MR. SARFRAZ AHMAD KHAN, MEMBER (TECHNICAL).-(1). This appeal disposes of 125 Appeals Nos.
285/LB of 2004 and 394/LB of2004 to 516/LB of 2004 since these have been filed by the same appellant against Order-in-Original No. 1/2004, dated 29-5-2004 passed by Collector of Customs- and involve common issues on law and facts. Brief facts leading to these appeals are that the appellant, a recognized manufacturer of agricultural tractors, statedly imported certain components/parts of agricultural tractors Model MF-240 and MF-375 and got the same cleared at the concessionary rate of duty/taxes in terms of S.R.O. 502(I)/94, dated 9-6-1994. The appellant had an approved Industry Specific Deletion Programme (ISDP) duly approved by Ministry of Industries/Engineering Development Board vide Office Memorandum No. 14-3/98-Tech. 1, dated 16- 1-1999. This was circulated by CBR vide its letter C. No. l(26)S&R-2/84-A, dated 30-1-1999. The said ISDP indicated the deleted components/parts and the one to be deleted in future and the one not to be deleted at all. The appellant achieve deletion to the extent of 82.1087% in Tractors MF-240 and to the extent of 59.1794% in the case of Tractor Model MF-375. A Unit Specific Deletion Programme
(USDP) was prepared, as per report, dated 4-5-2000 of technical team of Engineering Development Board, which recommended that the appellant was at liberty to choose the component from the baskets of A, B, C of ISDP. Here basket A included such components/parts, which had already, been deleted, B contained such components/parts which were to be deleted in near future and C contained such parts/components which' were never to be deleted. On receipt of complaints that the appellant was importing even deleted parts/components by availing of- concessions in terms of S.R.O. 502(I)/94, dated 9-6-1994, the respondent Collectorate started detailed audit/scrutiny of the imports effected by the appellant. Scrutiny of the documents revealed that the appellant had imported many deleted components/parts under the garb of USDP in violation of ISDP. Cases were made out against the appellants and show-cause notices were issued charging the appellant of clearance of components/parts under S.R.O. 502(I)/94, dated 9-6-1994 in violation of Industry Specific Deletion Programme approved by Engineering Development Board.............. And the appellant was also charged with the importation of "deleted components" and which were also included in the "list of locally manufactured goods as prescribed under CGO 7/98", which were not entitled to exemption. On culmination of the adjudication proceedings, Collector of Customs, Sales Tax and Central Excise (Adjudication), Lahore vide his 124 impugned orders-in-original ordered the appellant to pay the demanded amounts of duty/taxes along with imposition of penalties. The appellants filed appeals before the Tribunal which vide its judgment, dated 19-6-2001 in Appeal No. 1263/LB of 2000 (and applied to 120 other identical cases of the appellant) remanded the cases to the Collector of Customs, Lahore with the following directions:- "(3) The charge raised against the appellants is that they imported CKD components in contravention of Industrial Specific Deletion Programme (ISDP). Since USDP is to be treated as the relevant document for monitoring the CKD imports of the appellants, the impugned order has lost its raison detre and is thus of no legal effect. The impugned order is set aside.
(4) The goods imported by the appellants may be admitted in terms of USDP and in case of a conflict between USDP and CGO 7 of 1998, dated 23-3-1998 the matter may be referred to the Central Board of Revenue for a decision in terms of letter No. l/10/Mach/98, dated 22-1-1999.
(5) With this direction the case is remanded to the Collector of Customs, Lahore. He may decide the cases himself or pass it on to an officer of competent jurisdiction for disposal under the law.
