(Prayer: To allow the appeal by setting aside the Final Order No.A/31463/2017, dated 04-09-2017 passed in Appeal No. C/446/2004 by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore and pass.

IA NO: 1 OF 2018

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to condone the delay of 76 days in representing the above appeal in the interest of justice and pass.

IA NO: 2 OF 2018

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the Final Order No.A/31463/2017 in Appeal No.C/446/2004 passed by the Learned CESTAT, Regional Bench, Hyderabad pending disposal of the above appeal on the file of the this Hon'ble Court and pass.

IA NO: 3 OF 2018

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay the operation of the Final Order No. A/31463/2017 in Appeal No. C/446/2004 passed by the learned CESTAT, Regional Bench, Hyderabad pending disposal of the above appeal and pass

IA NO: 1 OF 2019

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to take on record the Letter No.8/EOU/Adj-72/VSEZ/2019/3861, dt.10.05.2019, issued by the office of the Development Commissioner, Ministry of Commerce & Industry, Government of India and pass)

Battu Devanand, J.

1. This Central Excise Appeal is filed against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench, Hyderabad (for short “CESTAT) in Appeal No.C/446/2004, final order No.A/31463/2017, dated 11.09.2017 in confirming the order in Appeal No.4 of 2004 (T) Cus, dated 10.08.2004 passed by the Commissioner of Customs and Central Excise (Appeals), Guntur.

2. The case of the appellant:

           (i) The appellant is an Export Oriented Unit (“hereinafter referred to as “EOU”) established in 1987 to manufacture of silk fabric near Ananthapur, Andhra Pradesh. The Department of Industrial Development, Secretariat of Industrial Approvals granted permission for setting up the EOU in 1986. The appellant was registered as 100% Export Oriented Unit and engaged in manufacture of silk fabrics for exports. The appellant opted for de-bonding of the unit in the year 1992 subject to payment of applicable customs duty in terms of the Customs Act, 1962 and the EXIM policy, 1992-97 and the conditions stipulated in the letter of intent issued by the Board of Approval. In terms of the scheme, the appellant started the manufacturing activity of silk yarn in 1988. However, due to liberal government policy, in 1990, China started dumping its silk with one forth of rate then prevailing into India that resulted severe problems to the silk industry in the country including the appellant‟s unit. Thereafter, the appellant lost the domestic and export market and sunk into losses. Thus, the appellant could not meet and achieve export turnover which it obliged to fulfill and therefore the appellant opted to exit from EOU scheme as it was not viable to continue in the scheme. The competent authority i.e., the Development Commissioner granted “in principle approval” to exit from the scheme on 09.06.1992 with conditions including payment of full duties and payment of penalties in case of non-fulfillment of export obligation.

           (ii) The appellant intimated the “in principle approval” to the jurisdictional Assistant Commissioner, Central Excise who intimated the duty liability to a tune of Rs.3,94,48,924/- to be paid for exit. As it was financially impossible to pay the huge amount of duty for the silk industry like that of the appellant and in order to avail concessional rate of duty, the appellant applied to the Central Silk Board to permit them to treat the de-bonding of goods as import under the Project Import Regulations so as to clear the capital goods from bonding by paying duty at 5% in terms of CTH 98.01. The Central Silk Board in its letter, dated 27.02.1992 permitted the appellant to register under Project Import Regulations, 1998 for availing confessional assessment of Customs Duty. Basing on the permission granted by the Central Silk Board, and on the basis of the “in principle approval” granted to the appellant by the Development Commissioner by the jurisdictional Assistant Commissioner, issued a provisional assessment order, dated 23.11.1992 demanding duties apart from a penalty of 10% of the duties assessed under Foreign Trade (Development & Regulation) Act, 1992 for the default to NFC (Net Foreign Exchange). Thereafter, the Assistant Commissioner issued final assessment order, dated 15.12.1992 directing the appellant to deposit Rs.2,80,37,915/-.

