justified.11. The Apex Court in the case of Standard Radiation Pvt. Ltd. V/s. Commissioner of Central Excise [143 E.L.T. 24 (S.C.)], has held that the Tribunal being the last fact finding authority is expected to discuss the facts in detail and not cursorily and come to briefly stated conclusions on that basis. In the present case specific plea is raised and canvassed before the Tribunal by adducing material and additional ground has been raised in that behalf. However, there is no clear finding recorded by the Tribunal on these issues at all. In these circumstances, we are of the opinion that the impugned order passed by the Tribunal is liable to be quashed and set aside. Accordingly, we quash the impugned order dated 22/4/2003 passed by CEGAT, Mumbai. The matter is remitted back to the CEGAT, Mumbai with directions to rehear the matter and dispose of the same on merits within three months from the date of receipt of Writ of this Court. All rival contentions are kept open.