(Sd.) (Sd.) Member (T) Chairman"
The appellant was ordered to pay the total amount of Rs. 251403992 along with Rs. 48030000 as penalties, out of which an amount of Rs. 108504,444 had been recovered prior to the aforementioned judgment, dated 19-6-2001 of the Tribunal. At this stage the appellant filed refund claims for the refund of the said amount of Rs. 108504,444, since the orders under which the said amount was recovered were no more in the field. The respondent Collectorate was not finalizing the refund claims of the appellant. Therefore, the appellant filed Writ Petition No. 16775 of 2002 in the Hon'ble Lahore High Court which vide its order, dated 20-9-2003 ordered for deciding the refund application within 30 days, which was subsequently extended to 90 days by the Hon'ble Lahore High Court which vide its orders, dated 25-10-2002. The Collector of Customs, passed an order, dated 3-3-2003 issued vide his C. No. V-Cus. Misc/CFS/G-II/24/1564 rejecting the refund claims besides deciding some other issues. The said order was impugned before the Tribunal and Lahore Bench-I of this Tribunal vide its judgment, dated 20-1-2004 in Appeal No. 1648/LB of 2003 set aside the impugned order, dated 3-3-2004 and directed the respondent to decide the remanded cases along with their refund applications. The impugned orders have been passed as a consequence thereof, in which the adjudicating officer ordered the appellant as under:-
(i) Exemption was not available on disputed components and the amount already recovered is held to have been lawfully recovered.
(ii) Refund applications are regretted being not maintainable.
(iii) The appellants are directed to deposit the evaded amount of duty/taxes along with the penalties, excluding the amount of Rs. 108504,444 already recovered.
Hence these appeals.
During hearing the learned counsel argued as under:-
(a) The charge framed against the appellant in the show-cause notices, dated 4-10-2000 was that the appellant "Imported/sought clearances of components and parts of agriculture tractors under S.R.O. 502(I)/94, dated 9-6-1994.......................... In violation of Industries Specific Deletion Programme approved by Engineering Development Board.......... ". The appellant was also charged with the importation of "components/items", as specified in the show-cause notices, "being deleted components and also included in the list of locally manufactured goods, as specified in CGO 7 of 1998" and availing of exemption from duty/taxes thereon which was not permissible. The lst adjudication took place on the basis of the said show-cause notice and the cases were remanded by the Tribunal vide its order, dated 19-6-2001 in Appeal No. 1263/LB of 2000 and applied to 124 cases.
While re-adjudicating the cases the adjudicating officer has passed an adverse order against the appellant oil the ground that USDP of the appellant was not authenticated, which was never the charge against the appellant in the show-cause notice.
(b) Orders of the learned Tribunal, dated 19-6-2001, as applied to 124 other cases, set aside the adjudication order passed by the Collector of Customs (Adjudication) Lahore but the show-cause notices.
(c) were never vacated/withdrawn. Resultantly the adjudicating officer was bound to remain within the framework of the show-cause notices and could not raise' fresh issues beyond the scope of the show- cause notices. On the recommendation of the EDB, and recommendation of the Collector's Committee, the Chairman C.B.R, vide his note, dated 28-4-2001 recommended to the Finance Minister "that where both ISDP as well as USDP are laid down, the USDP will be the monitoring document. If the above principle is accepted it will also apply to the previous clearances of Millat Tractors Ltd., Lahore in terms of their USDP including the contravention cases made by the Customs Collectorate (whether adjudicated or under adjudication)". In the light of the aforementioned note of the Chairman the Tribunal vide its judgment, dated 19-6-2001 in Appeal No. 1263/LB of 2000 as applied to 124 other cases, ordered for setting aside the lst adjudication order passed by Collector (Adjudication) Lahore and remanded the cases to the Collector of Customs Lahore directing that USDP is to be treated as the relevant document for monitoring the CKD imports of the appellant.
Despite that the adjudicating officer has held that note of the Chairman was not applicable to the present cases.
(d) Authorized Representative of Ministry of Industries and Production appeared before the Tribunal on 20-1-2004 and stated as under:- "It is submitted that Industry Specific Deletion Programme (ISDP) for tractors is an approved document of parts/components by the EDB/Ministry of Industries and Production. The EDB/Ministry of Industries & Production approved Unit Specific Deletion Programme (USDP) in line with ISDP. In the instant case, on a reference from Central Board of Revenue (Annex-I), the USDP of Millat Tractor Limited was verified by Ministry of Industries and Production stating that die same was in line with the ISDP of Tractors Category II & III and sent to the CBR on 16th January, 1999 for further necessary action (Annex-II)".