           (iii) Being aggrieved by the said assessment order, dated 15.12.1992 the appellant preferred an appeal before the Commissioner (Appeals). The Appellate Authority by its order, dated 23.07.1993 confirmed the duty amount and declined the concessional rate of duty under Project Imports on the ground that the imports are not contemporaneous and that the silk plants are not included in the list of machinery under the Project Imports by ignoring the letter issued by the Central Silk Board. Against the order, dated 23.07.1993 of the Appellate Authority, the appellant approached the CESTAT. The appellant also approached the High Court in W.P.No.1522 of 1993 and the said writ petition was disposed of by order, dated 01.10.1993 directing the Government may consider the request of the appellant subject to pre-deposit of an amount of Rs.25,00,000/- by the appellant. The condition was complied with by the appellant. Thereafter the appellant addressed a letter to the Secretary, SIA to allow the goods to be assessed under heading 9801 under Project Import Regulations. Meanwhile, the jurisdiction Assistant Commissioner issued detention memo vide his order, dated 16.11.1997 detaining the plant and machinery on the ground that the customs duty for de-bonding was not paid.

           (iv) The appellant requested the Secretariat of Industrial Approval, Government of India, New Delhi vide letter, dated 17.12.1997 to allow one time de-bonding option for 100% EOU in terms of the Notification No.477(E), dated 25.07.1991. As per which, compulsory licensing of silk industry has been abolished and sale of 50% is allowed in Domestic Tariff Area (DTA). In the EXIM policy for 1992-97, facility to opt for EPCG was also allowed. The appellant worked out the duty liability on the capital goods and raw-materials procured without payment of duty on the value of Rs.60,35,864/- (after depreciation) and the duty payable worked out to Rs.6,03,586/- only. The Development Commissioner, Vizag vide letter, dated 13.01.1998 granted “in principle approval” to withdraw from 100% EOU subject to fulfillment of standards stipulated in the letter of permission granted on 09.08.1992 by the Secretariat of Industrial Approvals. In the appeal filed by the appellant before the CESTAT against the order, dated 23.07.1993 passed by the Commissioner (Appeals), the CESTAT passed its final order No.314 of 1998, dated 17.02.1998 setting aside the Appellate Authority order with a direction that the claim of the appellant that they are still 100% EOU till final de-bonding takes place while requesting for refund. On 23.11.1998, the appellant submitted an ex-bond bill of entry for home consumption for assessment of duty and requested the Assistant Commissioner for de-bonding of the unit since 10 year period had been completed by 04.04.1998. But the jurisdictional Assistant Commissioner passed de novo order, dated 28.05.1999 confirming the duty liability of Rs.2,80,95,659/- with net liability of Rs.2,55,95,659/- after deducting an amount of Rs.25,00,000/- deposited by the appellant in terms of High Court order.

           (v) Being aggrieved by the order, dated 28.05.1999 of the Assistant Commissioner, the appellant preferred an appeal before the Commissioner (Appeals) along with stay petition and the Commissioner (Appeals) granted stay of further proceedings pending disposal of the appeal with a condition to pre-deposit of an amount of Rs.2.50 crores. As the condition of pre-deposit was not complied with by the appellant, the Commissioner (Appeals) dismissed the appeal on 24.04.2000. Being aggrieved by the said order, the appellant filed an appeal No.C/ST/231/2000 before the CESTAT and the CESTAT set aside the O-I-A No.24/2000 (H-II) CUS in its final order No.1364 of 2000 and remanded the matter for de novo enquiry.

           (vi) On being remanded, the Commissioner (Appeals) had confirmed the demand of entire amount of duty in O-I-A No.4 of 2004 (T) Cus, dated 10.08.2004 holding that the order passed by the Executing Authority had attained finality and he has no power to modify or over-rule the order and the depreciation applied for and the right of duty adopted requires no modification as found by his predecessor is correct on the ground that the appellant is not 100% EOU. The Appellate Authority ignored the direction of the CESTAT in its final order No.1364 of 2000, dated 03.10.2000 while remanding the matter to the Commissioner (Appeals) and the letter given by the competent authority i.e., the Development Commissioner, Vizag confirming the status of the appellant as 100% EOU. Aggrieved by the order, dated 10.08.2004 of the Commissioner (Appeals), the appellant again preferred an appeal before the CESTAT in Appeal No.C/446/2004. The CESTAT passed a final order No.A/31463/2017, dated 11.09.2017 confirming the order, dated 10.08.2004 passed by the Commissioner (Appeals) in O-I-A No.4 of 2004. Aggrieved by the final order No.A/31463 of 2017, dated 11.09.2017 passed by the CESTAT, the appellant filed the present appeal.

