The Customs Excise & Service Tax Appellate Tribunal Set Aside differential duty demand and penalties imposed on M/s.PPN power generating Co.
Facts
Appellant M/s. PPN Power Generating Co. Pvt. Ltd. have registered themselves under the Project Import Regulations, 1986 to set up a power plant at Pillaiperumalnallur, Thirukadaiyur Post, Nagapattinam District on the recommendation of “Tamil Nadu Electricity Board”. The project was approved and the Essentiality Certificate was issued by the Sponsoring Authority viz., Energy Department, Government of Tamil Nadu vide letter.
After the erection and commissioning of the power plant, M/s.PPN submitted a proposal to the Commissioner of Customs, Seaport Chennai requesting for finalization of provisional assessment vide their letter dated 26.12.2002. The matter was taken up for finalization of the project, based on their submissions. It was noted by the department that there was undervaluation of the goods supplied to appellant sourced by M/s.Stone & Webstar through M/s.Marubeni.
The original authority vide Order-in-Original thus confirmed differential duty demand on M/s.PPN and also imposed penalty under Section 112 (a) of the Customs Act, 1962.
Submissions
Advocate Hari Radhakrishnan appeared and argued for the appellant M/s.PPN submitted that that there is no undervaluation of goods. The appellant has made the payment as per the contract to M/s.Marubeni. There is no evidence of any amount paid to M/s.Marubeni over and above the contract value.
Decision
The division bench of Sulekha Beevi C.S., Member (Judicial) and Vasa Seshagiri Rao, Member (Technical) noted that there is considerable delay of more than 13 years after the date of report of DRI (8/2006) till the order of finalization. The department has not been able to explain this delay. The higher forums have held that in such situations, in unreasonable delay in adjudication / finalization of assessment the show cause notice itself is liable to be quashed.
The bench observed that the finalization has happened after 15 years of provisional assessment which, in our view, is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments. The department has not been able to put forward cogent evidence to reject the transaction value.
For these reasons, the tribunal found that the demand of differential duty the order for confiscation of goods, imposition of Redemption Fine and penalties imposed on M/s.PPN cannot sustain and requires to be set aside.
Case title: M/s.PPN Power Generating Co. Pvt. Ltd. v/s The Commissioner of Customs
Citation: CUSTOMS APPEAL No. 40240 OF 2021