Despite this categorical commitment from the Ministry of Industries and Production, the adjudicating officer had held that USDP of the appellant was not authenticated. The controlling authority in this regard is Ministry of Industries and Production and EDB and not the Collector of Customs.
(e) At para. 14(iii) of the impugned order the adjudicating officer observed that "main issue which led to the contravention reports was that certain items shown as deleted in the ISDP were allowed import in the USDP circulated vide Board's letter, dated 29-1-1999. Therefore, the confirmation by the representative of the Ministry of Industries and Production before the Honourable Appellate Tribunal could not be held as "not correct" since Collector of Customs, the adjudicating officer, was not competent to hold that the confirmation of the representative of the Ministry of Industries _ and Production before the Tribunal was "not correct". It is incorrect that the Tribunal allowed short time to the Collector for disposal of the cases due to which the respondent felt handicapped to have further confirmation. Sufficient time was allowed to the Collector for disposal of the cases and if he had any doubt he could seek necessary clarification from the Ministry.
(f) The findings of the adjudicating officer at para. 14(iv) to the effect that the USDP in question was circulated in a way other than the deletion programme previously circulated was not sufficient ground to pass an adverse order against the appellant. No format had been prescribed/notified by the concerned authority for the circulation of the deletion programme. Confirmation by the representative of the Ministry of Industries and Production before the Tribunal provided enough proof that USDP was duly approved by the Ministry.
(g) The EDB vide its letter No.EDB-005/03/2000, dated 4- 5-2000 referred to the visit of technical team of EDB to the premises of the appellant. On 25-2-2002 and after physical verification and perusal of documentary record reported that as per USDP, the appellant had achieved 82.1087 per cent deletion in its tractor MF 240 and deletion of 59.1794 per cent of tractor MF 375. On this basis the EDB certified that the appellant was "at liberty to choose the components from the basket "A"; "B" and "C" of the printed industry specified deletion programme". Here category "A" referred to the deleted components/parts. Category "B" referred to those components/parts which were likely to be deleted in the near future and category "C" referred to those components/parts, which were not likely to be deleted in the near future. Thus the appellant was given free hand to choose the components from the baskets A, B and C of ISDP. Steering Box, Crown Wheel and Pinion and Rear Tyres etc. Were in Basket "C", of USDP. The appellants have never been violative of List "C" of USDP.
Moreover the EDB vide its letter, dated 23-1-1999 and dated 6-12-2000 asked the CBR to allow clearance of already imported extra 4000 and 2000 units of steering box assemblies respectively.
The CBR accordingly endorsed the same recommendations and allowed the appellant to have the specified number of steering box assemblies. Similarly EDB vide its letter, dated 6-12-2000 allowed 500 sets of crown wheel and pinion to be released to the appellant and the C.B.R, accordingly endorsed it. Similar position was in respect of other disputed items.
The adjudicating officer erred in drawing an adverse inference against the appellant on the ground that the list of parts/components were prepared by the appellant at its own since all such lists are always prepared by the concerned manufacturers.
(i) Order passed by the adjudicating officer was violative of the directions given by the Tribunal in its judgment, dated 20-1-2004 in Appeal No. 1648/LB/2003 wherein it was specifically held that new issues "which were not there in the lst show- cause notice" could not be raised. It was also held in the said judgment that the refund claims having been rejected without issuance of show-cause notice, the impugned orders were void orders. This irregularity has again been repeated by passing the impugned order.