3. While admitting the appeal, this Court has framed the following substantial question of law:

           “Whether the Hon‟ble CESTAT was right in deciding the appeal without considering the matter not discussed by the Commissioner (Appeals) as was directed by it in its Final Order No.314 of 1998, dated 17.02.1998?”

4. On behalf of the respondent, a counter-affidavit has been filed:

           (i) It is averred in the counter-affidavit that the issue has originated in Ananthapur Division which is earlier under the jurisdiction of Commissioner of Industrial Excise and Customs, Tirupati Commissionarate and consequent on re-organization in the Central Board of Excise and Customs, during October, 2014, the jurisdiction of the customs related work has been brought under the jurisdiction of the Customs Commissionarate (Preventive), Vizag. The appellant is registered as 100% EOU and are engaged in the manufacture of silk fabrics for exports within India. He is opted de-bonding of their unit in the year 1992. The Assistant Commissioner vide the de novo order No.2 of 1999 (CUS), dated 28.05.1999 confirmed the demand of Rs.2,80,95,659/- on finalization of provisional assessment vide Assistant Commissioner‟s letter, dated 21.11.1992 being the duty of customs i.e., Basic/AUX/CVD involved on the capital goods, raw-materials/semi furnished goods/indigenous goods, spares and components of machinery on account of de-bonding unit. The said duty amount was payable in terms of Section 7 of Customs Act, 1992. The EXIM policy 1992-97 r/w terms and conditions of the letter of intent given to the appellant by the Board of Approval for 100% export oriented units. The Assistant Commissioner appropriated a sum of Rs.25,00,000/- paid by the appellant in compliance of the interim order of the Hon‟ble High Court of Andhra Pradesh towards the duty amount of Rs.2,80,95,659/- demanded in the assessment letter, dated 21.11.1992. The Assistant Commissioner also demanded interest on the said outstanding duty amount @ 20% per annum with effect from 26.05.1995 i.e., the date of inception of the interest clause vide Section 28(A)(a) r/w notification No.33/1995 CUS (NT) dated 26.05.1995 which worked out to be Rs.2,08,60,461/- as on May, 1999. It is further averred that after many rounds of litigation, the issue remanded to Commissioner (Appeals), Guntur in A.No.30/2000 (H-II), CUS. The Commissioner (Appeals), Guntur and after giving opportunities under principles of natural justice and expressing his displeasure about the attitude of the appellant, passed ex parte order, dated 10.08.2004 and dismissed the appeal and upheld the de novo order, dated 28.05.1999 passed by the Assistant Commissioner.

           (ii) It is further averred in the counter-affidavit that the appellant is claiming 100% EOU as it was referring to the suo moto de-bonding letter issued by VSEZ Development Commissioner, Visakhapatnam on 08.08.2006. But this aspect has been properly and empathetically addressed by the Appellate Authority vide O-I-A No.4 of 2004 (T) CUS, dated 10.08.2004 in A.No.30/2000 (H-II) Cus. It is further averred that the CESTAT rightly upheld the First Appellate Authority findings and categorically held that there are no wrong findings in them. It is further averred that the CESTAT also categorically stated the ratio of case laws cited by the appellant does not applicable in the instant case as they are totally different from the facts of the instant case eventually and the CESTAT dismissed the appeal as devoid of merits and accordingly prayed this Court to dismiss the present appeal as devoid of merits.

5. Submissions of the learned Senior Counsel for appellant:

           (i) The learned Senior Counsel would submit that the department issued a letter, dated 08.08.2006 wherein the Government has issued a cancellation of letter of permission and suo-moto bonding from EOU scheme. In view of de-bonding order issued on 08.08.2006 and the appellant was still an export oriented unit as on that day, the condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking would come into operation and the authority should have passed an order in terms of the said clause. The learned counsel further contends that though the CESTAT had extracted the contention of the appellant in para No.7 of the order, without considering the same passed the impugned order. The learned counsel further contends that during the pendency of the present appeal, the appellant herein made a representation to the Government of India, Ministry of Commerce and Industry, seeking clarification regarding suo-moto de-bonding EOU.

