The Customs, Excise & Service Tax Appellate Tribunal, Chennai, ordered reconsideration of the penalty imposed on M/s. Beach Minerals Company for LOP/Green Card non-renewal.
Facts
M/s. Beach Minerals Company, Muthiapuram, Tuticorin, which is an 100% EOU, were holders of LOP/Green card valid up to 6.10.2014 for manufacture of garnet, ilmenite, rutile and zircon. However, their LOP/Green card along with bonded warehouse license and in-bond manufacture sanction order were found to have not been extended after its expiry on 06.10.2014.
They were hence issued a Show Cause Notice (SCN) demanding an amount of Rs.34,88,133/- being the duty forgone on capital goods, packing material and finished / semi-finished goods under the provisions of Central Excise Act, 1944. After due process of law, the learned Adjudicating Authority has vide Order in Original confirmed the demand with interest and imposed penalty.
Submission
Advocate A.K. Jayaraja, submitted that it has been admitted in the Show Cause Notice and the Order in Original that even prior to the expiry of their LOP/Green card, they had applied for extension to the Development Commissioner, MEPZ, Chennai.
Decision
The single member bench of M. Ajit Kumar, Member (Technical) found that the issue before it falls on a short compass i.e. that the impugned order was passed without taking into consideration the request made by the appellant to the D.C. for extension of LOP/Green Card. Subsequently, due to operation of law, mining operations have been banned and they were forced to exit from the EOU operations. Their application for the same has since been obtained and the in principle exit order has been extended up to 16.12.2021.
The tribunal found that the Show Cause Notice does not contain any allegations of a blameworthy act by the appellant except his license was not renewed by the D.C. A person who sets out to do business is at times caught in circumstances beyond his control.
The bench said that to have a setback in business is not a punishable offence. Each situation has to be examined on its merit and hardship should not be caused to a compliant assessee just because a provision in law enables the discretionary imposition of penalties.
The bench found that the SCN has been issued invoking the B-17 bond executed by the appellant. Hence, although the action of the Commissioner (Appeals) in setting aside the penalty was right, he should also have asked the adjudicating authority to examine the duty liability in terms of the exit order given by the D.C.
“The appellant has showed his willingness to pay the duty as per the normal process of debonding at the time of exit from EOU scheme. Hence, I feel that in the light of the development the matter needs to be remanded to the adjudicating authority to examine the facts and decide all the issues raised by the appellant regarding depreciation, destruction of obsolete goods etc. and arrive at the duty payable along with interest, afresh”, the tribunal said.
Case title: M/s. Beach Minerals Company v/s Commissioner of GST & Central Excise
Citation: Excise Appeal No.40120 of 2022