3. The learned SDR opposed contentions of the learned counsel and supported the impugned orders.
4. We have heard contentions of both the sides and perused the appeal files available before us. A perusal of the impugned Order-in-Original No. 1 of 2004, dated 25-5-2004, as applied to 124 cases revealed that at para. 14 of the impugned order, the adjudicating officer had indicated the grounds/factors which led him pass the impugned order. Those factors were mainly as under:-
(i) Note of the Chairman C.B.R., dated 28-4-2001 was mainly based on ECC's endorsement of the recommendations of the Ministry of Industries and Production regarding admissibility of exemption to the appellant with retrospective effect. The said endorsement was subject to approval of the Cabinet. The Chairman's note, dated 28-4-2001 and the Board's correspondence only clarified that in cases where ISDP and USDP both were available, then USDP would be the monitoring document.
In the present case, USDP was not authenticated, therefore, in absence of USDP, the ISDP would prevail and the Chairman's note, dated 28-4-2001 was not applicable.
(ii) The main issue was that certain items shown as deleted in the ISDP were allowed import in the USDP. Therefore, confirmation made by the representative of the Ministry of Industries and Production before the Hon'ble Tribunal was not correct especially in the light of the fact that EDB at the time of formulation of USDP had shown major disputed components as deleted i.e. Crown Wheel Pinion, Wheel, Steering Box, Hardware etc. Representative of the EDB desired that necessary clarification may be sought from C.B.R, but since it was a time consuming process and the matter had already been referred to the C.B.R, more than once, in the past and the C.B.R, having desired from the Collectorate to decide the cases on merits, it was decided to proceed with the cases on merits since it was a time consuming exercise and the Tribunal had given limited time.
(iii) The USDP in question was circulated in a way other than deletion programme previously circulated.
(iv) The components like Crown Wheel Pinion, Wheel, Steering Box and Hardware etc. Which had been included in Pro forma C of the USDP, dated 16-1-1999 were in conflict with the Customs General Order No.7 of 1998. These items have been shown as deleted in the ISDP, dated 18-9-1998 as well as approved USDP dated 16-9-2000.
On the basis of the above factors, the adjudicating officer held that the list of components forwarded by the EDB vide letter, dated 16-1-1999 and circulated by the CBR vide its letter C. No. 1(26) S&R-R/84-A dated 19-1-1999 was not a valid/approved USDP and also were not in line with the ISDP. These were prepared by the manufacturing unit at its own by roll back irrespective of the fact that some of items had already been localized and the subject items were not eligible for the benefit of the said S.R.O. 502(I)/94, dated 9-6-1994.
5. A perusal of the above factors, when compared with the show-cause notices would reveal that different factors like noncirculation of the USDP according to the earlier style was a new factor and was not specified in the show-cause notices. Similarly, we agree with the learned counsel that the adjudicating officer was required to adjudicate the cases on the basis of the first show-cause notices and the said show-cause notices did not indicate the charge of USDP of the appellant as having not been authenticated or was in a different style. While re-adjudicating the cases, on remand from the Tribunal vide its orders, dated 19-6-2001, new charges could not be framed against the appellants. A perusal of the records revealed that when the issue cropped up, Member Customs, C.B.R, appointed a committee comprising of Collector of Sales Tax and Central Excise, Gujranwala and Additional Collector of Customs, Lahore which submitted a detailed report wherein it was recommended that:- "...USDP should be treated as monitoring document in respect of each unit. It is also proposed that in case of difference of perception, matter should be resolved at the level of Ministry of Industries and C.B.R, before passing instructions to field formations. Board may also like to re-open the earlier cases in the light of these observations and may pass appropriate instructions to the Collector etc."
6. Ministry of Industries and Production vide its Summary No. 14-3/98-Tech. 1, dated 30-8-2000 recommended to the ECC as under:- "(9) It is therefore recommended that:--
(a) Those items, which are not in conformity with these lists and have already been imported by MTL as consequence to the clarification made by Ministry of Industries and Production will be permitted on CKD rates.
(b) EDB will undertake an exercise and prepare the lists containing Pro-formae A, B & C for all Categories, within the parameters of ISDP and keep in view "No Roll Back" is allowed. These lists will be used to monitor the CKD imports of Millat Tractors.
(10) Approval of the ECC is solicited on the recommendations contained in Para. 9 above."
