2002 (5) TMI 292 - Commission - Customs

Issues Involved:
1. Duty liability under EPCG Scheme
2. Fulfillment of Export Obligation (EO)
3. Payment of Customs Duty and Countervailing Duty (CVD)
4. Interest liability
5. Immunity from prosecution under Customs Act and IPC
6. Installment facility for payment
7. Modvat credit admissibility

Detailed Analysis:

1. Duty Liability under EPCG Scheme:
The Applicant was issued a License under the EPCG Scheme to import capital goods with a CIF value of Rs. 14,28,66,240/- for manufacturing ceramic tiles. The duty demanded against imports made through six duty demand notices was Rs. 3,81,85,558/-. The Applicant admitted a duty liability of Rs. 1,27,67,809/-.

2. Fulfillment of Export Obligation (EO):
The Applicant was required to export ceramic tiles worth four times the CIF value within five years. They claimed to have fulfilled 30% of the EO, substantiated by a certificate from the Licensing Authority. However, the DGFT indicated a shortfall of 71.06% in EO fulfillment, with only 28.04% of EO met by 31st March 2001.

3. Payment of Customs Duty and Countervailing Duty (CVD):
The Applicant admitted a liability of Rs. 1,26,01,128/- for basic Customs Duty. They argued that the CVD was revenue-neutral due to eligibility for Modvat credit. However, the Commission clarified that the settlement was for Customs duty liability, and Modvat credit issues were not relevant to the case before the Commission.

4. Interest Liability:
The Applicant contended that there was no interest liability under the Customs Act or Notification No. 160/92-Cus. The DGFT's letter indicated an interest amount of Rs. 4,28,59,960/- payable up to 1-3-2002. The Commission noted that the interest on unpaid duty would be at 18% per annum if not paid within thirty days of the order.

5. Immunity from Prosecution under Customs Act and IPC:
The Applicant sought immunity from prosecution under the Customs Act and IPC, claiming full and true disclosure of duty liability and cooperation with the Commission. The Commission granted immunity from prosecution under the Customs Act, 1962 read with IPC but refrained from granting immunity under the Foreign Trade (D & R) Act, 1992.

6. Installment Facility for 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 payment in eleven installments, with the first installment of Rs. 28,44,660/- within thirty days, followed by ten monthly installments of Rs. 10 lakhs each, starting from June 2002. Interest at 18% per annum would apply from May 2002.

7. Modvat Credit Admissibility:
The Commission indicated that the jurisdictional Central Excise authorities might consider granting Modvat credit if permissible under the Central Excise Act, 1944. The Customs authority was directed to issue a certificate for the amount of CVD paid to facilitate this process.

Conclusion:
The Commission settled the duty liability at Rs. 2,71,34,660/- after considering the proportionate benefit of EO fulfilled by 31st March 2001. The Applicant was directed to pay the balance amount in installments with interest. Immunity from prosecution under the Customs Act was granted, but not under the Foreign Trade (D & R) Act. The settlement would be void if obtained by fraud or misrepresentation, and the immunity would be withdrawn if the Applicant failed to comply with the payment schedule or other conditions.

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