           (ii) The learned Senior Counsel for the appellant further contends that by virtue of the clarification issued by the Government vide letter, dated 10.05.2009, it is clear that the suo-moto de-bonding order on 08.08.2006 is to be treated as final date of exit of the unit and by virtue of the said clarification, the condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking would come into play. In view of the clarification issued in the letter, dated 10.05.2019 stated supra, the Commissioner of Central Excise and Central Tax, Tirupati Commissionarate has to pass an order in terms of the condition 10 f the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking. In the light of the clarification letter issued by the Deputy Development Commissioner, Vizag, dated 10.05.2019, the learned Senor Counsel would contend that the matter may be remanded back to the Commissioner (Appeals) for consideration of the appellant unit has exited from EOU scheme by virtue of de-bonding order issued on 08.08.2006 by allowing the appeal.

6. Submissions of the learned Senior Standing Counsel for Respondent:

           The learned Senior Standing Counsel would contend that the impugned orders are well reasoned, lawful and based on settled facts. The learned Senior Standing Counsel would contend that the CESTAT rightly dismissed the appeal filed by the appellant observing that the appellant failed to fulfill export obligations undertaken at the time of import and the plea of continue EOU as it was passed suo-moto de-bonding in 2006 illusory and untenable. The learned Senior Standing Counsel further contends that the appellant has failed to establish any ground warranting interference of this Court in this appeal, as the appeal devoid of merits and barred by limitation and sought to dismiss this appeal directing the appellant to forthwith discharge the outstanding amount along calculated interest in the interest of justice and revenue.

7. Heard Sri O. Manohar Reddy, learned Senior Counsel appearing for the appellant and Sri B.V.S. Chalapati Rao, learned Senior Standing Counsel for Central Excise and Central Tax appearing for respondent and carefully perused the material available on record.

8. Findings and reasons:

           (a) The main contention raised by the learned Senior Counsel appearing for the appellant is that by virtue of the clarification issued by the Deputy Development Commissioner, Government of India, Ministry of Commerce and Industry vide letter, dated 10.05.2019, the unit was issued suo-moto de-bonding order on 08.08.2006 and the same may be treated as final date of exit of the unit and there upon condition No.10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking would come into play.

           (b) The contention of the learned Senior Standing Counsel appearing for the respondent is that the contention of the appellant that they are claiming 100% Export Oriented Unit by referring to the suo-moto de-bonding letter issued by VSEZ, Development Commissioner, Visakhapatnam on 08.08.2006 has been properly and empathically addressed by the appellate authority in its order, dated 10.08.2004 and as such the CESTAT rightly upheld the appellate authority proceedings and there is no infirmity in the order of the appellate authority as rightly confirmed by the order of the CESTAT.

           (c) In view of the rival contentions, as noted herein above, in our considered view, it is relevant and necessary to look into the contents of the letter No.8/EOU/Adj-72/VSEZ/ 2019/ 3861, dated 10.05.2019 issued by the Deputy Development Commissioner, Government of India, Ministry of Commerce and Industry and the condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking as extracted herein under for proper adjudication of the issue involved in the present appeal:

           Letter No.8/EOU/Adj-72/VSEZ/ 2019/ 3861, dated 10.05.2019:

           “In view of the undertaking submitted by the unit and as per the record of this office since the unit was defunct from 1999 onwards the unit was issued Cancellation of Letter of Permission/ “Suo-Moto‟ de-bonding from EOU scheme vide VSEZ letter dated 08.08.2006 in terms of Para 4(i) Appendix 14-G of Hand Book of Procedure and as per the monitoring guidelines of Foreign Trade Policy.

           It is also mentioned that the unit was continued to be treated as EOU till the date of final exit order, in terms of the Appendix 6K of guidelines for exit of EOUs. In the instant case, the unit was issued „Suo-Moto‟ de-bonding order on 08.08.2006 and the same may be treated as final date of exit of the unit.

           It is further mentioned that the Unit has to comply with the provisions of the FTP and liable to pay all applicable duties and taxes if any levied on them immediately.”

           Condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking:

           “10. On de-bonding after the period of export obligation, the undertaking will be liable to pay will by the followings:-

           (a) Customs duty on capital goods on the depreciated value but at rates prevalent on the date of import.