7. The ECC in its meeting held on 4-9-2000 decided as under:- "(i) The ECC endorsed the recommendations contained in paragraph 9(a) of the Summary with retrospective effect subject to approval of the Cabinet.
(ii) The ECC directed that the Engineering Development Board should review the who is situation of the Deletion Policy and submit its recommendations for approval of the compete authority."
8. The Chairman CBR vide his note C. No. l(26)S&R-2/84, dated 28-4-2001 recommended to the Finance Minister as under:- "(6) Considering the recommendation of EDB and the Collector's Committee, confirmation of the Finance Minister is requested on the principle that where both ISDP as well as USDP are laid down, then USDP will be the monitoring document. If the above principle is accepted it will also apply to the previous clearances of Messrs Millat Tractors Ltd., Lahore in terms of ?Heir USDP including the contravention cases made by the Customs Collectorates (whether adjudicated or under adjudication)."
9. The Finance Minister approved the recommendation of the Chairman, C.B.R. Representative of the Ministry of Industries and Production submitted following comments during hearing on 18-12- 2003 before, Lahore Bench-I in Appeal No. 1648/LB/2003:- "It is submitted that Industry Specific Deletion Programme (ISDP) for tractors is an approved document of parts/components by the EDB/Ministry of Industries and Production. The EDB/Ministry of Industries and Production approved Unit Specific Deletion Programmes (USDP) in line with ISDP.
In the instant case, on a reference from Central Board of Revenue, the USDP of Millat Tractor Limited was verified by Ministry of Industries and Production stating that the same was in line with the ISDP of Tractors Category II & III and sent the C.B.R on 16th January, 1999 for further necessary action."
10. After confirmation by the Ministry of Industries and Production, which was a respondent before the Tribunal in Appeal No. 1648/LB of 2003 and duly entered its appearance on the summons from this Tribunal, the adjudicating officer stepped out of his jurisdiction to uphold that confirmation by the representative of the Ministry of Industries and Production before the Tribunal was "not correct".
That confirmation having been made before this Tribunal by duly authorized representative of the said Ministry, the USDP of the appellant is held to be duly approved by the Ministry of Industries and Production and findings of the adjudicating officer in this regard to the contrary are held to be of no legal effect. Similarly, the Chairman C.B.R vide his note, dated 28-4-2001 recommended to the Finance Minister that "where both ISDP as well as USDP are laid down, then USDP will be the monitoring document". The Chairman further recommended that if the said principle was accepted, it would also "apply to the previous clearances of Messrs Millat Tractors Ltd., Lahore in terms of their USDP including the contravention cases made by the Customs Collectorate (whether adjudicated or under adjudication)". The said proposal of the Chairman CBR was approved by the Finance Minister. The note, dated 28-4-2001 of the Chairman CBR for the Finance Minister and the approval of the Finance Minister thereon unambiguously covered all the cases of the appellant (whether adjudicated or under adjudication), if the principle of USDP to be the monitoring document was to be accepted. The appellant had both USDP and ISDP, duly approved from EDB/Minloiry of Industries, therefore, the USDP was to be the monitoring document. The adjudicating officer erred in holding that the note of the Chairman CBR was not applicable to the appellant's case. When the I Ministry of Industries, through its authorized representatives, confirmed that the USDP was duly approved from the said Ministry, all the reservations expressed by the adjudicating officer at paras. 14 and 15 of the impugned order have no legal validity. Due to surpassing the required deletion target, the appellant was allowed by the competent authority to have a USDP in the presence of ISDP and the appellant could have the facility of importing, in terms of S.R.O. 502(I)/94, dated 9-6-1994, even such components/parts, which had earlier been deleted through ISDP.
11. In view of the foregoing the impugned orders are set aside and all the appeals are accepted. The concessions available under S.R.O. 502(I)/94, dated 9-6-1994 were correctly availed by the appellant on the disputed parts/components and the amount already recovered from the appellant on such parts/components be refunded to the appellant forthwith.
12. All the appeals stand disposed of as above.