2002 (5) TMI 291 - Commission - Customs

Issues Involved:
1. Duty Demand Notices and Fulfillment of Export Obligation (EO)
2. Adjustment of Admitted Duty Liability
3. Certification of Export Obligation Fulfillment
4. Customs Duty and Modvat Credit
5. Interest Liability
6. Immunity from Prosecution
7. Installment Facility for Duty Payment
8. Grant of Modvat Credit
9. Penalty and Interest Immunity

Detailed Analysis:

1. Duty Demand Notices and Fulfillment of Export Obligation (EO):
The Applicant was issued a licence under the EPCG Scheme to import capital goods for manufacturing ceramic tiles with a CIF value of Rs. 14,28,66,240/-. The duty demanded against these imports was Rs. 3,81,85,558/-. The Applicant was obligated to export ceramic tiles valued at four times the CIF value within five years. The Applicant indicated an additional amount payable of Rs. 1,27,67,809/-. The DGFT certified a shortfall of 71.06% in the EO, with the stipulated EO being US $1,81,12,994 and the fulfilled EO till 31-3-2001 being US $52,42,556.

2. Adjustment of Admitted Duty Liability:
The application was allowed to proceed under Section 127C of the Customs Act, 1962, and the admitted duty liability was adjusted from Rs. 1,42,90,000/- already realized by Revenue via encashment of a Bank Guarantee.

3. Certification of Export Obligation Fulfillment:
The Revenue pointed out that the Applicant's claim of fulfilling 30% of the EO needed certification from the Licensing Authority. The Applicant provided a certified copy from DGFT indicating a shortfall of 71.06% in EO fulfillment.

4. Customs Duty and Modvat Credit:
The Applicant admitted a liability of Rs. 1,26,01,128/- for basic Customs Duty saved but did not agree to pay the CV duty, arguing it was revenue neutral due to eligibility for Modvat credit. The Commission clarified that the Modvat credit issue was not within its purview and had to be decided by the Jurisdictional Commissioner of Central Excise.

5. Interest Liability:
The Applicant argued there was no interest liability under the Customs Act or Notification No. 160/92-Cus. The Commission, however, noted that interest was indicated by the DGFT, totaling Rs. 4,28,59,960/- up to 1-3-2002.

6. Immunity from Prosecution:
The Applicant sought immunity from prosecution under the Customs Act, IPC, and the Foreign Trade (D & R) Act. The Commission granted immunity from prosecution under the Customs Act and IPC but refrained from granting immunity under the Foreign Trade (D & R) Act.

7. Installment Facility for Duty Payment:
The Applicant requested to pay the balance duty liability of Rs. 1,28,44,660/- in installments due to financial hardship. The Commission allowed the payment in eleven installments, with the first installment of Rs. 28,44,660/- to be paid within thirty days and the remaining amount in ten equal monthly installments of Rs. 10 lakhs each, starting from June 2002.

8. Grant of Modvat Credit:
The Commission directed the Jurisdictional Commissioner of Customs to issue a certificate for the CV duty paid by the Applicant to enable the Jurisdictional Commissioner of Central Excise to examine the admissibility of Modvat credit.

9. Penalty and Interest Immunity:
The Commission granted immunity from levy of penalty and interest under the Customs Act, 1962, for the offence and liability covered by this case. However, the licensing authority was free to deal with any penal or interest liability under the Foreign Trade (D & R) Act, 1992.

Conclusion:
The Commission settled the duty liability at Rs. 2,71,34,660/-, with the Applicant required to pay the balance amount in installments and interest at 18% per annum. The Applicant was granted immunity from prosecution and penalty under the Customs Act, 1962, but not under the Foreign Trade (D & R) Act, 1992. The settlement would be void if obtained by fraud or misrepresentation, and immunity would be withdrawn if the Applicant failed to comply with the conditions.

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