           (b) Customs duty on unused Imported raw-materials and component on value at the time of Import and at the rates in on the date of clearance and

           (c) In respect of excisable goods, excise duty to be levied without depreciation on such goods and at rates attracted as on the date on clearance.”

9. The contention of the appellant is that though the CESTAT had noted the contention of the appellant in para No.7 of its order, dated 17.09.2017 about applying the condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Undertaking regarding the de-bonding order issued on 08.08.2006, there is no discussion or finding on that aspect. Though the respondent has stated in their counter that the claim of the appellant with regard to 100% EOU was considered referring to the suo-moto de-bonding letter, dated 08.08.2006 issued by the VSEZ, Development Commissioner, Visakhapatnam by the appellate authority in its order, dated 10.08.2004, it was not considered.

10. On careful examination of the order of the Commissioner (Appeals), dated 10.08.2004, there is no mention about considering that aspect. Even in the order, dated 11.09.2017 of the CESTAT also this issue has not been considered. The Commissioner (Appeals) in its order, dated 10.08.2004 held that the order passed by the Assessing Authority had attained finality and he has no power to modify or over-rule the order and the findings given by his predecessor. In fact, while the CESTAT remanded the matter by its order for de-novo enquiry, it is directed the Commissioner (Appeals) to take into consideration the pre-deposit already made in terms of High Court‟s order and directed to hear the appeal on merits. As and when the CESTAT remanded the matter for fresh consideration and to conduct de-novo consideration, the Commissioner (Appeals) has to consider the entire issue on merits. As such, the Commissioner (Appeals) finding that he would not entitle to modify or over-rule the order of his predecessor (which was set aside by the CESTAT while remanding for conducting de-novo enquiry) is illegal and unsustainable. The CESTAT also without going into the merits of the case simply extracted the findings of the Commissioner (Appeals) and dismissed the appeal without assigning reason, which is illegal and unjust.

11. The Commissioner (Appeals) and the Customs, Excise and Service Tax Appellate Tribunal are exercising powers under the Central Excise Act, 1944, as quasi-judicial authorities and they are obliged to discharge satisfactory functions which by assessing the facts and circumstances of the case which would show the application of judicial mind. They have to weigh the material which has been placed before them and they have to process it by the process of assessing the credentiality of the contentions of the appellant. In the present case, unfortunately, it appears that the appellate authority or Tribunal did not consider the contentions raised by the appellant in proper manner. As such, the order of the Customs, Excise and Service Tax Appellate Tribunal assailed in this appeal would not sustain in the eye of law.

12. On careful perusal of the order, dated 11.09.2017 of the CESTAT, it is established that without assigning any reasons for non- considering the claim of the petitioner in the light of the de-bonding order, dated 08.08.2006 passed by the VSEZ, Development Commissioner, Visakhapatnam and the application of the condition 10 of the Standard Conditions attached to Industrial License in respect of 100% Export Oriented Unit, in mechanical way dismissed the appeal filed by the appellant. As such, the order, dated 10.08.2004 passed by the Commissioner (Appeals) and the order, dated 11.09.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal are unsustainable under law and liable to be set aside.

13. Considering the facts and circumstances of the case and in the light of the clarification issued by the Deputy Development Commissioner, Vizag, dated 10.05.2019 wherein it is clarified that that the suo-moto de- bonding order on 08.08.2006 is to be treated as final date of exit of the unit, in our considered view, it is appropriate and reasonable to remand the matter to the Commissioner (Appeals) for fresh consideration and for passing appropriate orders in accordance with law by following due process of law, to meet the interest of justice.

14. Accordingly, this appeal is disposed of with the following directions:

           (i) The order, dated 11.09.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench, Hyderabad in Appeal No.C/446/2004, final order No.A/31463/2017, in confirming the order in Appeal No.4 of 2004 (T) Cus, dated 10.08.2004 passed by the Commissioner of Customs and Central Excise (Appeals), Guntur, are hereby set aside;

           (ii) The matter remanded to the Commissioner (Appeals) for de- novo enquiry and to pass orders afresh in accordance with law by following due process of law, taking into consideration of the clarification letter issued by the Deputy Development Commissioner, Vizag, dated 10.05.2019.

16. There shall be no order as to costs.

           As a sequel, miscellaneous petitions pending, if any, shall stand closed.