HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM C.E.A No. 17 OF 2004 19-11-2014 BETWEEN M/s. Teknomin Aqua Exports (India) Ltd., Ankalapatur Village, Chillakur Mandal, Nellore District …Appellant And The Commissioner of Customs & Central Excise, C.R Buildings, Kannavarithota, Guntur – 522 004 …..Respondent HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM C.E.A No. 17 OF 2004
JUDGMENT: (per the Hon'ble Sri Justice L. Narasimha Reddy)
This appeal under Section 35G of the Central Excise Act, 1944 (for short, ‘the Act’) is preferred by the appellant herein feeling aggrieved by the order dated 02-07-2004 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zone Bench at Bangalore (for short, ‘the Tribunal’) in Appeal No.C/212/2000.
The appellant is a 100% export oriented unit. As a part of its activity, it exports frozen shrimp. A search was conducted by the authorities of the Customs Department on the premises of the appellant on 22-11-1994. It was noticed that the appellant has removed certain items that were stored in the notified customs godown at Ankalapatur Village of Nellore District without payment of customs duty and that it sold certain items within the Domestic Tariff Area (DTA). A show cause notice was issued to the appellant on 08-05-1995 demanding a sum of Rs.12,50,000/-. Explanation submitted by the appellant was not found satisfactory and the respondent passed an order in original dated 15-02-1999 confirming the demand made through the show cause notice. The appellant filed an appeal against the order in original. After examining the contentions urged by both the parties, the Tribunal dismissed the appeal through order dated 02-07-2004.
Sri Pushyam Kiran, learned counsel for the appellant submits that except that the appellant has shifted the imported goods from one customs godown to another customs godown for the sake of convenience and protection, it did not effectively remove the goods and still, the respondent as well as the Tribunal held that there was violation on the part of the appellant. He submits that permission from the Development Commissioner was obtained before the shifting of the goods and the same was not taken into account, by the respondent. As regards the sale of goods in DTA, learned counsel submits that the distribution of the seed to the farmers who are expected to cultivate the prawns and then to export the product to the foreign countries, was treated as a sale in DTA. He contends that supply of frozen shrimp to one M/s Rank Aqua Estates Limited was treated as permissible and similar treatment was not extended in respect of other instances.
Sri Gopal Krishna Gokhale, learned counsel for the respondent submits that the removal of the goods from the customs godown was totally unauthorised and the appellant was not able to produce any order authorising such removal. He submits that it is only on clearance, given by the incharge officer of the customs godown that the goods can be removed and such a course was not adopted in the instant case. Learned counsel further submits that the appellant tried to make a distinction between frozen shrimp and shrimp seeds in the context of sale in the DTA and no support whatever was derived from any provision of law or conditions in the permission accorded to the appellant.
The activities of the appellant are fairly restricted since it is registered and recognised as 100% export oriented unit. As regards the import of material from foreign countries, it stands on the same footing as any other importer. Any goods imported by it from foreign countries can be removed or put to use, only on payment of customs duty. So far as the disposal of the manufactured goods is concerned, the appellant was supposed to export the entire quantity produced by it, to foreign countries and there is a clear prohibition against the sale of such goods in the domestic market i.e., DTA.
Two allegations were made against the appellant on the basis of the search conducted on 22-11-1994. The first was in relation to removal of imported goods, from customs godown. The appellant does not dispute that it has removed goods from the customs godown at Ankalapatur. The justification pleaded by it was that the removal was not for the purpose of using the goods, but to preserve them in another godown at Srinivasarao Chatram Village. It is too difficult to accept such a plea. Even where it becomes necessary to shift the imported goods from one customs godown to another, it can be done only on the strength of a specific order passed by the competent authority in this behalf. In case, the appellant had permission from any superior authority for removal of the goods from a godown, without payment of customs duty, the same ought to have been presented before the incharge officer of the godown. It is only when such incharge officer is satisfied about the genuinity of the order, that he can be expected to release the goods without payment of the customs duty. The record discloses that the appellant did not produce the so-called order of the Development Commissioner, at any point of time nor it was shown to the incharge officer of the godown. The respondent as well as the Tribunal recorded specific findings to this effect. Learned counsel for the appellant is not able to point out as to how the finding of fact in this behalf, is contrary to law.
Coming to the second aspect, the appellant is required under law, to supply its goods only to foreign countries i.e., by exporting them. Even if for any reason, the export becomes either non-profitable or otherwise difficult, it cannot sell the goods manufactured by it, in the DTA. The justification pleaded by it is that the supply was to certain agencies or individuals who in turn are under obligation to export. Here again, the plea is difficult to be accepted. Once there is an absolute prohibition against the sale of goods manufactured by the appellant in the DTA, the question of making any classification or distinction of the goods or purchases in the DTA, does not arise.
We do not find any merit in this appeal. It is accordingly dismissed. There shall be no order as to costs.
L. NARASIMHA REDDY, J CHALLA KODANDA RAM, J 19-11-2014 ks Note:
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